Ultra Petroleum to swap $780 million notes for 9% cash/2% PIK notes

By Wendy Van Sickle

Columbus, Ohio, Dec. 21 – Ultra Petroleum Corp. said it entered on Dec. 17 into agreements to exchange $780 million of wholly owned subsidiary Ultra Resources, Inc.’s notes for $545 million of new 9% cash/2% PIK senior secured second-lien notes due July 12, 2024, also issued by Ultra Resources and 10,916,699 new warrants.

The exchange agreements were for $505 million, or 72.1%, of the 6 7/8% senior notes due 2022 and $275 million, or 55%, of the 7 1/8% senior notes due 2025, according to an 8-K filing with the Securities and Exchange Commission.

Each warrant entitles the holder to purchase one common share of the company.

Closing is expected to occur by Dec. 31.

For each $1,000 aggregate principal amount of 2022 notes exchanged under the agreement, the noteholders will receive $720 principal amount of new notes issued and 14 warrants.

For each $1,000 aggregate principal amount of 2025 notes exchanged, the noteholders will receive $660 principal amount of new notes and 14 warrants.

The new notes will be senior secured obligations of Ultra Resources and will rank senior in right of payment to all of its existing and future unsecured senior debt.

The new notes will be secured by second priority security interests in substantially all assets of the company. Payment by Ultra Resources of all amounts due on or in respect of the new notes will be initially guaranteed by Ultra Petroleum.

No warrants will be exercisable until the date on which the volume-weighted average price of the common shares is at least $2.50 per common share for 30 consecutive trading days.

The obligations of the supporting noteholders under the exchange agreement, including their obligation to exchange their old notes pursuant to the exchange transaction, are subject to some conditions.

The exchange agreement may be terminated by any single supporting noteholder, solely with respect to itself, if the closing of the exchange transaction has not occurred by Dec. 31.

Upon the closing of the exchange, the company and certain of the supporting noteholders will enter into an agreement providing for the nomination by the majority of certain supporting noteholders of one independent director as a member of the board of directors of the company.

Ultra Petroleum is a Houston-based oil and gas exploration and production company.

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