Ultra Petroleum wraps exchange of notes, may swap more 2022 notes

By Wendy Van Sickle

Columbus, Ohio, Dec. 26 – Ultra Petroleum Corp. said it retains the right to exchange within one year about $55 million more of wholly owned subsidiary Ultra Resources, Inc.’s 6 7/8% senior notes due 2022 for new 9% cash/2% PIK senior secured second-lien notes due July 12, 2024 and warrants.

On Dec. 26, the company settled the previously announced exchange of $505 million, or 72.1%, of the 2022 notes as well as $275 million, or 55%, of the subsidiary’s 7 1/8% senior notes due 2025 for $545 million of the 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.

Pro forma for the exchange, as of Sept. 30, the company’s consolidated net leverage ratio is reduced to 3.9x from 3.5x, according to a news release.

Any further exchange of 2022 notes would be on the same terms as the newly concluded exchange or on terms that are more favorable to the company.

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

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 received $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.

Upon the closing of the exchange, the company and certain of the supporting noteholders were to 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, as previously reported.

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

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