Goodrich offers to exchange nine series of preferreds, notes for stock

By Marisa Wong

Morgantown, W.Va., Jan. 26 – Goodrich Petroleum Corp. has begun offers to exchange any and all of its outstanding 5.375% series B cumulative convertible preferred shares, any and all of its outstanding 10% series C cumulative preferred shares, any and all of its outstanding 9Ύ% series D cumulative preferred shares and any and all of its outstanding 10% series E cumulative convertible preferred shares for newly issued shares of common stock, according to an 8-K filing with the Securities and Exchange Commission.

In addition, the company is offering to exchange any and all of its outstanding 8 7/8% senior notes due 2019, 3.25% convertible senior notes due 2026, 5% convertible senior notes due 2029, 5% convertible senior notes due 2032 and 5% convertible exchange senior notes due 2032 for newly issued shares of common stock.

The offers will expire at 5 p.m. ET on Feb. 24.

Preferred exchange offers

According to a news release, the company is offering to exchange newly issued shares of common stock to all holders of the existing preferred stock under the following exchange ratios:

• 8.899 common shares per 5.375% series B convertible preferred share;

• 4.449 common shares per depositary share, each representing 1/1000th of a share of 10% series C preferred stock;

• 4.449 common shares per depositary share, each representing 1/1000th of a share of 9.75% series D preferred stock; and

• 5.188 common shares per depositary share, each representing 1/1000th of a share of series E preferred stock.

The higher exchange ratio applicable to the series B preferreds reflects the higher liquidation preference for the series B preferreds relative to the liquidation preference of the series C, D and E preferreds.

The higher exchange ratio for the series E preferreds relative to the series C and D preferreds reflects the original liquidation preferences of the series B, C and D preferreds tendered in exchange for the series E preferreds on Dec. 18.

Senior notes exchange offers

Goodrich is offering to exchange the following minimum consideration in newly issued shares of common stock to all holders of its existing unsecured notes, subject to pro rata adjustments:

• 800.635 common shares per $1,000 principal amount of 8 7/8% notes due 2019;

• 800.635 common shares per $1,000 principal amount of 3.25% convertible notes due 2026;

• 800.635 common shares per $1,000 principal amount of 5% convertible notes due 2029;

• 800.635 common shares per $1,000 principal amount of 5% convertible notes due 2032; and

• 1,601.270 common shares per $1,000 principal amount of 5% convertible exchange notes due 2032.

According to the release, the higher exchange ratio for the 5% convertible exchange notes due 2032 is due to a previous private exchange, where some holders of the 5% convertible notes due 2032 exchanged their notes into the 5% convertible exchange notes due 2032 at a 50% discount.

Second-lien notes exchange

As part of its recapitalization plan, in addition to the exchange offers above, the company intends to offer to exchange any and all of its 8% second-lien senior secured notes due 2018 and 8 7/8% second-lien senior secured notes due 2019 for new senior secured notes with materially identical terms except that interest may be paid either at the company’s option in cash or in kind or deferred until maturity.

If successful with both sets of notes exchanges, the company would eliminate between $213 million and $224.2 million of unsecured senior debt and $29.8 million to $31.4 million in cash interest payment obligations per year. This would help preserve liquidity in the near term, the release noted.

The company said it is conducting the exchange offers in response to the current low commodity price environment that has had a significant, adverse impact on the company.

While the company is not in default under its existing debt instruments, its ability to make the March interest payments on its 8% second-lien notes and 8 7/8% senior notes due 2019 and service its other debt and fund its operations is at significant risk, the company said.

If the company is unable to complete the recapitalization plan, including the exchange offers, and address its near-term liquidity needs, it may need to seek relief under the U.S. Bankruptcy Code, the company said.

Georgeson, Inc. (888 607-6511 or www.georgeson.com) is the information agent, and American Stock Transfer & Trust Co., LLC (877 248-6417 or 718 921-8317 or www.americanstocktransfer.com) is the exchange agent for the exchange offers.

Goodrich is an independent oil and gas exploration and production company based in Houston.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.