Rex Energy discusses possible restructuring with holder of 1%/8% notes

By Wendy Van Sickle

Columbus, Ohio, Nov. 10 – Rex Energy Corp. discussed a possible restructuring with a holder of its 1%/8% senior secured notes due 2020 in October, but those talks have ended, the company said in an 8-K filing with the Securities and Exchange Commission.

In October, Rex and the noteholder entered a non-disclosure agreement to explore potential alternative structures for the senior notes.

The parties reviewed a restructuring proposal that included an exchange under which the company would have offered all holders of the notes to exchange their existing senior notes for new convertible senior secured notes at par.

The new convertible notes would have:

• Retained the same ranking as the senior notes;

• Carried an interest rate of 1% until Oct. 2, 2017 and 3.5% thereafter, payable in cash;

• Been callable through Oct. 2, 2018 at 90, from Oct. 2, 2018 through Oct. 2, 2019 at 95 and from Oct. 2, 2019 and thereafter at par; and

• Been convertible in two tranches, each equal to 50% of the issuance, at a conversion price of $1.15, with the first tranche convertible at the company’s option at any time after issuance provided the company’s common stock traded above the conversion price for 20 of 30 trading days and at the holder’s option at any time after Oct. 2, 2017, and the second tranche convertible at the company’s option at any time after Oct. 2, 2017 provided the company’s common stock traded above 130% of the conversion price for 20 out of 30 trading days, and by the holder at any time after Oct. 2, 2019.

The proposed conversion ratio was 869.57 shares of common stock per $1,000 of principal, but the company would have had the option to pay the conversion consideration in either cash or shares.

All of the remaining covenants, terms and conditions of the new notes would have remained the same as the existing senior notes.

If all required approvals were not obtained in a certain timeframe, the new notes would have automatically reverted to the terms of the senior notes.

“The non-disclosure agreement facilitated discussions of the proposal; however, the company did not provide the holder with any additional confidential information,” the filing states. “Discussions regarding the proposal have ended.”

The company said it expects to periodically assess financing alternatives with current or potential investors, lenders and financing providers in the future.

Based in State College, Pa., Rex Energy is an oil and gas exploration and production company.

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