BY Fraser Tennant
Struggling financially due to the slump in oil prices seen in the past few years, energy company Gastar Exploration has taken stock and entered into a restructuring support agreement (RSA) to be implemented via a pre-packaged Chapter 11 bankruptcy plan of reorganisation.
Houston-based Gastar has filed for bankruptcy with the support of its largest creditor and shareholder, private equity firm Ares Management LLC. While the RSA and Chapter 11 filing will clear more than $300m of Gastar’s debt, as well as provide $100m in new financing to fund the restructuring process and ongoing business operations, controlling ownership will cede to Ares.
Trading of Gastar’s common stock was suspended by the New York Stock Exchange in September due to the company’s low trading price.
“The restructuring agreement is a comprehensive plan that will ensure Gastar remains competitive in its industry,” said Jerry R. Schuyler, interim chief executive and board chairman of Gastar. “We can now set our sights on facilitating a smooth, efficient in-court restructuring while continuing to meet our obligations to our employee and vendor constituencies. I am proud of the exceptional hard work and dedication of all our employees throughout this process."
The agreed restructuring was developed following numerous attempts to find strategic alternatives – including selling the company – that would have allowed Gastar to avoid a bankruptcy filing.
Serving as Gastar’s legal counsel is Kirkland & Ellis LLP, with Opportune LLP serving as restructuring adviser. Perella Weinberg Partners LP is serving as financial adviser.
Subject to approval of the plan of reorganisation by the Bankruptcy Court for the Southern District of Texas and the satisfaction of certain conditions, Gastar expects to emerge from Chapter 11 before the end of 2018.