The pure play Mid-continent energy company Gastar Exploration will file for bankruptcy with support from the company's largest creditor and shareholder, the Los Angeles private equity group Ares Management.
The financially struggling Houston company said the prepackaged bankruptcy plan will eliminate more than $300 million in debt but give controlling ownership of the company to Ares.
Gastar said the restructuring was developed after marketing efforts failed to yield any viable proposals to repay or refinance its existing debt or to sell the company or its assets.
"The agreed restructuring was developed after extensive marketing efforts failed to yield any viable proposals to repay or refinance the Company's existing indebtedness or to sell the Company or its assets," said a press release from the company.
The company needs new capital to continue to operate, and the restructuring support agreement (RSA) and related new capital commitment will ensure that the Company can continue to operate its business in the ordinary course. Post-restructuring, the Company will have a strengthened balance sheet that will facilitate capital investment in operations.
Jerry R. Schuyler, interim Chief Executive Officer and Board Chairman of Gastar Exploration Inc., said, "The restructuring agreement we signed today is a comprehensive plan that will ensure Gastar remains competitive in its industry. 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."
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