Gastar Exploration Inc.

22 Mar 2017capital raising announcement● NeutralMajor

On March 22, 2017 Gastar bought extra interests in about 66 gross (9.5 net) producing wells and 5,670 net acres of STACK leasehold in Kingfisher County, Oklahoma for about $51.4 million cash from several sellers. It was funded by selling Ares another $75 million of the 6.0% Convertible Notes on March 21. If stockholders approve by July 3, 2017, $37.5 million of these notes becomes convertible and the other $37.5 million must be exchanged for 25,456,521 new shares plus 2,000 special voting preferred shares, which would dilute existing holders further; without approval the notes are not convertible and the interest rate steps up to 15%. This adds to the Ares financing thread and the open stockholder vote.

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7 Mar 2017capital raising announcement● NeutralMajor

Gastar closed the Ares refinancing on March 3, 2017: it sold Ares-affiliated funds $125 million of 6.0% Convertible Notes due 2022 and 29,408,305 new shares for $50 million (about 18.8% of the 156.7 million shares outstanding at Jan 31, 2017), and took a $250 million 8.5% first-lien term loan due March 3, 2022. The money fully repaid the $69.2 million revolver and discharged the $325 million 8.625% notes due 2018, which will be redeemed at 102.156% on March 24, 2017. This completes the pending financing; note conversion still needs stockholder approval by July 3, 2017, and the filing says the preferred dividends are not expected to be restricted through July 2018 but are not assured.

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17 Feb 2017capital raising announcement● NeutralMajor

Gastar agreed to a financing with Ares Management affiliates: $125 million of 6.0% Convertible Notes due 2022, 29,408,305 new common shares for $50 million (about 18.8% of the 156.7 million shares outstanding at Jan 31, 2017), and a separate $250 million 8.5% first-lien term loan. Proceeds are to repay the $70.4 million revolver and the $325 million 2018 senior secured notes. Existing shareholders are diluted, and the notes' conversion (at $2.2103 per share) depends on stockholder approval within four months of closing. Ares gets board nomination rights (two seats while it holds at least 15%). The filing also sets a 2017 capital budget of about $84.0 million and says year-end 2016 cash was about $71.5 million with $84.6 million drawn on the revolver. This settles the open thread on the 2018 notes' fate, but closing is still pending.

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