Sold control to private equity: White Deer Energy put in $60 million for preferred stock paying a 12% compounding dividend, mandatory redemption in seven and a half years, and warrants that could take it to about 70% of the common at $3.15 a share. It was the rescue the over-levered post-merger balance sheet needed, but it made an outside fund both the company's largest owner and the holder of a redeemable claim ahead of every ordinary shareholder.
Bought three more months on the $8 million revolver at the services subsidiary, pushing its maturity to October 2010, and separately agreed to settle the securities class actions and derivative suits arising from the Quest-era misconduct for about $1.4 million. The litigation left over from the Jerry Cash affair was finally being priced and closed out.
Royal Bank of Canada, as agent, cut the Quest Cherokee credit facility's borrowing base to $125 million against $138.6 million drawn, a $13.6 million deficiency. The company said it intended to repay it in two equal monthly installments from cash on hand.
The three-way recombination closed on 5 March 2010: Quest Resource Corporation, Quest Energy Partners and Quest Midstream all became subsidiaries of the new PostRock Energy Corporation, and trading began on Nasdaq as PSTR. Former Quest Midstream unitholders took 44% of the new company, Quest Energy unitholders 33% and Quest Resource shareholders just 23%, so the public company that emerged from the Jerry Cash misappropriation scandal and the 2005-2008 restatement was owned mostly by the pipeline side. David Lawler stayed as chief executive and Eddie LeBlanc as finance chief.
Amendment No. 4 to the registration statement for the planned recombination of Quest Resource (QRCP), Quest Energy Partners (QELP) and Quest Midstream Partners (QMLP) under a new company, PostRock Energy Corporation. The filing says all three entities are in difficult economic circumstances and that the boards believe recombining improves their ability to avoid bankruptcy. It sets expected ownership at about 23% for former QRCP stockholders, 33% for former QELP unitholders (other than QRCP) and 44% for former QMLP unitholders, with votes at QRCP and QELP meetings on 9 March 2010 and a planned Nasdaq listing as 'PSTR'. The terms continue the earlier S-4 drafts; the text provided shows no change in the percentages.
Amendment No. 3 keeps the 25 February 2010 meeting date, the 14 January 2010 QRCP record date and the same 23%/33%/44% ownership split. The visible text shows only a change of QRCP meeting venue to the Ronald J. Norick Downtown Library in Oklahoma City; any other changes are not visible in the excerpt provided.
Amendment No. 2 sets the QRCP annual meeting and QELP special meeting for 25 February 2010 to vote on the merger and a PostRock 2010 Long-Term Incentive Plan, with a QRCP record date of 14 January 2010. The ownership split of 23%/33%/44% is unchanged; this is the first version with dates fixed (later pushed to 9 March 2010 in Amendment No. 4).
Amendment No. 1 to the recombination registration adds 71,506 shares to the 8,055,000 originally registered, with an extra fee of $74. The deal terms (23%/33%/44% ownership split, bankruptcy-avoidance rationale, Nasdaq 'PSTR' listing) are unchanged and the meeting dates were still blank.
PostRock Energy Corporation, a new Delaware company, first filed to register up to 8,055,000 shares to recombine Quest Resource (QRCP), Quest Energy Partners (QELP) and Quest Midstream Partners (QMLP). Afterwards former QRCP holders would own about 23%, QELP holders (other than QRCP) about 33% and QMLP holders about 44%, and the boards say the three companies are in difficult economic circumstances and that recombining would substantially enhance their ability to avoid bankruptcy. Shares are expected to list on Nasdaq as 'PSTR'; meeting dates were still blank.
