Comstock (CRK) Unveils Refinancing Plan To Boost Liquidity
Zacks Investment Research | Apr 04, 2018 10:39PM ET
On Apr 2, Comstock Resources, Inc. (NYSE:CRK) announced the commencement of tender offers to retire senior secured notes.
The offerings comprise secured and convertible payment-in-kind (PIK) notes, carrying interest rate of 7.75%, scheduled to get matured by 2019. The offerings also include PIK notes, both secured and convertible, with 9.5% interest rate which will likely mature by 2020.
Following the closure of the tender offers, Comstock will likely issue 10 million shares. The transaction is expected to price each share at $7.50. According to the company, Arkoma Drilling LP has showed interest in acquiring 10 million common stocks at the offered price and hence is expected to gain ownership interest in 14% outstanding stock of Comstock.
On top of that, the company will likely divest some properties for roughly $125 million. Both the transactions will be done in private negotiations. Moreover, Comstock will get revolving bank credit facility of another $300 million and also issue senior notes. The unsecured notes will likely have a principal amount of roughly $600 million.
With the refinancing, Comstock will be able to lower its debt load and reduce capital cost considerably.
Headquartered in Frisco, TX, Comstock is an exploration firm with focus on oil and gas resources that spread over Texas and Louisiana. Over the past six months, the stock has rallied 16.6%, outperforming the Zacks Investment Research
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