Rex Energy is holding a gun to the head of bondholders. The negotiations are going like this: convert the debt into equity or we’ll declare bankruptcy and you’ll be lucky to get 20 cents on the dollar.”
Now if they can renegotiate all of their debt into equity, that would give them a fighting chance to survive, providing crude prices could rebound. This could be a terrific turn around stock to get long, again contingent upon crude cooperating.
One minor thing to note: all of these extra shares can be extremely dilutive. I need to read the terms and see the strike prices. Nevertheless, the newly adorned stock holders are hoping to hit pay dirt with this exchange; otherwise, they’d never agree to the terms.
Via briefing.com
Co announces that it has closed two privately negotiated exchange transactions with certain holders of the company’s securities, including the 8.875% Senior Notes due 2020, the 6.250% Senior Notes due 2022, the Series A 6.00% Convertible Perpetual Preferred Stock, and the 1.00%/8.00% Senior Secured Second Lien Notes due 2020, in which those holders agreed to exchange their existing securities for shares of the company’s common stock
Rex Energy executed a privately negotiated exchange pursuant to which the holder exchanged $26.9 mln in aggregate principal amount of the 2020 Notes and 2022 Notes and waive all accrued and unpaid interest for approximately 5.2 mln shares of common stock. With this transaction, the company’s interest savings in 2016 and 2017 will be $1.8 mln and $2.1 mln, respectively. Total interest expense savings from the exchange will be approximately $11.6 mln
The company executed a second privately negotiated exchange with a different holder pursuant to which the holder agreed to exchange $13.8 mln in face value of the Preferred Stock and waive all accrued and unpaid dividends, and to exchange $2.2 mln in aggregate principal amount of the Second Lien Notes and waive all accrued and unpaid interest, for an combined total of approximately 1.9 mln shares of common stock. With this transaction, the company will save approximately $0.8 mln in dividend payments per year
Sex with REX comes to mind (no homo).
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That’s a total of 7.1 million shares, about 12% of shares outstanding. Not bad. Not to mention 40% short interest.
I was confused at first. I was looking at NYSE:REX, not NASDAQ:REXX.
At $1.10 per share, looks like $43M in debt and Preferred shares for $8M in stock. The savings on the Expense and Balance sheet sides will probably be greater than any dilution effects, explaining the 12% post-market pop.
Checking out the balance sheet (2016Q4), it looks like they had $788M in long-term debt and $48M in annual interest rate payments, so this only cuts their debt and interest payments by ~5%.