Gastar Preferred Stock
Posted: Mon Mar 21, 2016 11:27 am
I am not saying this is what is happening, BUT if I were advising a large-cap that wanted to make a run at taking over Gastar Exploration (GST) I would tell them to buy up as much of the company's preferred stock and public debt in the market as they could BEFORE making an offer.
Gastar's preferred stock and debt is trading at a deep discount to par.
If a well funded large-cap (CLR, DVN, NFX or XEC for example) wants to add to their STACK acreage, buying Gastar makes sense. However, if GST becomes a wholly owned subsidiary of a well-funded large-cap, the pfd stock and debt would move quickly back to par. The Buyer would need to pay dividends on the preferred and interest on the debt based on par values.
There are several very well funded private E&P companies operating in STACK. They are also likely buyers and could do a reverse merger into GST to go public or take it private. They would have to take out the preferred stock at par or keep paying the monthly dividends.
Someone is now gobbling up the Gastar preferred stock. There are only 4,045,000 shares of Series A preferred and 2,140,000 shares of Series B preferred outstanding. A lot of it is held by insiders, therefore the float is quite small on both issues. Since Gastar released Q4 results a lot of preferred stock has changed hands.
Gastar's preferred stock and debt is trading at a deep discount to par.
If a well funded large-cap (CLR, DVN, NFX or XEC for example) wants to add to their STACK acreage, buying Gastar makes sense. However, if GST becomes a wholly owned subsidiary of a well-funded large-cap, the pfd stock and debt would move quickly back to par. The Buyer would need to pay dividends on the preferred and interest on the debt based on par values.
There are several very well funded private E&P companies operating in STACK. They are also likely buyers and could do a reverse merger into GST to go public or take it private. They would have to take out the preferred stock at par or keep paying the monthly dividends.
Someone is now gobbling up the Gastar preferred stock. There are only 4,045,000 shares of Series A preferred and 2,140,000 shares of Series B preferred outstanding. A lot of it is held by insiders, therefore the float is quite small on both issues. Since Gastar released Q4 results a lot of preferred stock has changed hands.