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PostRock Announces $60 Million Investment By White Deer Energy

OKLAHOMA CITY, Sept. 2, 2010 (GLOBE NEWSWIRE) -- PostRock Energy Corporation (Nasdaq:PSTR) ("PostRock or the "Company") today announced that White Deer Energy L.P. ("White Deer") has agreed to invest $60 million of equity in the Company. White Deer is a recently formed energy private equity firm. In connection with the investment, PostRock's debt will be reduced and its credit agreements restructured.

White Deer will purchase $60 million of the Company's 12% cumulative redeemable preferred stock. The preferred stock has a 7 ½ year term and is callable after one year at par plus 10%. The Company has the option to pay the preferred dividends in cash or in kind until July 2013. In addition, White Deer will receive 7 ½ year warrants to purchase $60 million of common stock. The exercise price of the warrants was set at $3.15 per share, which represents an approximate 5% premium to PostRock's closing stock price on September 1, 2010.

PostRock will use the proceeds to reduce debt and fund future growth. The investment and the debt restructuring are expected to close simultaneously in approximately three weeks, subject to the satisfaction or waiver of various closing conditions. As part of the transaction, White Deer has reserved an additional $30 million to invest in PostRock on mutually acceptable terms to fund future growth.

White Deer will be entitled to vote with the common stock on all matters based on its pro forma interest in the Company giving effect to the exercise of its warrants. However, it has agreed to limit its vote to 45% for a period of time. White Deer will designate Thomas J. Edelman, James D. Bennett and Nathan M. Avery as directors, expanding the Board to twelve. NASDAQ granted the Company a financial viability exception from the requirement to obtain shareholder approval of the transaction. PostRock's Audit Committee approved the exemption request and the Board obtained a fairness opinion on the transaction. 

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