PostRock Closes Second Phase Of Appalachian Asset Sale
OKLAHOMA CITY, Jan. 14, 2011 (GLOBE NEWSWIRE) -- PostRock Energy Corporation (Nasdaq:PSTR) ("PostRock" or the "Company") today announced that it has completed the second phase of its previously announced sale of certain assets in West Virginia to Magnum Hunter Resources Corporation (NYSE:MHR) ("MHR"). The consideration for the first two phases of the sale totaled $39.7 million. The purchase agreement also provides for MHR to acquire a third, smaller package of assets upon satisfaction of certain events and conditions. There can be no assurance that the sale of this third package will occur.
Consideration for the sale that closed on December 30, 2010 was $28 million, comprised of $14 million of cash and $14 million of restricted MHR common stock based on an issuance price of $6.21 a share. Approximately $8.5 million of cash and approximately $12.6 million of MHR common stock were used to reduce the principal balance of the non-recourse QER loan secured by certain Appalachian assets. In the transaction, $4.2 million was escrowed to cover potential claims for 18 months, $0.9 million was used to reduce borrowings under PostRock's credit facility and the remainder was used to pay transaction expenses. In addition, PostRock retained 218,095 shares of restricted MHR common stock.
Consideration for the sale that closed on January 14, 2011 was $11.7 million, comprised of approximately $5.8 million of cash and approximately $5.9 million of restricted MHR common stock based on an issuance price of $6.21 a share. Approximately $3.6 million of cash and approximately $5.7 million of MHR common stock were utilized to reduce the principal balance of the QER loan. The principal balance of the QER loan now stands at $13.3 million. In the transaction, approximately $1.7 million was escrowed to cover potential claims for 18 months and the remainder was used to pay transaction expenses and for general corporate purposes. In addition, PostRock retained 23,517 shares of restricted MHR common stock.
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