On June 27, 2008, Quicksilver Resources Inc. (“Quicksilver”) and certain of its subsidiaries entered into the Fifth Supplemental Indenture to the Indenture (the “Supplemental Indenture”), dated as of December 22, 2005, between Quicksilver and The Bank of New York Trust Company, N.A., as trustee (the “Base Indenture” and, together with the Supplemental Indenture, the “Indenture”), in connection with the offer and sale of $475 million aggregate principal amount of Quicksilver’s 7¾% Senior Notes due 2015.
Quicksilver will pay interest on the notes each February 1 and August 1, beginning February 1, 2009. The notes will mature on August 1, 2015. Quicksilver may redeem the notes on or after August 1, 2012 at the redemption prices described in the Indenture. Prior to August 1, 2012, Quicksilver may redeem the notes at a redemption price equal to 100% of the principal amount thereof, plus a “make whole” premium described in the Indenture. Prior to August 1, 2011, Quicksilver may redeem up to 35% of the notes using proceeds of certain equity offerings.
The Indenture contains covenants, which include limitations on indebtedness, limitations on restricted payments, limitations on liens, limitations on restrictions or distributions from restricted subsidiaries, limitations on sales of assets and subsidiary stock, limitations on affiliate transactions and limitations on merger and consolidation.
The Indenture contains customary events of default, including: (a) Quicksilver’s failure to pay principal or premium, if any, on any note when due at maturity; (b) Quicksilver’s failure to pay any interest on any note for 30 days after the interest becomes due; (c) Quicksilver’s failure to comply with its obligations under the merger and consolidation covenant; (d) Quicksilver’s failure to comply with its obligations under the change of control provisions of the Supplemental Indenture or any of the covenants described above for 30 days after written notice thereof; (e) Quicksilver’s failure to perform, or its breach of, any other covenant in the Indenture for 60 days after written notice thereof; (f) Quicksilver’s failure to redeem or repurchase any note when required to do so; (g) nonpayment at maturity or other default (beyond any applicable grace period) under any agreement or instrument relating to any other indebtedness of Quicksilver or a significant subsidiary, the unpaid principal amount of which is not less than $15 million, which default results in the acceleration of the maturity of the indebtedness; (h) specified events of bankruptcy, insolvency or reorganization involving Quicksilver or a significant subsidiary; (i) Quicksilver’s (or certain subsidiaries’) failure to pay final judgments aggregating in excess of $15 million which are not paid, discharged or stayed for a period of 60 days; and (j) any subsidiary guarantee of a significant subsidiary or group of subsidiary guarantors that would constitute a significant subsidiary ceases to be in full force and effect (except as contemplated by the terms of the Indenture).
If an event of default resulting from specified events involving Quicksilver’s or a significant subsidiary’s bankruptcy, insolvency or reorganization has occurred and is continuing, the Indenture provides that the principal of, premium, if any, and accrued interest on the notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any holder. If any other event of default occurs and is continuing, the Indenture provides that either the Trustee or the holders of at least 25% in principal amount of the notes may declare the principal amount of all the notes to be due and payable immediately.
The Fifth Supplemental Indenture is filed as Exhibit 4.1 to this Form 8-K and incorporated herein by reference.
