We are offering 646,295 shares of our 8.625% Series A Cumulative Preferred Securities, par value $0.01 per share, which we refer to in this prospectus supplement as the “Series A Preferred Securities.” The offering of Series A Preferred Securities contemplated by this prospectus supplement is the first issuance of shares of this series by us. With respect to shares of Series A Preferred Securities issued pursuant to this prospectus supplement or any other shares of Series A Preferred Securities issued in June 2011, we anticipate setting the record date for a June 2011 partial dividend period on June 30, 2011, with such initial dividend payment to be made at the end of July 2011. Any other subsequently issued shares of Series A Preferred Securities will become entitled to dividends commencing on the first monthly record date following the date of issuance, and we anticipate setting record dates as of the fifteenth of every month with dividends to be paid at the end of the month to such holders of record. Dividends will be in the amount of $2.15625 per share each year, which is equivalent to 8.625% of the $25.00 liquidation preference per share. If the Series A Preferred Securities, however, is not listed on a “National Exchange,” as defined in this prospectus supplement, for a total of at least 180 consecutive days after the Series A Preferred Securities becomes eligible for listing on a National Exchange or if we fail to pay cash dividends on the outstanding Series A Preferred Securities in full for any monthly dividend period within a quarterly period for a total of four consecutive or non-consecutive quarterly periods and such dividends remain accumulated, accrued and unpaid, subject to our right to remedy these matters as described in this prospectus supplement, investors will be entitled to receive cumulative cash dividends at the increased rate of 10.625% per annum of the $25.00 liquidation preference per share (equivalent to $2.65625 per year per share) as outlined in this prospectus supplement.
The Series A Preferred Securities will be subordinated to all of our existing and future debt and all future capital stock designated as senior to the Series A Preferred Securities. Our parent, Gastar Exploration Ltd., will fully and unconditionally guarantee the payment of dividends that have been declared by the board of directors of Gastar Exploration USA, Inc., amounts payable upon redemption or liquidation, dissolution or winding up, and any other amounts due with respect to the Series A Preferred Securities, to the extent described in this prospectus supplement. Gastar Exploration Ltd.’s obligations with respect to the guarantee will be effectively subordinated to all of its existing and future debt. Gastar Exploration Ltd.’s guarantee of the Series A Preferred Securities is further described in this prospectus supplement under “Description of Guarantee of Preferred Securities.”
Investors in the Series A Preferred Securities generally will have no voting rights other than with respect to the authorization or creation of shares ranking senior to the Series A Preferred Securities, matters directly impacting the rights of the holders and for certain share exchanges and other acquisitions. However, holders will have limited voting rights if the Series A Preferred Securities are not listed on a National Exchange for at least 180 consecutive days after the shares first become eligible for listing or if we fail to make a monthly dividend payment on the outstanding Series A Preferred Securities during a quarterly period for four or more consecutive or non-consecutive quarters, and under certain other circumstances. The voting rights of investors in the Series A Preferred Securities are further described in this prospectus supplement under “Description of Series A Preferred Securities — Voting Rights.”
We may not redeem the Series A Preferred Securities before June 23, 2014, except as described below. On or after June 23, 2014, we may, at our option, redeem the Series A Preferred Securities, in whole or in part, by paying $25.00 per share, plus any accrued and unpaid dividends to the redemption date. If at any time a “Change of Ownership or Control,” as defined in this prospectus supplement, occurs, we (or the acquiring company) will have the option to redeem the Series A Preferred Securities, in whole but not in part, within 90 days after the date on which the Change of Ownership or Control has occurred at specified redemption amounts as described in this prospectus supplement. The Series A Preferred Securities have no stated maturity, will not be subject to any sinking fund or other mandatory redemption, and will not be convertible into any of our other securities.
The underwriter is selling shares of the Series A Preferred Securities offered in this prospectus supplement on a “best efforts” basis and is not required to sell any specific number or dollar amount of the securities offered by this prospectus supplement, but will use its best efforts to sell such securities. The underwriter will receive a commission with respect to such sales. There is no arrangement for funds to be received in escrow, trust or similar arrangement. For additional information regarding our arrangement with the underwriter and underwriting compensation, please see “Underwriting” beginning on page S-44 of this prospectus supplement.