2.4.0.81090 - Disclosure - Debt and Tax Gross-ups on Debttruefalsefalse1false falsefalseD2014Q1http://www.sec.gov/CIK0001477032duration2013-04-01T00:00:002013-06-30T00:00:001true 1us-gaap_DebtDisclosureAbstractus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0Debt and Tax Gross-ups on Debt2false 2us-gaap_DebtDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalseterseLabel1falsefalsefalse00<div style="font-size:10.0pt;font-family:Times New Roman;"> Note 9 — Debt and Tax Gross-ups on Debt   Prospect’s debt consists of the following:   <table style="text-align:left;WIDTH: 70%; BORDER-COLLAPSE: collapse; MARGIN-LEFT: 1in;" border="0" cellspacing="0" cellpadding="0" width="70%"> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="57%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> June 30, 2013 (thousands)</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> March 31, 2013 (thousands)</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="57%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> (unaudited)</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="57%"> Karlsson senior secured note</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="3%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%"> $</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 15.72%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="15%"> 115,282</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="3%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%"> $</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 15.72%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="15%"> 115,282</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="57%"> Apollo unsecured notes</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> 6,750</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> 6,750</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="57%"> Very Hungry unsecured notes</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="3%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="17%" colspan="2"> 5,500</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="3%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="17%" colspan="2"> —</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="57%"> Tax gross-up on Karlsson senior secured note</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> 17,629</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> 6,226</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="57%"> Less: Unamortized debt discount*</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="17%" colspan="2"> (33,329</td> <td style="PADDING-BOTTOM: 0.375pt; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="3%"> )</td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="17%" colspan="2"> —</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="57%"> Total debt and tax gross-ups</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> 111,832</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="17%" colspan="2"> 128,258</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="57%"> Less: current portion of debt and tax gross-ups</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="17%" colspan="2"> (4,063</td> <td style="PADDING-BOTTOM: 0.375pt; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="3%"> )</td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 17.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="17%" colspan="2"> (128,258</td> <td style="PADDING-BOTTOM: 0.375pt; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%"> )</td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 57.14%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="57%"> Total long-term debt and tax gross-ups</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.54%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: windowtext 2.25pt double; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="1%"> $</td> <td style="BORDER-BOTTOM: windowtext 2.25pt double; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 15.72%; PADDING-RIGHT: 0in; BORDER-TOP: windowtext 1pt solid; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="15%"> 107,769</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 3.58%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="3%">  </td> <td style="BORDER-BOTTOM: windowtext 2.25pt double; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="1%"> $</td> <td style="BORDER-BOTTOM: windowtext 2.25pt double; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 15.72%; PADDING-RIGHT: 0in; BORDER-TOP: windowtext 1pt solid; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="15%"> —</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.42%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr></table>   * Includes gross discount on the Karlsson note of $34,528, net of amortized discount of $3,801; gross discount on the Very Hungry notes of $2,215, net of amortized discount of $1,014 and the gross discount of $2,900 related to the embedded derivative in the Very Hungry notes, net of amortized discount of $1,499.   Karlsson Note   We issued The Karlsson Group a $125.0 million senior first priority secured promissory note at the closing of The Karlsson Group Acquisition on August 1, 2012 which bears interest at 9% per annum.  Pursuant to the terms of this note, we made principal payments totaling $9.7 million in November 2012 equal to 40% of the net proceeds received from our November equity offering.  The remaining principal balance of $115.3 million was due to have been repaid in two installments with the balance of the first installment or $40.3 million having been due on March 30, 2013 and the second installment of $75.0 million having a due date of July 31, 2013.  We entered into Extension Agreements with The Karlsson Group on April 15, 2013 and June 26, 2013 that, among other things, extended the due date of the Karlsson Note to the earlier of (i) 12 months following completion of our Definitive Feasibility Study (the “DFS”) and (ii) July 1, 2015.   In connection with the Extension Agreements, the annual interest rate of 9% was changed from simple to compounding and is now payable quarterly in kind by automatically increasing the principal balance of the Karlsson Note.  On July 1, 2013, the date of the first interest compounding period, the principal balance of the Karlsson Note will increase by $2.2 million to $117.5 million reflecting the interest accrued on the Karlsson Note between April 15, 2013 and June 30, 2013.  At June 30, 2013, this $2.2 million was included in other long-term liabilities.   Under the Extension Agreements, we are required to prepay the Karlsson Note with 10% of the gross proceeds from any future capital raises until the Karlsson Note has been repaid in full. The Karlsson Note is also mandatorily pre-payable within five business days of a sale of at least 50% of AWP or a merger of AWP with or into an unaffiliated entity. The Karlsson Note is guaranteed by AWP and is secured by (a) a parent guaranty for us and a pledge by us of 100% of the shares of our wholly owned subsidiary Old Prospect and, (b) a pledge by Old Prospect and (c) a lien over all the assets of Old Prospect and AWP.   For accounting purposes, since the modifications stemming from the Extension Agreements resulted in the present value of the cash flows under the amended note to exceed the present value of the cash flows under the original note by more than 10%, it made it necessary to account for these transactions as an extinguishment of the original note and the issuance of a new note.  Accordingly, the new (amended) note was recorded at its estimated fair value with the difference between fair value and the original note’s carrying value being recorded as debt discount and amortized over the amended note’s remaining life.  Fair value, in this case, was determined by discounting the future cash flows under the amended note by the Company’s estimated, effective borrowing rate of 25%.   Including the tax gross-ups (see below), accrued interest and the remaining unpaid principal balance, we owed The Karlsson Group approximately $142.7 million as of June 30, 2013, of which $1.2 million is due on or before September 10, 2013 and is included in current liabilities at June 30, 2013.   Karlsson Note Tax Gross-Up   Under the Extension Agreements, we are required to make future tax “gross-up” payments to the Karlsson Group to compensate them for increases in federal and state income taxes and other tax related matters .We currently estimate the cost of these tax “gross-up” payments to be approximately $17.6 million; however, this amount could change based on future changes in tax rates (including increases in effective income tax rates caused by “minimum tax” provisions such as the “Buffett rule” or “flat tax” proposals) and/or future changes in certain interest rates published by the Internal Revenue Service.  Also, to the extent the entire Karlsson Note balance would remain outstanding through July 1, 2015, we estimate that we would owe the Karlsson Group another $2.3 million in tax gross-ups in addition to the $17.6 million reflected in our June 30, 2013 financial statements. Future adjustments to the amounts of tax gross-ups owing under the Karlsson Note will be recognized in operations in the earliest period in which the adjustment applies.   Of the $17.6 million in tax gross-ups accrued for as of June 30, 2013, $1.2 million is payable on or before September 10, 2013 with the balance being due on the final maturity date of the Karlsson Note.   Apollo Notes   On March 7, 2013, we entered into a Termination and Release Agreement with certain affiliates of certain investment funds managed by Apollo Global Management, LLC (which we refer to collectively as the Apollo Parties) that terminated the agreements we entered into with the Apollo Parties in November 2012 (as amended in December 2012). In connection with the Termination and Release Agreement, we issued the Apollo Parties two promissory notes (“the Apollo Notes”) totaling approximately $6.8 million as partial consideration for the break-up and release. The Apollo Notes are unsecured and bear interest at the rate of 11% per annum, payable on the maturity date.   On April 15, 2013, the terms of the Apollo Notes were amended to extend the payment due dates from September 3, 2013 to the maturity date of the Karlsson Note and to reduce the prepayment obligation from 33% of the net proceeds of any capital raised to 10% of the gross proceeds of any capital raised by us going forward. For accounting purposes the amendment was treated as a debt modification as the change in terms was not considered significant under the amendment.   Very Hungry Notes   On May 2, 2013, we borrowed $5.0 million from Very Hungry, LLC and the Scott Reiman 1991 Trust (“the Very Hungry Parties”) in exchange for $5.5 million in unsecured, subordinated promissory notes (“the Very Hungry Notes”).  The Very Hungry Notes bear no interest and mature on September 9, 2013. The Very Hungry Notes also contained a conversion option giving them the right to convert the Notes in our previously announced investor rights offering.  As additional consideration to the Very Hungry Parties, we amended all of their warrants reducing the exercise price to $0.30 and extending the expiration date to August 1, 2017.   As a result of the transaction, we subsequently realized a $2.9 million derivative gain related to the embedded conversion options when this rights offering was terminated on June 17, 2013. The $2.9 million represented the estimated fair value of this conversion feature based on a Black-Scholes model using the rights offering price of $0.22 per share.   On July 10, 2013, the Very Hungry Parties exchanged the Very Hungry Notes for 5.5 million shares of the Company’s newly created senior mandatorily convertible preferred stock. Refer to Note 17 – Subsequent Events for further details.   Gain on Debt Restructuring   During the June 2013 quarter, we recognized a gain of $13.1 million associated with the two restructurings of the Karlsson Note, completed on April 15, 2013 and June 26, 2013, respectively. In accordance with applicable guidance, the Company accounted for these restructurings as a debt extinguishment in that the restructured debt met the requirements for having a substantially different debt instrument following the completion of the restructurings.  The components of this gain consisted of the following:   <table style="text-align:left;WIDTH: 60%; BORDER-COLLAPSE: collapse; MARGIN-LEFT: 1.5in;" border="0" cellspacing="0" cellpadding="0" width="60%"> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="65%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="4%">  </td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 28.34%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="28%" colspan="2"> Gain on extinguishment (in thousands)</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="65%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="4%">  </td> <td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 28.34%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="28%" colspan="2"> (unaudited)</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="top" width="65%"> Additional consideration-1% gross revenue interest</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="4%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.3%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%"> $</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 27.04%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="27%"> 9,200</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="top" width="65%"> Additional consideration-tax gross-ups</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="4%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 28.34%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="28%" colspan="2"> 11,403</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="top" width="65%"> Additional consideration-warrants</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="4%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 28.34%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="28%" colspan="2"> 412</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="top" width="65%"> Fees paid to the Karlsson Group</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="4%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 28.34%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="28%" colspan="2"> 400</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="top" width="65%"> Reduction in the fair value of the amended Karlsson Note*</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="4%">  </td> <td style="BORDER-BOTTOM: windowtext 1pt solid; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 28.34%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="28%" colspan="2"> (34,529</td> <td style="PADDING-BOTTOM: 0.375pt; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%"> )</td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="top" width="65%">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="4%">  </td> <td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 28.34%; PADDING-RIGHT: 0in; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" valign="bottom" width="28%" colspan="2">  </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; PADDING-TOP: 0in;" valign="bottom" width="1%">  </td></tr> <tr style="padding:0;"> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 65.84%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="top" width="65%"> Net gain on debt extinguishment</td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 4.16%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="4%">  </td> <td style="BORDER-BOTTOM: windowtext 2.25pt double; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 1.3%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%"> $</td> <td style="BORDER-BOTTOM: windowtext 2.25pt double; BORDER-LEFT: medium none; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 27.04%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="27%"> (13,114</td> <td style="PADDING-BOTTOM: 2.25pt; PADDING-LEFT: 0in; WIDTH: 1.66%; PADDING-RIGHT: 0in; BACKGROUND: #cceeff; PADDING-TOP: 0in;" bgcolor="#CCEEFF" valign="bottom" width="1%"> )</td></tr></table>   * See explanation of change in fair value under the Karlsson Note heading above.   </div>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 false0Debt and Tax Gross-ups on DebtfalseDebt and Tax Gross-ups on DebtUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://www.prospectgri.com/role/DisclosureDebtAndTaxGrossUpsOnDebt12