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Energy XXI files for Chapter 11 to remove $2.8 billion in debt

Staff writer |
Energy XXI and certain of its subsidiaries have entered into a Restructuring Support Agreement (RSA) with holders of more than 63% of the company’s secured second lien 11% notes.

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The restructuring plan should strengthen the company’s financial position by reducing long-term debt and enhancing financial flexibility.

In order to implement the terms of the RSA, the company commenced cases under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

Through the Chapter 11 restructuring, Energy XXI will eliminate more than $2.8 billion in debt from its balance sheet, substantially deleverage its capital structure and position the company for long-term success.

The RSA eliminates substantially all of the company’s prepetition funded indebtedness other than its first lien reserve based loan facility, resulting in a significantly deleveraged balance sheet upon the company’s emergence from the Chapter 11 bankruptcy process.

The RSA also provides that John Schiller will continue as the reorganized company’s chief executive officer and a member of its board of directors. The company is also continuing ongoing negotiations with a steering committee of lenders under the company’s first lien reserve based loan facility that is not party to the RSA at this time.

Energy XXI expects operations to continue as normal throughout the court-supervised financial restructuring process, including paying royalty and surety obligations in the ordinary course.

In addition, the company expects to maintain compliance with its existing long-term plan with the Bureau of Ocean Energy Management throughout the restructuring process.

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