Three energy companies to start 2017 with bankruptcy
Staff Writer |
Bonanza Creek Energy and its subsidiaries belive they will commence their prepackaged bankruptcy case in the United States Bankruptcy Court for the District of Delaware on or prior to January 5, 2017.
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The plan is to significantly deleverage the Company’s balance sheet and provide the company with $200 million of additional liquidity from an equity rights offering backstopped by certain holders of the senior notes.
Richard Carty, Bonanza Creek CEO, commented, !During 2016 we have been working diligently to reduce our cost structure and improve operating efficiencies under our commitment to rapid continuous improvement initiatives.
"The Restructuring Support Agreement announced today further increases our competitive position with significant improvements in firm transportation commitments, a comprehensive elimination of more than $850 million in unsecured balance sheet principal, accrued interest, and prepayment premiums, and a concurrent injection of $200 million in equity to fund our go-forward development plan.
"Effected by way of a proposed prepackaged chapter 11 filing, this represents the culmination of countless hours of hard work from various parties to resolve legacy encumbrances that restricted our access to liquidity and constrained asset development."
Memorial Production Partners has entered into a Plan Support Agreement (PSA) with holder on the terms of a financial restructuring plan that is expected to eliminate more than $1.3 billion of debt from the Partnership's balance sheet.
The company plans to:
- Cancel more than $1.1 billion of principal in outstanding Notes. In the restructuring, the noteholders will receive 98% of the common equity interests of the restructured company as of the effective date of the restructuring plan.
The noteholders, at their election, will be entitled to receive an additional cash payment of up to approximately $24.6 million.
- Provide the Partnership's limited partners with a recovery in the form of 2% of reorganized MEMP's equity on the Effective Date and) 5-year warrants to acquire an additional 8% of the total outstanding equity in reorganized MEMP at an exercise price based upon the outstanding principal amount plus interest accrued on the Notes.
- Be structured in a manner intended to minimize, to the extent possible, the negative tax impact of cancellation of debt income to the Partnership's existing limited partners.
The Partnership expects to emerge from a financial restructuring plan as a corporation for U.S. federal income tax purposes.
- Ensure that ordinary course trade obligations will be paid in full.
Forbes Energy had reached a prepackaged plan with lenders and would file for bankruptcy in Houston on or before January 23, 2017. ■