Oil and gas producer Linn Energy, LinnCo and Berry Petroleum have entered into a restructuring support agreement (RSA) with holders of at least 66.67% (by aggregate outstanding principal amounts) of Linn’s amended credit facilities.
To implement the terms of the restructuring support agreement, the company filed voluntary petitions for restructuring under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
The company anticipates that the cash available to it during its Chapter 11 process will likely provide sufficient liquidity to support the business during the financial restructuring. Therefore, the company does not currently intend to seek debtor-in-possession financing.
According to a related 8-K filing, the RSA contemplates that Berry will separate from the LINN debtors under the plan. All existing equity interests of the company, LinnCo and Berry will be extinguished without recovery.
Under the RSA, the parties agreed to support a plan of reorganization for the company that would include:
- A new LINN $2.2 billion reserve-based and term loan credit facility on the terms set forth in the RSA
- The consensual use of LINN and Berry’s cash collateral to fund the Chapter 11 cases under negotiated terms and conditions and
- The broad terms of a comprehensive restructuring of the company’s indebtedness
The new LINN $2.2 billion exit facility will consist of an $800 million term loan and a $1.4 billion revolving loan. Wells Fargo will serve as administrative agent for the lenders.
The company expects operations across its asset base to continue in the ordinary course throughout the Chapter 11 process.
Mark E. Ellis, chairman, president and chief executive officer, said, “We believe the restructuring support agreement reflects the confidence of our first lien lenders in the quality of our assets and represents an important step forward for the company. After our review of the available options, with the assistance of our financial and legal advisors, we determined that this court supervised financial restructuring process is the best course of action for the company and our stakeholders. Like many others in our industry, LINN has been impacted by continued low commodity prices. We believe that these steps will provide us the financial flexibility to successfully manage in the current commodity price environment and, when combined with constructive agreements with our remaining creditors and potential third party financing, will provide a platform for future growth.”
Follow this story in the ABF Journal:
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