Ultra Petroleum agreed to the terms of a comprehensive balance-sheet restructuring with key creditor constituencies, including holders of 100% of the loans under its first lien RBL credit facility, 85% of the loans under its first lien term loan and 67% of its second lien notes. To implement the transactions, Ultra commenced solicitation of votes to accept a prepackaged plan of reorganization and voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division .
FTI Consulting is acting as restructuring advisor, Centerview Partners is acting as financial advisor and Kirkland & Ellis is acting as legal advisor to Ultra Petroleum.
Ultra also secured a commitment for financing of up to $25 million from certain holders of the company’s first lien term loan, which combined with cash on hand and normal operating cash flow, is expected to allow Ultra to maintain normal operations and meet ongoing financial commitments throughout the Chapter 11 restructuring period. Additionally, all of the company’s existing lenders under its first lien RBL credit facility have executed commitment letters to provide exit financing in the form of a revolving credit facility with an initial borrowing base of $100 million and total commitments of $60 million.
Evercore Group is acting as financial advisor and Stroock & Stroock & Lavan is acting as legal advisor for the consenting term lenders.
Through the Chapter 11 restructuring, Ultra will eliminate approximately $2 billion in debt from its balance sheet and deleverage its capital structure. Ultra plans to complete its Chapter 11 bankruptcy process within the next three months.
The company also filed various “first day” motions with the bankruptcy court in support of its financial restructuring plan. Approval of these motions is expected and will allow the company to continue to pay employee wages and provide benefits without interruption in the ordinary course of business. The company also expects to pay suppliers and vendors in full under normal terms for goods and services and will continue making royalty and working interest payments when due.
“After several months of liability management efforts and careful consideration of how best to navigate a challenging low commodity price environment and our debt levels, Ultra’s board of directors determined that a voluntarily filling for Chapter 11 reorganization provides the best outcome for the entity,” Brad Johnson, CEO of Ultra, said. “This financial restructuring will result in an enterprise with very little debt, good liquidity and significant free cash flow that is underpinned by a large-scale, low-cost base of natural gas and condensate production.
“I want to thank all of our employees for their commitment to Ultra and their continued focus and tenacity demonstrated during the COVID-19 pandemic. The company has continued to stay focused during this period delivering production results of 554 MMcfe/d in the first quarter and continuing its focus on delivering strong operating margins.”
Ultra Petroleum is an independent energy company engaged in domestic natural gas and oil exploration, development and production.
