Rex Energy initiated voluntary proceedings under Chapter 11 in the U.S. Bankruptcy Court for the Western District of Pennsylvania with support outlined in a restructuring support agreement (RSA) signed by 100% of its first lien lenders and approximately 72% of its second lien noteholders, including Wilmington Savings Fund Society, Angelo, Gordon Energy Servicer and Macquarie Bank.
The RSA contemplates the approval by the Bankruptcy Court of the DIP credit agreement between the DIP Lenders, and AGES, as administrative agent and collateral agent. The initial lenders under the DIP credit agreement are expected to be one or more of the lenders under the prepetition first lien credit agreement.
If approved, the DIP credit agreement would provide a $100 million new money super-priority senior DIP delayed draw term loan with an annual interest rate of LIBOR + 8.75%.
The debtors anticipate closing the DIP credit agreement promptly following approval by the Bankruptcy Court of the DIP motion.
The restructuring agreement provides for a sale process to have a reserve price sufficient to pay the obligations owing to the DIP lenders and first lien lenders in full.
The RSA includes an agreed timeline for the Chapter 11 cases that, if met, would result in the company closing on a qualified bid and/or confirming a Chapter 11 plan and emerging from bankruptcy within 170 days.
The debtors will continue to operate their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court.
“Over the past seven months, Rex Energy has been in deep discussion with our lenders and advisors to evaluate every aspect of our business and take proactive steps to overcome the challenges our industry continues to face,” said Tom Stabley, CEO of Rex Energy. “We have undoubtedly made progress in addressing the realities of the global commodities market but require a more fulsome debt restructuring to overcome the immense pressures our business is facing. Ultimately, we decided that the best possible outcome was to put our remaining assets into the hands of owners with the financial strength necessary to position them for long-term growth and success. Chapter 11 provides an orderly process to achieve these goals in a way that maximizes value for our stakeholders.”
