Magnum Hunter Resources announced that the U.S. Bankruptcy Court for the District of Delaware approved a variety of first day motions related to Magnum Hunter’s voluntary chapter 11 restructuring. Collectively, the first day orders entered provide the company with the ability to continue operating in the ordinary course while it continues to pursue a comprehensive financial restructuring.
The court approved the company’s debtor-in-possession financing on an interim basis. As previously announced, the DIP financing is a key component of the company’s overall restructuring strategy, which is set forth in a restructuring support agreement filed with the bankruptcy court. The DIP financing generally provides for a $200 million senior and junior secured multi-draw term loan, approximately $40 million of which was made available upon entry of the interim order. The initial draw provides the company with sufficient liquidity to fund its post-petition operations and continue operating in the ordinary course of business without interruption during these chapter 11 cases.
According to a related 8-K filing, the DIP financing is agented by Cantor Fitzgerald Securities for the DIP lenders and by Credit Suisse for the second lien lenders.
“The court’s approval is another positive step forward in our efforts to address our capital constraints and reposition Magnum Hunter as a market leader in the new oil and gas operating environment due to record low commodity prices,” said Gary C. Evans, Magnum Hunter’s chairman and chief executive officer.
As announced on December 15, 2015, the company filed its voluntary chapter 11 cases to implement an in-court financial restructuring that will result in a substantial deleveraging of the company’s balance sheet and that is supported, pursuant to the RSA, by approximately 75% in principal amount of the company’s funded debt claims. Under the timeline set forth in the RSA, the company expects to emerge from chapter 11 in approximately four months, financially stronger than ever before.