Halcón Resources will begin Chapter 11 proceedings after entering into a restructuring support agreement (RSA) with certain holders of its unsecured notes.

The restructuring plan, if implemented, will result in the elimination of more than $750 million of debt and an ongoing reduction in annual interest expense of more than $40 million. The restructuring plan provides the company significant additional liquidity and minimizes operational disruptions by ensuring trade creditors will be paid in full.

The company will continue to operate its business in the normal course without material disruption to its vendors, partners or employees, and expects to have sufficient liquidity to meet its financial obligations during the restructuring. The company has received a commitment for a $35 million debtor-in-possession credit facility from the unsecured noteholders to fund operations during the bankruptcy process. Halcón has also received an underwritten commitment from BMO Harris Bank for the entire amount of a new senior secured revolving credit facility, which will be arranged by BMO Capital Markets effective upon exit from bankruptcy with an expected initial borrowing base of $275 million. The company expects to have liquidity in excess of $150 million upon exit from the Chapter 11 cases, with leverage below 1.5x (net debt/LTM EBITDA).

The proposed restructuring plan is subject to definitive documentation as well as court approval, so there can be no assurance the restructuring plan will be consummated on the terms set forth above and the final terms of any restructuring transaction could be materially different.

“After exploring all strategic and financial options available to the Company, and after months of negotiations, we are very pleased to have reached an agreement for a consensual restructuring with our Unsecured Noteholders. We believe that the restructuring contemplated by the RSA will provide us with the capital structure and liquidity to compete and grow in today’s challenging oil and gas environment,” said CEO
Richard Little.

Perella Weinburg Partners and Tudor Pickering Holt are acting as financial advisors. Weil, Gotshal & Manges is acting as legal counsel and FTI Consulting is acting as restructuring advisor to the company in connection with the Restructuring Plan. Ducera Partners is acting as financial advisor, and Paul, Weiss, Rifkind, Wharton & Garrison is acting as legal advisor to the unsecured noteholders.