Friday, December 23, 2016

"Bonanza Creek Energy Announces Agreement on Comprehensive Deleveraging and Recapitalization" $BCEI

  • Eliminate more than $850 million of principal, accrued interest and prepayment premiums in respect of the Senior Notes.  In exchange, approximately 95.5% of reorganized Bonanza Creek’s equity as of the effective date of the Plan (the “Effective Date”) (subject to dilution by a rights offering for new equity, a management incentive plan, and warrants for existing equity holders) and the opportunity to participate in an equity rights offering that will raise $200 million of new capital will be made available to holders of general unsecured claims against the Company as provided for in the Plan. This new capital commitment will be backstopped pursuant to an agreement to be entered into by certain Supporting Noteholders, subject to approval by the Bankruptcy Court.  Bonanza Creek anticipates emerging from chapter 11 with no funded debt and has sufficient liquidity to operate during the case.
  • Restructure Bonanza Creek’s crude oil purchase and sale agreement with NGL on more favorable terms to the Company.
  • Pay all customer, employee, royalty and working interest obligations in full in the ordinary course.
  • Provide the Company’s existing shareholders, in exchange for the releases by such shareholders of the Released Parties (as defined in the Plan), with consideration in the form of 4.5% of reorganized Bonanza Creek’s equity on the Effective Date (subject to dilution by a rights offering for new equity, a management incentive plan, and warrants for existing equity holders) and 3-year warrants to acquire up to 7.5% of equity in reorganized Bonanza Creek.
  • Subject to approval by Bonanza Creek’s board of directors, the Company anticipates filing voluntary petitions for relief under chapter 11 in the Bankruptcy Court by January 5, 2017.  Subject to Bankruptcy Court approval of the Plan and the satisfaction of certain conditions to the Plan and related transactions, the Company expects to consummate the Plan and emerge from chapter 11 before the end of the first quarter of 2017. 


CP said...

8-K filing


CP said...

The Restructuring Support Agreement also contains certain milestones to ensure that the Debtors move forward with the restructuring contemplated therein on a specified timeline, including, but not limited to:

(a) commencing the Chapter 11 Cases on or before January 5, 2017;
(b) filing within one business day of the Petition Date the Approval Motion and a motion requesting that the Bankruptcy Court schedule a hearing to consider the Approval Motion, confirmation of the Plan and approval of the Disclosure Statement on or before 35 days after the Petition Date;
(d) obtaining entry of an order approving the Approval Motion within 35 days of the Petition Date;
(c) obtaining entry of the Confirmation Order within 105 days of the Petition Date; and
(d) causing substantial consummation of the Plan to occur no later than 14 days following the date of entry of the Confirmation Order.

The Debtors’ failure to comply with the milestones would allow the Supporting Noteholders to terminate the Restructuring Support Agreement.

ADL said...

The sliver of equity here and in the contemplated MEMP reorganization is still quite a Christmas gift!

CP said...

If the bondholders are converting $800 million in debt into ~95% of equity that values the new equity at $630 million (based on 75 cent trading price for the bonds).

So that means the ~4% of new equity that the old equity is getting would be worth $25 million.

The market cap today was $40 million, so that would be valuing the 3-year warrants to acquire up to 7.5% of new equity at $15 million.

Doesn't seem crazy.

Also, the Jan 2018 $2.50 put options trading at $1.75 imply an equity price of 75 cents, which is a market cap of $35 million. That would value the warrants at only $10 million.

ADL said...

Came to the same conclusion (good to see someone who knows a bit more concurs with my arithmetic). Was just surprised that equity was getting anything, though I guess it's a relatively cheap sop to ensure a quick, non contentious reorg.

CP said...

I think the key may be that the noteholders are really bullish on oil, so they think they're stealing the company by trading their debt claim for almost all the equity.

Anonymous said...

Equity closed at $3 today, $150m market cap. Hell of a run