Thursday, December 21, 2017

EXCO Resources, Inc. Enters into Forbearance Agreements $XCO

More action from one of the Distressed Debt Watch companies, XCO filing:

EXCO Resources, Inc. (XCO) ("EXCO" or the "Company") today announced that it has entered into forbearance agreements (the “Forbearance Agreements”) with the administrative agent and the majority of lenders under its reserve-based credit agreement (the “Credit Agreement”), holders of approximately 87% of the outstanding aggregate principal amount of its senior secured 1.5 lien notes due March 2022 (the “1.5 Lien Notes”) and lenders holding approximately 81% of its outstanding senior secured 1.75 lien term loans due October 2020 (“1.75 Lien Term Loans”) (collectively, the “Forbearing Creditors”).

Under the terms of the Forbearance Agreements, the Forbearing Creditors have agreed to forbear from exercising any and all remedies available to them under the Credit Agreement, the 1.5 Lien Notes and the 1.75 Lien Term Loans as a result of the Company not making the December 20, 2017 payment due under the 1.75 Lien Term Loan, as well as certain defaults arising as a result of the Company’s failure to meet affirmative covenants under its Credit Agreement as of December 31, 2017, among other things. The Forbearance Agreements will expire upon the earlier of 11:59 PM (Eastern Time) on January 15, 2018 or the occurrence of certain events specified in the Forbearance Agreements.

The Company also announced it has received a commitment for a $250 million debtor-in-possession financing in the event that the Company elects to pursue a filing of voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code.

Harold L. Hickey, EXCO’s Chief Executive Officer and President, said, “We are continuing to explore strategic alternatives to address our financial position and maximize the value of the Company. The Forbearance Agreements provide EXCO with additional time and flexibility as we continue our ongoing and constructive discussions with our stakeholders regarding the Company’s capital structure. We remain committed to acting in the best interest of our stakeholders and will continue to take actions to strengthen our financial position.”

As previously announced, EXCO's next quarterly interest payment of approximately $27 million, based on the paid in-kind interest rate of 15.0% on the 1.75 Lien Term Loans, was scheduled to occur on December 20, 2017, and was required to be paid in-kind pursuant to the terms of the indenture governing the 1.5 Lien Notes. The Company did not make the interest payment on the 1.75 Lien Term Loans on December 20, 2017.

The Company, together with the Audit Committee of the Board of Directors, is continuing to explore strategic alternatives to strengthen the Company's balance sheet and maximize the value of the Company, which may include seeking a comprehensive out-of-court restructuring or reorganization under Chapter 11 of the U.S. Bankruptcy Code. As previously announced, the Company has retained PJT Partners LP as financial advisor and Alvarez & Marsal North America, LLC as restructuring advisor. The Company continues to retain Kirkland & Ellis LLP as its legal advisor to assist the Audit Committee and management team with the strategic review process.
The 8-K filing has more details:
No decision by the Obligors to file a petition under Chapter 11 of the U.S. Bankruptcy Code has been made at this time. The Forbearance Agreements are intended to provide the Obligors an opportunity to negotiate a restructuring transaction and the debtor-in-possession financing commitment is intended to provide the Company with necessary liquidity should the Company file a Chapter 11 proceeding. The Company is negotiating the terms of a restructuring with the Forbearing Parties. Until any definitive agreements are negotiated in their entirety and executed, and the transactions contemplated thereby are consummated, there can be no assurance that any restructuring transaction will be completed by the end of the Forbearance Period or at all. The Company may file a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code if the Company is unable to negotiate and implement a restructuring before the end of the Forbearance Period or if any negotiated restructuring requires implementation through a Chapter 11 proceeding.
So, quite possibly a bankruptcy filing in the coming month.

1 comment:

ADL said...

The frustrating thing about a situation like this is that debt holders may decide to offer the equity something of purported value just to avoid a possible nuisance, so the stock's not a definite zero. It should be.