Oasis Petroleum Inc. entered into a restructuring support agreement with "substantially all of its lenders" under its revolving credit facility and "holders of 52% of the aggregate principal amount of the company's bonds," on what the company termed a "pre-prepackaged" restructuring plan, the company announced on Sept. 30.
To implement the RSA, the company further said it filed for Chapter 11 in bankruptcy court in Houston, Texas.
In filing for Chapter 11, the company cited the "volatile market environment that drove a severe downturn in oil and gas prices, as well as the unprecedented impact of the COVID-19 pandemic."
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Oasis Midstream Partners, which is a publicly traded, independent legal entity operated as a master limited partnership, and its subsidiaries are not included in the Chapter 11, Oasis Petroleum said.
The company said that through the reorganization, it "intends to reduce its total indebtedness by $1.8 billion, representing 100% of its senior unsecured notes and senior unsecured convertible notes," adding, "Upon emergence, the company expects to have approximately $340 million of borrowings under the Oasis Petroleum credit facility."
The company said it expects to complete the restructuring and emerge from Chapter 11 in November.
More specifically, the company asked the bankruptcy court to schedule a combined reorganization plan confirmation/disclosure statement hearing for Nov. 10. The company launched the vote solicitation for its reorganization plan Sept. 29, and set a voting deadline of Nov. 2, court filings show.
Creditor approval of the reorganization plan would require acceptance by holders of two-thirds of the claims by amount in each impaired creditor class and by a majority, in number, of claim holders.
In connection with the filing, the company entered into a $450 million debtor-in-possession, or DIP, facility with existing lenders.
The DIP would consist of $150 million of new money ($120 million, with an $80 million LOC sublimit, available on an interim basis) and a $300 million roll-up of existing claims (with $240 million available on an interim basis) under the company's RBL, which is outstanding in the amount of roughly $361 million (plus about $77 million in secured LOCs issued but undrawn).
Interest under the DIP is L+550 on the new money portion, with a 1% Libor floor, and L+425 on the roll-up portion, with a 1% floor. The DIP carries a commitment fee of 2% on the new money portion and a 0.5% unused commitment fee on the new money, as well as fees related to the issuance of letters of credit.
As for the proposed restructuring, the company said it had entered into a commitment letter for an exit revolving credit facility which, according to court filings, would be in the aggregate amount of $1.5 billion, with an initial borrowing base of $575 million.
Existing RBL lenders that participate in the exit facility would be repaid through a combination of participation in the facility and cash, while lenders that do not participate in the exit facility would be deemed to have funded a second-out term loan in a dollar-for-dollar amount of their RBL claim. The recovery, in either case, is pegged at 100%, according to the company's disclosure statement.
The company's senior unsecured notes, with allowed claims consisting of about $1.877 billion outstanding over five issues of notes, would be exchanged for 100% of the equity in the reorganized company, subject to dilution from a management incentive plan and new warrants to be issued to shareholders. General unsecured claims would be paid in full. The recovery is estimated at 62% before dilution, according to the company's disclosure statement.
Current equity holders would receive four-year warrants convertible into 7.5% of the equity in the reorganized company at a price to be determined.
Kirkland & Ellis is the company's legal advisor, Tudor Pickering Holt & Co. and Perella Weinberg Partners are its financial advisors, and AlixPartners is its restructuring advisor.
Paul, Weiss, Rifkind, Wharton & Garrison and Porter Hedges are legal counsel to the ad hoc committee of senior noteholders, and Evercore is the panel's financial advisor.