Halcón Resources Corp. and its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas to pursue a prepackaged plan of reorganization, according to an Aug. 7 news release from the Texas-based oil and gas producer.
Under the plan, the company will eliminate more than $750 million in debt and will slash annual interest expenses by more than $40 million.
Holders of the company's 6.75% senior notes with a principal amount of $625 million will receive 91.0% of the new common shares while existing common shareholders will receive 9.0% of the new common shares.
Existing common shareholders will also be granted warrants that will allow them to purchase up to 30% of the new common shares at prices based on unsecured noteholders achieving certain recovery levels.
Some members of the ad hoc group of creditors also committed to backstopping a $150.2 million new money equity rights offering of new common shares, which is being offered to unsecured noteholders on a pro rata basis.
Existing holders of common stock will also be offered the right to participate in a $14.9 million new money equity rights offering on a pro-rata basis. The rights offerings will provide the company with $165 million of proceeds if completely subscribed.
The company received a commitment for a $35 million debtor-in-possession credit facility from some members of the creditors to fund operations during the bankruptcy process.
Halcón Resources has also received an underwritten commitment from BMO Harris Bank NA for a new $750 million senior secured revolving credit facility effective upon exit from bankruptcy with an initial borrowing base of $275 million. The revolving credit facility will be arranged by BMO Capital Markets Corp.
The company expects to have liquidity in excess of $150 million upon exit from the cases and expects to emerge from bankruptcy within around 60 days.
Halcón Resources plans to continue to pay vendors, royalty owners and other parties in ordinary course during the bankruptcy process.
Perella Weinburg Partners and Tudor Pickering Holt & Co. are acting as financial advisers, while Weil, Gotshal & Manges LLP is acting as legal counsel.
FTI Consulting Inc. is acting as restructuring adviser in connection with the restructuring plan.