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McClendon-founded company merges with parent, closes restructuring to cut debt

American Energy - Permian Basin LLC completed deals to merge its assets with its parent company, Sable Permian Resources LLC, and cut about $1.4 billion in debt obligations.

Under a debt recapitalization deal, American Energy repurchased roughly $2.1 billion of its outstanding 13.000% senior secured first-lien notes due 2020, 8.000% senior secured second lien notes due 2020, floating rate senior notes due 2019, 7.125% senior notes due 2020 and 7.375% senior notes due 2021, according to an Oct. 17 news release. American Energy also issued approximately $708 million of new 12.000% senior secured notes due 2024.

The recapitalization deal simplified the company's organizational structure, reduced its debt maturities over the next four years to $36 million and eliminated about $94 million of its annual cash interest expense.

American Energy also entered into an amended and restated credit facility through its subsidiary AEPB Acquisition Co. LLC. The upsized $1.0 billion credit facility, which has an initial borrowing base of $700 million, replaced the existing credit facilities of Sable Permian Resources and AEPB Acquisition.

Credit Suisse Securities (USA) LLC and Evercore Group LLC acted as financial advisers and Latham & Watkins LLP served as legal counsel to AEPB. Greenhill & Co. LLC acted as the financial adviser to the special committee of AEPB's board of managers, while Katten Muchin Rosenman LLP served as legal counsel. Kirkland & Ellis LLP acted as legal counsel to Sable Permian Resources and its private equity sponsors.

Sable Permian Resources acquires and develops unconventional oil and natural gas reserves in the Wolfcamp Shale play in the southern Midland Basin of the Permian Basin in West Texas. American Energy was founded by Aubrey McClendon, the former CEO of Chesapeake Energy Corp. and one of the pioneers of U.S. shale oil and gas, who died in 2016 in a car crash.