Halcón Reaches Agreement in Principal with Stakeholders Regarding a Comprehensive Balance Sheet Restructuring
May 18 2016 - 4:30PM
Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”)
today announced the Company has reached an agreement in principal
on terms of a plan to restructure its balance sheet (the
“Restructuring Plan”) with select holders of its 13.0% 3rd Lien
Notes due 2022 (“3L Notes”), its three tranches of senior unsecured
notes comprised of its 9.75% Senior Notes due 2020, its 8.875%
Senior Notes due 2021, and its 9.25% Senior Notes due 2022
(together, the “Unsecured Notes”), its 8.0% Convertible Note due
2020 (the “Convertible Note”) and its 5.75% Perpetual Convertible
Preferred Stock (the “Preferred Equity”, and together with the 3L
Notes, Unsecured Notes and Convertible Note, the “Affected
Stakeholders”).
The Restructuring Plan, if implemented, will
result in the elimination of approximately $1.8 billion of debt and
approximately $222 million of Preferred Equity, and will reduce the
Company’s ongoing annual interest burden by more than $200
million. As of May 18, 2016, holders representing a majority
of the value outstanding in each class of Affected Stakeholders
have indicated their willingness to support the Restructuring
Plan. This agreement is subject to the negotiation and
execution of certain definitive documentation, including a
Restructuring Support Agreement (“RSA”) to be entered into with
select Affected Stakeholders. The Company expects the RSA to
be executed in the near term, but there is no assurance this will
occur.
Under the Restructuring Plan, all Halcón debt
junior in seniority to the Company’s existing 8.625% 2nd Lien Notes
due 2020 and its 12% 2nd Lien Notes Due 2022 (“2L Notes”) will be
eliminated, as will all of the Preferred Equity. The
Restructuring Plan contemplates that the Affected Stakeholders will
receive newly issued common shares in reorganized Halcón, warrants
and/or cash in exchange for their existing securities. The
table below summarizes the treatment of the Affected Stakeholders
in addition to other stakeholders under the Restructuring
Plan.
Stakeholder |
Treatment |
Senior Secured Revolver |
- New or amended reserve based facility to be provided
by existing lenders |
2L Notes |
- Unaffected and reinstated |
3L Notes |
- Fully equitized into 76.5% of the pro forma equity
- Receive $50.0 MM in cash plus accrued and unpaid
interest through March 31, 2016 |
Unsecured Notes |
- Receive 15.5% of the pro forma equity -
Receive warrants for 4.0% of the pro forma equity (4 year term,
$1.33 BN equity strike) - Receive $37.6 MM in cash
plus accrued and unpaid interest through May 15, 2016 |
Convertible Note |
- Receive 4.0% of the pro forma equity -
Receive $15.0 MM in cash - Receive warrants for 1.0%
of the pro forma equity (4 year term, $1.33 BN equity strike) |
Preferred Equity |
- Receive $11.1 MM cash |
Existing Common Equity |
- Receive 4.0% of the pro forma equity |
Following the execution of the RSA, the Company
plans to solicit the support of additional Affected Stakeholders
for the Restructuring Plan. If certain voting thresholds are
satisfied through the solicitation process, the Restructuring Plan
will be executed through an accelerated pre-packaged Chapter 11
bankruptcy filing. The proposed Restructuring Plan is subject
to definitive documentation as well as court approval, so there can
be no assurance the Restructuring Plan will be consummated on the
terms set forth above and the final terms of any restructuring
transaction could be materially different. The Company plans
to operate as usual during the restructuring process and will pay
all suppliers and vendors in full under normal terms for goods and
services provided.
Advisors
PJT Partners is acting as financial advisor,
Weil, Gotshal & Manges LLP is acting as legal counsel and
Alvarez & Marsal is acting as restructuring advisor to the
Company in connection with the Restructuring Plan. Houlihan
Lokey Capital, Inc. is acting as financial advisor and Latham &
Watkins LLP is acting as legal advisor to the select ad hoc
committee of 3L Notes. Paul, Weiss, Rifkind, Wharton &
Garrison LLP is acting as legal advisor to the select ad hoc
committee of Unsecured Notes.
Additional Information
More detailed information of the Restructuring
Plan will be made available if and when the Company and select
Affected Stakeholders enter into the RSA which will be filed on
Form 8-K with the U.S. Securities and Exchange Commission
(“SEC”).
Forward-Looking Statements
This release may contain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Statements that are not strictly
historical statements constitute forward-looking statements
and may often, but not always, be identified by the use
of such words such as "expects", "believes", "intends",
"anticipates", "plans", "estimates", "potential",
"possible", or "probable" or statements that certain
actions, events or results "may", "will", "should", or "could" be
taken, occur or be achieved. Forward-looking statements are
based on current beliefs and expectations and
involve certain assumptions or estimates that
involve various risks and uncertainties that could cause
actual results to differ materially from those reflected in the
statements. These risks include, but are not limited to, the
ability of the Company and its subsidiaries to negotiate and
execute the RSA upon the terms set forth herein and to confirm and
consummate a plan of reorganization in accordance therewith; risks
attendant to the bankruptcy process, including the effects thereof
on the Company’s business and on the interests of various
constituents, the length of time that the Company might be required
to operate in bankruptcy and the continued availability of
operating capital during the pendency of such proceedings; risks
associated with third party motions in any bankruptcy case, which
may interfere with the ability to confirm and consummate a plan of
reorganization, potential adverse effects on the Company's
liquidity or results of operations; increased costs to execute the
reorganization, effects on market price of the Company's common
stock and on the Company's ability to access the capital markets,
and the risks set forth in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2015 and other filings
submitted by the Company to the SEC, copies of which may
be obtained from the SEC's website at
www.sec.gov or through the Company's website
at www.halconresources.com. Readers should not place
undue reliance on any such forward-looking statements, which are
made only as of the date hereof. The Company has no duty,
and assumes no obligation, to update forward-looking
statements as a result of new information, future events
or changes in the Company's expectations.
About Halcón
Resources
Halcón Resources Corporation is an independent
energy company engaged in the acquisition, production, exploration
and development of onshore oil and natural gas properties in the
United States.
Contact:
Quentin Hicks
SVP, Finance & Investor Relations
Halcón Resources
(832) 538-0557
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