Halcón Enters into Restructuring Support Agreement with Stakeholders
June 10 2016 - 8:46AM
Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”)
today announced the Company has executed a restructuring support
agreement (the “RSA”) 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”).
As previously announced, the restructuring plan,
if implemented, will result in the elimination of approximately
$1.8 billion of net debt and approximately $222 million of
Preferred Equity, and will reduce the Company’s ongoing annual
interest burden by more than $200 million. Under the terms of
the RSA, all current stakeholders, including common equity holders,
will receive cash and/or common equity in the restructured
Company. As of June 9, 2016, holders representing 80% of the
aggregate principal amount of 3L Notes outstanding, 57% of the
aggregate principal amount of Unsecured Notes outstanding, 100% of
the aggregate principal amount of Convertible Note outstanding and
holders of 63% of the outstanding shares of Preferred Equity have
executed the RSA. The table below summarizes the treatment of
the Affected Stakeholders under the plan outlined in the
RSA.
|
|
Stakeholder |
Treatment |
|
Senior Secured Revolver |
- New or amended reserve based facility provided by existing
lenders |
|
2L Notes |
- Unaffected and reinstated |
|
3L Notes |
- Fully equitized into 76.5% of the pro forma common equity |
|
- Receive $33.8 MM in cash plus accrued and unpaid interest through
May 15, 2016(1) |
|
Unsecured Notes |
- Fully equitized into 15.5% of the pro forma common equity |
|
- Receive warrants for 4.0% of the pro forma common equity (4 year
term, exercise price based on $1.33 BN equity value) |
|
- Receive $37.6 MM in cash plus accrued and unpaid interest through
May 15, 2016 |
|
Convertible Note |
- Fully equitized into 4.0% of the pro forma common
equity |
|
- Receive $15.0 MM in cash |
|
- Receive warrants for 1.0% of the pro forma common equity (4 year
term, exercise price based on $1.33 BN equity value) |
|
Preferred Equity |
- Receive $11.1 MM in cash |
|
Existing Common Equity |
- Receive 4.0% of the pro forma equity |
|
(1) Total cash consideration to the 3L holders is
equivalent to $50.0 MM in cash and accrued interest through 3/31/16
as indicated in the terms |
|
detailed in the Company's May 18, 2016 press
release. |
|
|
Halcón plans to seek further support for the
restructuring plan from additional Affected Stakeholders over the
next several weeks through a solicitation process. Under the
terms of the RSA, if support from 66.7% of the value and over 50.0%
in number of the holders of the 3L Notes, the Unsecured Notes and
the Convertible Note is attained through the solicitation process,
in addition to support from at least 66.7% of the outstanding
shares of Preferred Equity (the “Threshold Levels”), the Company
has agreed to file for a pre-packaged Chapter 11 bankruptcy.
If the Threshold Levels are not attained, the Company is not
required to file for bankruptcy. The consummation of the
restructuring plan outlined in the RSA will be subject to customary
conditions including bankruptcy court approval. As previously
indicated, 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 its restructuring efforts.
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 holders of 3L Notes. Paul, Weiss,
Rifkind, Wharton & Garrison LLP is acting as legal advisor to
the select ad hoc committee of holders of Unsecured
Notes.
Additional Information
More detailed information on the restructuring
can be found in the RSA which will be filed on Form 8-K with the
SEC in the next few days. Further information on the Company
as well as the restructuring process and plan will be included in a
disclosure document which will be used in the solicitation process
and will also be included on Form 8-K with the SEC in the near
future.
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 to confirm and consummate a plan of reorganization in
accordance with the terms of the RSA; 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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