Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on June 9, 2016, Halcón Resources Corporation (
Halcón
, and together with certain of its subsidiaries, the
Company
) entered into a restructuring support agreement (the
RSA
) with respect to the terms of a chapter 11 plan of reorganization with certain of its stakeholders, pursuant to which, among other things, the Company agreed to (a) commence a solicitation for acceptance of a pre-packaged plan of reorganization (the
Plan
) based on the restructuring transactions contemplated by the RSA (the
Restructuring Transactions
), (b) if certain approval levels are attained from the stakeholders, file voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court in the District of Delaware (
Chapter 11 Filing
), and (c) seek approval of the Plan by the Bankruptcy Court. On June 20, 2016, the Company commenced a solicitation for acceptance of the Plan. As previously disclosed, the solicitation was completed on July 20, 2016 and the final results are noted below:
|
|
% of Class Voting In Favor Of
Restructuring Plan(1)
|
|
Affected Stakeholder Class
|
|
% of Face
Value
|
|
% of Holders
|
|
3L Notes
|
|
99.997
|
%
|
99.350
|
%
|
Unsecured Notes
|
|
99.860
|
%
|
97.970
|
%
|
Convertible Note
|
|
100.000
|
%
|
100.000
|
%
|
Preferred Equity
|
|
99.300
|
%
|
Not Applicable
|
|
(1) Threshold levels needed for acceptance under the bankrupty code are at least 66.67% of the value of voting stakeholders in each Affected Stakeholder class and more than 50% of the number of voting holders in each affected debt class (50% threshold does not apply to Preferred Equity class).
In connection with the Restructuring Transactions, on July 22, 2016, the Company entered into a lockup agreement (the
Lockup
) with holders of an aggregate 51% of its 8.625% Senior Secured Notes (the
8.625% Second Lien Notes
)
issued under that certain indenture, dated as of May 1, 2015, by and among Halcón, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee (as amended, modified, or otherwise supplemented from time to time, the
8.625% Second Lien Note Indenture
) and 12.0% Senior Secured Notes (the
12.0% Second Lien Notes
and, together with the 8.625% Second Lien Notes, the
Second Lien Notes
) issued under that certain indenture, dated as of December 21, 2015, by and among Halcón, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee (as amended, modified or otherwise supplemented from time to time, the
12.0% Second Lien Note Indenture
and, together with the 8.625% Second Lien Note Indenture, the
Second Lien Note Indentures
), pursuant to which, in exchange for a consent fee, the parties agreed to consent to an amendment of the Second Lien Note Indentures and any other applicable Note Documents (as defined in the Second Lien Note Indenture) to modify the incurrence of indebtedness and lien covenants, as well as certain restricted payments covenants (the
Amendment
) and support the Restructuring Transactions. A copy of the Lockup is filed herewith as Exhibit 10.1 and incorporated herein by reference. On or as soon as reasonably practicable following the effective date of the Plan but in no event later than thirty (30) days following the effective date, the Company will launch a consent solicitation of the holders of Second Lien Notes in respect of the Amendment.
Pursuant to a Consent and Amendment dated July 22, 2016 (the
RSA Amendment
), the RSA was amended to provide (i) that the interest payments contemplated to be made on the Companys 13% senior secured notes due 2022, 8.875% senior unsecured notes due 2021, 9.25% senior unsecured notes due 2022 and 9.75% senior unsecured notes due 2020, prior to any Chapter 11 Filing, would be made no later than two (2) business days prior to such filing and (ii) that the Plan shall not specify how distributions will be allocated between principal and interest. Pursuant to the RSA Amendment, the requisite stakeholders have also given their consent with respect to the Amendment. A copy of the RSA Amendment is filed herewith as Exhibit 10.2 and incorporated herein by reference.
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Cautionary Note Regarding Forward-Looking Statements
Certain statements and information included herein may constitute 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, those set forth in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other filings submitted by the Company to the U.S. Securities and Exchange Commission (SEC), copies of which may be obtained from the SECs website at www.sec.gov or through the Companys 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 Companys expectations.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1 Lockup Agreement
10.2 Amendment to Restructuring Support Agreement
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