Bonanza Creek Energy, Inc. (NYSE:BCEI) (“Bonanza Creek” or the
“Company”) today announced that in accordance with and pursuant to
its Plan of Reorganization (the “Plan”), which was confirmed by the
United States Bankruptcy Court for the District of Delaware on
April 7, 2017, the Company has successfully completed its
prepackaged restructuring and emerged from Chapter 11.
Richard Carty, President and CEO, commented, “We
are very pleased to announce our emergence from Chapter 11, and I
am very thankful to all of our dedicated employees and stakeholders
for their efforts in this process, getting the Company from filing
to emergence in little over 100 days. With our legal proceedings
behind us, we look forward to resuming drilling and completion
activities with a clean balance sheet that can support long-term
sustainable growth in the current environment.”
Jack E. Vaughn, Chairman of the Board of
Directors, commented, “On behalf of the newly appointed Board of
Directors, we are enthusiastic about the solid assets and
opportunity set that Bonanza Creek has to offer. We look
forward to working with the management team to quickly resume
activity and create value for Bonanza Creek’s shareholders.”
Bankruptcy Emergence
Details
Pursuant to the Plan, the Company’s senior
unsecured noteholders received, in exchange for approximately $866
million of unsecured debt, (i) shares of new common stock of the
reorganized Company and (ii) the right to participate in a $200
million backstopped rights offering. Certain equity holders agreed
to invest $7.5 million in the Company pursuant to a settlement
agreement (“Equity Settlement”), bringing the total equity raise
upon emergence to $207.5 million. Holders of the Company’s legacy
equity that did not elect to opt out of releases granted pursuant
to the Plan received shares of 4.5% of the reorganized Company’s
common stock, subject to dilution, and warrants to purchase up to
7.5% of the reorganized Company’s common stock for a term of three
years.
The tables presented below show the Company’s
pro forma capitalization after giving effect to the
restructuring.
Pro Forma Capital Structure Upon
Emergence(in millions)
|
December 31, 2016 |
|
Restructuring |
|
Pro Forma as of December 31, 2016 |
Cash |
$ 80 |
|
$16 |
|
|
$96 |
|
|
|
|
|
|
Secured Credit Facility (RBL) |
$192 |
|
$(192 |
) |
|
|
$― |
2021 Notes |
|
500 |
|
|
(500 |
) |
|
― |
2023 Notes |
|
300 |
|
|
(300 |
) |
|
― |
Total Debt |
$992 |
|
$(992 |
) |
|
|
$― |
|
|
|
|
|
|
Stockholders’ Equity |
$51 |
|
$639 |
|
|
$690 |
|
|
|
|
|
|
Borrowing Base |
$150 |
|
$42 |
|
|
$192 |
Less: Borrowings |
|
192 |
|
|
(192 |
) |
|
|
0 |
Plus: Cash |
|
80 |
|
|
16 |
|
|
|
96 |
Total Liquidity |
$38 |
|
$250 |
|
|
$288 |
The Company’s cash balance at emergence was
approximately $65 million.
Prior to emergence, the Company received
approval to list its new common stock with the CUSIP number 097793
400 (the “New Common Shares”) on the New York Stock
Exchange (the “NYSE”) under the same NYSE ticker
symbol “BCEI” as the existing shares of the Company’s issued common
stock (the “Existing Shares”). Along with New Common Shares, the
Company will issue warrants with the CUSIP number 097793 111 (the
“Warrants”) in accordance with the Plan. These warrants will not be
listed on an exchange. After the market close on April 28, 2017,
all Existing Shares (with the CUSIP number 097793103) will be
cancelled, and the New Common Shares and Warrants will be issued
and will commence trading at the market open on May 1, 2017.
Because the Company will retain the ticker symbol “BCEI” after
the Effective Date of the Plan, holders of Existing Shares, and
brokers, dealers and agents effecting trades in Existing Shares,
and persons who expect to receive New Common Shares or effect
trades in New Common Shares, should take note of the anticipated
cancellation of the Existing Shares and issuance of New Common
Shares, and the two different CUSIP numbers signifying the Existing
Shares and the New Common Shares, in trading or taking any other
actions in respect of shares of the Company that trade under the
“BCEI” ticker.
Summary of
Equity |
|
|
|
|
% Ownership |
|
Post Emergence
Pre-Dilution |
|
Effect of Rights Offering and Equity
Settlement |
Equitization of Senior
Notes |
|
95.40 |
% |
|
46.53 |
% |
Disputed Claim
Reserve |
|
0.10 |
% |
|
0.05 |
% |
Rights Offering |
|
0.00 |
% |
|
46.67 |
% |
Backstop
Fee |
|
0.00 |
% |
|
2.80 |
% |
Total Senior Notes |
|
95.50 |
% |
|
96.05 |
% |
Legacy Equity |
|
4.50 |
% |
|
2.20 |
% |
Equity
Settlement |
|
0.00 |
% |
|
1.75 |
% |
Total Equity |
|
4.50 |
% |
|
3.95 |
% |
Total |
|
100.00 |
% |
|
100.00 |
% |
|
|
|
|
|
Share Count |
|
Post Emergence
Pre-Dilution |
|
Effect of Rights Offering and Equity
Settlement |
Equitization of Senior
Notes |
|
9,471,833 |
|
|
9,471,833 |
|
Disputed Claim
Reserve |
|
10,000 |
|
|
10,000 |
|
Rights Offering |
|
- |
|
|
9,501,300 |
|
Backstop
Fee |
|
- |
|
|
570,078 |
|
Total Senior Notes |
|
9,481,833 |
|
|
19,553,211 |
|
Legacy Equity |
|
446,788 |
|
|
446,788 |
|
Equity
Settlement |
|
- |
|
|
356,295 |
|
Total Equity |
|
446,788 |
|
|
803,083 |
|
Total |
|
9,928,621 |
|
|
20,356,294 |
|
Holders of the Company’s legacy equity will be
allocated 446,788 New Common Shares, resulting in and effective
equivalent reverse stock split of 1 for 111.5879, considering
Bonanza Creek had 49,856,141 shares outstanding as of April 26,
2017.
Upon emergence, the Company issued 1,650,510
3-year Warrants with a strike price of $71.23 per share. In
addition, the Company granted 389,102 restricted stock units
(“RSUs”) and 389,102 options to its employees. The RSUs have a
3-year vesting period and the options have a 10-year term and
strike price of $34.36 per share.
Operations Update
With regard to Company operations upon
emergence, the Company plans to resume drilling and completion
activity around June 1, 2017 with intent to operate a one-rig
program for the remainder of the year, pending Board approval. Once
the newly-appointed Board approves a full-year 2017 budget, the
Company will issue full guidance for the remainder of the
year. A new investor presentation has been posted to the
Company’s website under the Investor Relations section at
www.bonanzacrk.com.
Board of Directors
Appointments
The Company also announces the appointment of
seven members to its Board of Directors. The new Board appointments
were selected in accordance with the Plan. Two members from the
previous Board have been appointed to the new Board. Richard
J. Carty, served on the previous board since 2010, and Jeffrey
Wojahn, served since November 2014. Biographies of the seven Board
members are included below.
Richard J. CartyMr. Carty was named President
and Chief Executive Officer in November, 2014. He has over 25 years
of experience in global capital markets and finance with investment
management mandates including energy, commodities, and engineering.
He served as Chairman of the Board of Directors of Bonanza Creek
since December 2010, when he led a major recapitalization of
Bonanza Creek on behalf of West Face Capital (USA) Corp, an
affiliate of West Face Capital, where he served as President from
2009 until 2013. Prior to that period, Mr. Carty was Managing
Director of Morgan Stanley Principal Strategies where he was
responsible for investing the bank’s capital in proprietary
investment mandates in public corporate securities and private
securities. Mr. Carty led investment teams that ran Morgan
Stanley’s value arbitrage strategies, special situations
investments, strategic private investments, and global quantitative
strategies. Prior to Mr. Carty's 14 years at Morgan Stanley, he was
a partner at Gordon Capital Corp, a Toronto-based investment and
merchant bank, where he worked for five years.
Paul KeglevicPaul Keglevic is a
senior executive and trusted business advisor with a strong track
record of performance serving the utility industry and two Big 5
accounting firms, with deep expertise in finance and accounting,
restructuring, risk management, shared services, regulatory
testimony, and process improvement. Mr. Keglevic has been at
Energy Future Holdings Corp. since 2008, serving as Chief Executive
Officer of TCEH since October 2016, Chief Restructuring Officer
since December 2013, Executive Vice President, Chief Financial
Officer from 2008 to September 2016, President of EFH Corporate
Services from 2010 to 2016 and Chief Risk Officer from 2008 to
2016.
Prior to Energy Future Holdings Corp., Mr. Keglevic worked for
over 25 years at Arthur Andersen and for six years at
PricewaterhouseCoopers (PWC). Mr. Keglevic serves on the
Board of Directors of Energy Future Intermediate Holdings, EFIH
Finance Inc., Stellus Capital Management LLC and the Dallas Chamber
of Commerce (not-for-profit). Mr. Keglevic received a
Bachelor’s Degree in Accounting from Northern Illinois
University.
Brian SteckBrian Steck is a seasoned investor
with 27 years of financial market experience. Mr. Steck is a
partner and senior analyst at Mangrove Partners where he has worked
since 2011. Prior to Mangrove, Mr. Steck was a partner at
investment managers K Capital Partners and Tisbury Capital and was
the general partner of the Laurel Capital Group. Prior to
this, Mr. Steck spent 10 years at UBS and its predecessors Swiss
Bank Corporation and O’Connor & Associates, where he focused on
equity derivative trading and risk management, built equity
derivative and event-driven client businesses and was Global
Co-Head of Equity Hedge Fund Coverage. Mr. Steck received a
Bachelor’s of Science, with highest honors, from University of
Illinois at Urbana Champaign.
Thomas B. Tyree, Jr.Thomas B. Tyree, Jr. served
as President, Chief Financial Officer and Member of the Board of
Managers of Vantage Energy from 2006 to 2016. Prior to
Vantage Energy, Mr. Tyree served as Chief Financial Officer of Bill
Barrett Corporation, a Managing Director in the Investment Banking
Division at Goldman, Sachs & Co. and an Associate in the
Corporate Finance division at Bankers Trust Company. Mr.
Tyree received his M.B.A. from The Wharton School at the University
of Pennsylvania and his B.A. at Colgate University.
Jack E. VaughnJack E. Vaughn is the Chairman
and Chief Executive Officer of Peak Exploration and Production,
LLC, where he is responsible for executive management of all
operational activity, including drilling, completion, and facility
construction in all operating areas, as well as all gas and crude
oil transportation and marketing, regulatory and environmental
compliance activities. Mr. Vaughn serves on the Board of
Directors of Saddle Butte Pipeline II, LLC and was the co-founder
and a member of the Board of Directors of Momentum Midstream, LLC
from 2007 to 2011. In addition, Mr. Vaughn has held several
senior management positions at energy companies in the United
States, including Peak Energy Resources, Inc., EnerVest Management
Partners, LP and Emerald Gas Operating Company. Mr. Vaughn
received his B.S. – Petroleum Engineering from the University of
Texas at Austin.
Scott D. VogelScott D. Vogel was a Managing
Director at Davidson Kempner Capital Management investing in
distressed debt securities from 2002 to 2016. Previously, Mr. Vogel
worked at MFP Investors, investing in special situations and
turnaround opportunities. Prior to MFP Investors, he was an
investment banker at Chase Securities. Mr. Vogel received his
M.B.A. from The Wharton School at the University of Pennsylvania
and his B.S.B.A. from Washington University.
Mr. Vogel serves on the Board of Directors of Modular Space
Corp, Key Energy Services, Arch Coal and Merrill Corp. and
previously on numerous Board of Directors and ad hoc creditor and
equity committees throughout his career. Mr. Vogel is a member of
the Olin Alumni Board of Washington University, a member of the
Advisory Board of Grameen America, and a former member of New
Leadership Council of Make-A-Wish Foundation of Metro New York.
Jeffrey E. WojahnMr. Wojahn served as Executive
Vice President of Encana Corporation from 2003 to 2013, and was
President of Encana Oil & Gas (USA) Inc. from 2006 to 2013.
Beginning in 1985, Mr. Wojahn held senior management and
operational positions in Canada and the United States and has
extensive experience in unconventional resource play development.
He currently serves as a Strategic Advisory Board member for Morgan
Stanley Energy Partners
Advisors
Davis, Polk & Wardwell LLP is acting as legal counsel,
Perella Weinberg Partners LP is acting as financial advisor, and
Alvarez & Marsal LLC is acting as restructuring advisor to the
Company in connection with its restructuring efforts.
About Bonanza Creek Energy
Bonanza Creek Energy, Inc. is an independent oil and natural gas
company engaged in the acquisition, exploration, development and
production of onshore oil and associated liquids-rich natural gas
in the United States. The Company’s assets and operations are
concentrated primarily in the Rocky Mountain region in the
Wattenberg Field, focused on the Niobrara and Codell formations,
and in southern Arkansas, focused on oily Cotton Valley sands. The
Company’s common shares are listed for trading on the NYSE under
the symbol: “BCEI.” For more information about the Company, please
visit www.bonanzacrk.com. Further information on the restructuring
process and the Plan can be found on the Company’s case information
website, located at http://cases.primeclerk.com/bcei. Please
note that the Company routinely posts important information about
the Company under the Investor Relations section of its
website.
Safe Harbor Statement
This release includes forward-looking statements
and projections, made in reliance on the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995, including
statements regarding our liquidity. Bonanza Creek has made
every reasonable effort to ensure that the information and
assumptions on which these statements and projections are based are
current, reasonable, and complete. However, a variety of
factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in
this release, including: (i) changes in demand for our services and
any related material impact on our pricing and utilizations rates,
(ii) Bonanza Creek’s ability to execute, manage and integrate
acquisitions successfully, (iii) changes in our expenses, including
labor or fuel costs and financing costs, (iv) continued volatility
of oil or natural gas prices, and any related changes in
expenditures by our customers, (v) competition within our industry,
(vi) Bonanza Creek’s ability to comply with its financial and
other covenants and metrics in its debt agreements, as well as any
cross-default provisions, and (vii) the ability to execute Bonanza
Creek’s business plan. Additional important risk factors that
could cause actual results to differ materially from expectations
are disclosed in Item 1A of Bonanza Creek’s Form 10-K for the year
ended December 31, 2016. While Bonanza Creek makes these
statements and projections in good faith, neither Bonanza Creek nor
its management can guarantee that anticipated future results will
be achieved. Bonanza Creek assumes no obligation to publicly
update or revise any forward-looking statements made herein or any
other forward-looking statements made by Bonanza Creek, whether as
a result of new information, future events, or otherwise.
Contacts:
James R. Edwards
Director, Investor Relations
(720) 440-6136
Prime Clerk
Information Call Center
(855) 252-4427
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