July 10, 2020 – Further to a June 23rd bidding procedures order [Docket No. 101] and a July 9th auction, the Debtors have designated Presidio Investment Holdings LLC ("Presidio," $91.0mn bid) as the successful bidder for their assets [Docket No. 195].
This was an unusual auction in several respects, with the Debtors comfortably exceeding a $65.0mn marker set by stalking horse Tapstone Energy, LLC ("Tapstone") which may simply not have had the horsepower to go the distance, even the $65.0mn looking on the face of things to be stretching Tapstone's limited pile of acquisition capital. Tapstone not only got beat, it was left back of the pack; with Zarvona III-A, L.P. named as the backup bidder.
Tapstone had itself only just completed a comprehensive, out-of-court restructuring; which saw the exit of Blackstone's GSO Capital Partners (Tapstone touting Blackstone's $700.0mn investment, and 95% equity ownership, in a May 2019 investor presentation) in favor of Kennedy Lewis Investment Management, LLC which is supplying a more modest $50.0 million of new capital in return for the right to be called Tapstone's "new capital sponsor."
At the time, Steve C. Dixon, Tapstone's CEO, commented, “The outcome of this process establishes Tapstone as an entity ready to consolidate assets in the Mid-Continent. We are eager to turn our focus on acquiring producing properties and evaluating merger candidates.” There will certainly be more of those.
It's not all bad new for Tapstone, which will walk away with a $1.95mn break-fee and $350k for expenses; not a bad return on its short investment.
A sale hearing is set for July 14th, also the Debtors' Plan confirmation hearing date; and Presidio's asset purchase agreement has yet to be filed.
Headquartered in Fort Worth, Texas, Morgan Stanley Energy Partners-backed Presidio Petroleum describes itself as "a leading oil and gas efficiency company with assets located in the western Anadarko Basin of Texas, Oklahoma, and Kansas"
About the Debtors
The Debtors, founded in 2012, are an independent exploration and production company, with a core focus on the development and acquisition of oil and natural gas reserves in the Greater Anadarko Basin of Western Oklahoma and the Texas Panhandle. The Debtors have acquired substantial assets in this Mid-Continent region covering, as of the Petition Date, approximately 273,400 net acres by directly leasing oil and gas interests from mineral owners.
The Debtors’ bidding procedures motion [Docket No. 47], filed on June 02, 2020, indicated that although a stalking horse bidder was yet to be named, there were “credible parties…progressing towards the submission of binding bids…and expect to reach agreement with a Stalking Horse Bidder…in the near term.” As noted in Petition date filings, those bids included one from a management-led group. For the Debtors and their “deeply impaired RBL Lenders,” time was of the essence, with each passing day eating into DIP financing that would run out in “just a few months”, shrinking the RBL Lenders’ distribution even further.
The motion noted: “The Debtors, with the assistance of their proposed investment banker, Guggenheim Securities, LLC (‘Guggenheim Securities’), seek to continue and conclude the marketing process they began approximately four months ago as expeditiously as possible. Since commencing the marketing process, the Debtors have received a robust response particularly in light of current market conditions. Credible parties have submitted indications of interest and are progressing towards the submission of binding bids. While the Debtors had hoped to enter into a purchase agreement with a Stalking Horse Bidder prior to the Petition Date, the Debtors were unable to do so given liquidity and other constraints. However, the Debtors are actively negotiating with several parties and expect to reach agreement with a Stalking Horse Bidder on the terms of a stalking horse bid that are consistent with the terms of this Motion in the near term.
The Debtors seek to promptly effectuate the court-supervised marketing and auction process. Speed is critical here because, even with the additional liquidity of up to $25 million to be provided by the DIP Facility, the Debtors will run of cash within just a few months, and any costs incurred in these Chapter 11 Cases will decrease distributions to the already deeply impaired RBL Lenders…
An expeditious sale process is also necessary to stabilize the Debtors’ rapidly deteriorating business and provide assurances to existing vendors, customers, and employees that they can and should continue to do business with, or remain employed by, the Debtors during these Chapter 11 Cases. With this in mind, the Debtors developed the Bidding Procedures, which are designed to preserve flexibility in this sale process, facilitate a quick but fair process, and generate the highest or best value for the Assets. The proposed deadlines in the Bidding Procedures create an appropriate timetable for the Sale and are consistent with the Debtors’ current liquidity position and the milestones under the Restructuring Support Agreement and DIP Facility.”
Prepetition Marketing Efforts
The Simmons Declaration provides: “…on February 3, 2020, the Debtors commenced a marketing process for all or substantially all of the Debtors’ business. The Debtors, through Guggenheim Securities, reached out to 148 potential acquiring parties and the Debtors ultimately entered into 41 confidentiality agreements with certain of those parties. The Debtors prepared a diligence data room and provided potential buyers with access to substantial information to assist them in formulating their indications of interest. In addition, management made confidential presentations to 13 parties who expressed an interest in acquiring all or a portion of the Debtors’ business.
Interested parties were advised that they initially would have until March 25, 2020 to submit indications of interest (each an ‘IOI’) for a transaction to acquire all or a portion of the Debtors’ business either through an in-court or out-of-court transaction. Fifteen parties submitted IOIs by the initial deadline.
On April 19, 2020, certain members of the Debtors’ management advised the Board of Managers that they may submit a bid for the Assets. On April 20, 2020, the Debtors formed a special committee of the Board of Managers (the ‘Transaction Committee’), composed solely of directors disinterested in participating in the sale process, which was vested with sole authority over evaluating, negotiating, and approving any proposed sale transaction. Since its appointment, the Transaction Committee has overseen the sale process, with the assistance of the Debtors’ advisors."
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The post Templar Energy LLC – Notifies Court that Presidio Investment Holdings ($91mn Bid) Selected as Successful Bidder as Stalking Horse Tapstone Fades to Back of the Auction Pack; July 14th Sale and Plan Confirmation Hearing Up Next appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.