Midstates Petroleum Company’s First Amended Joint Plan of Reorganization became effective, and the Company emerged from Chapter 11 protection. The U.S. Bankruptcy Court confirmed the Plan on September 28, 2016.
With completion of its restructuring, the Company has eliminated approximately $2 billion of debt along with more than $185 million of annual interest expense. Midstates Petroleum’s new capital structure consists of a $170 million first lien revolving credit facility maturing in 2020. The Company exits Chapter 11 protection with approximately $75 million in total liquidity and a business plan that projects positive free cash flow at current strip pricing.
Jake Brace, Company president and C.E.O., states, “I would like to thank our lenders and noteholders, members of our former board of directors, and all the financial, legal and restructuring advisors who worked tirelessly throughout this process and contributed to its successful outcome….We look forward to working closely with all of our key stakeholders going forward and we are excited about the opportunities that lie ahead.” In accordance with the Plan, the terms of the Company’s previous board of directors expired and Midstates Petroleum appointed a new board, which consists of the following seven members: Alan Carr, Patrice Douglas, Neal Goldman, Todd Snyder, Michael Reddin, Bruce Vincent and Jake Brace.
BankruptcyData’s Summary of the Plan of Reorganization
The Plan will significantly reduce the Debtors’ leverage through, among other things, a modification of the terms of the First Lien Credit Facility and the equitization of all of the debt junior to the First Lien Credit Facility. This restructuring solution will position the Debtors for emergence with a streamlined capital structure and an opportunity for the Debtors to execute on its business plan. Under the Plan, the following will occur:
1. Lien Trade Claims will be paid in cash in full for a 100% rate of recovery.
2. First Lien Claims will receive $82 million in cash or otherwise the amount necessary to reduce the outstanding obligations to the First Lien Lenders to $170 million and if such Holder is a First Lien Accepting Lender, the New Credit Facility Revolving Loans, or if such Holder is a First Lien Rejecting Lender, the New Credit Facility Term Loans any remaining cash from the liquidation proceeds for a 100% rate of recovery.
3. Second Lien Notes Claims will receive 96.25% of the New Common Stock and the Excess Cash; provided, however, that in the event of a Settlement Termination Event, each Holder will instead receive 98.75% of the New Common Stock and the Excess Cash for an 86.3% rate of recovery.
4. Unsecured Notes/General Unsecured Claims will receive 1.25% of the New Common Stock and the Unsecured Creditor Warrants; provided that in the event of a Settlement Termination Event, the Unencumbered Distribution will be shared pro rata among all Holders of Unsecured Notes Claims and General Unsecured Claims, including the Deficiency Claims for a 0.5% 0.9% rate of recovery.
5. Interests in Parent receive no distribution and will be cancelled.
The Plan Summary includes the Valuation Analysis, Liquidation Analysis and Financial Projections, which were filed as exhibits to the Disclosure Statement. A corporate structure chart was not included in any Court documents. The Valuation Analysis estimated the Total Enterprise Value of the Reorganized Debtors to be approximately $500 million to $700 million, with a midpoint of $600 million. Based on assumed pro forma net debt of $49 million, the Total Enterprise Value implies an Equity Value range of $451 to $651 million, with a midpoint of $551 million.
The Liquidation Analysis for Reorganized Midstates Petroleum estimates the Net Liquidation Proceeds Available for Distribution to be between $590.2 million and $670.2 million. The recovery rate to the First Lien Claim is estimated to be 100%, the recovery rates to Second Lien Notes Claims is estimated to be between 47% and 59%, and the recovery rates to Third Lien Notes Deficiency Claims, Unsecured Notes Claims, General Unsecured Claims to be 0.0%.
In connection with its emergence, Midstates Petroleum received approval for its common stock to be listed for trading on the NYSE MKT platform under the symbol MPO. This oil and gas producer filed for Chapter 11 protection on April 30, 2016, listing $679 million in total pre-petition assets.
Read more oil & gas bankruptcy news.
The post Midstates Petroleum Company Plan Effective appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.