Bonanza Creek Energy filed with the U.S. Bankruptcy Court a motion for entry of an order approving the rights offering procedure and related forms, authorizing the Debtors to conduct the rights offering in connection with the Debtors’ Joint Prepackaged Plan of Reorganization and an order authorizing the Debtors to assume the backstop commitment agreement and pay the backstop obligations.
The motion explains, “The Rights Offering and the Backstop Commitment Agreement are critical elements of the restructuring transactions contemplated by the Prepackaged Plan and that certain Restructuring Support and Lock-Up Agreement (the ‘Restructuring Support Agreement’) dated as of December 23, 2016, by and among the Debtors, NGL Crude Logistics, LLC and its parent, NGL Energy Partners LP, and members of an ad hoc group of holders of the Debtors’ 6.75% senior notes due 2021 and 5.75% senior notes due 2023 representing approximately 51% of the Debtors’ unsecured noteholders (the ‘Ad Hoc Group’).”
The motion continues, “The Restructuring will leave the Debtors’ business intact and will substantially delever it by reducing its balance sheet liabilities by more than $850 million. To successfully consummate the Restructuring under the Prepackaged Plan and emerge from these chapter 11 cases well-capitalized and competitive, the Debtors have agreed to launch a $200 million rights offering (the ‘Rights Offering’), whereby eligible holders of general unsecured claims have the right to subscribe to purchase their ratable share of $200 million of New Common Stock, which Rights Offering will be backstopped by certain holders of the Unsecured Notes (collectively, the ‘Backstop Parties’) pursuant to the Backstop Commitment Agreement.”
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