Houston, TX-based Endeavour International Corp. (NYSE: END) (LSE: ENDV) and certain of its subsidiaries have each filed for bankruptcy protection following the execution of an agreement to restructure its debt obligations.
The company's UK subsidiaries and certain other affiliates have not sought bankruptcy protection and will continue to operate outside of any reorganization proceedings. Endeavour and its debtor affiliates will continue to operate as "debtors in possession" in the Chapter 11 Proceedings.
It has been a year since the embattled oil and gas exploration and production company concluded a strategic review process that began in February 2013 and resulted in the closure of the company’s London office and consolidation of technical teams in Aberdeen, Scotland. More recently, the company had extended forbearance agreements with noteholders.
Pursuant to the restructuring agreement, the company's existing debt will be reduced by approximately $568 million including the cancellation of all of the company's notes and reduce its annual interest burden by 43%. As consideration for such cancellation, the reorganized company would issue (a) $262.5 million of new 9.75% notes to the holders of its 12% First Priority Notes, (b) an aggregate of approximately $237.5 million of new 3.5% convertible preferred shares to holders of its 12% First Priority Notes and 12% Second Priority Notes, and (c) common shares to holders of its 12% Second Priority Notes, 7.5% Convertible Bonds, 6.5% Convertible Notes and 5.5% Convertible Notes. All of the company's existing equity securities, including its shares of common stock and preferred stock, will be cancelled, without receiving any distribution.
The $440 million senior secured term loan incurred by Endeavour Energy UK Limited and certain other of the company's foreign subsidiaries will not be affected by the restructuring.
Endeavour expects its oil and gas operations to continue in the ordinary course throughout the Chapter 11 Proceedings.
According to the company, the filing is principally the result of the development of two large UK North Sea assets – Bacchus and Rochelle. Both projects were delayed in first production by over a year, leading to cost overruns and an impact on cash flow and operating margins anticipated by the company had the projects come online as scheduled, the company said. Additionally, the company incurred debt at a high cost of capital to maintain ownership rights in the assets.
William L. Transier, chairman, CEO, and president of Endeavour, cited the North Sea assets in a prepared statement, saying the Chapter 11 Proceedings are a step forward in the reorganization process. “We continue to believe that these are quality long lived assets that can generate substantial returns for the company's stakeholders.”
To assist the company in its restructuring process, Endeavour engaged Opportune LLP, appointing David C. Baggett, managing partner of Opportune LLP, as chief restructuring officer of Endeavour, reporting directly to the Board of Directors.