Samson Resources Corp., after gaining support for its proposed restructuring plan from more than 68% of its second lien lenders, has taken the next step in implementing its financial restructuring by beginning a voluntary, prearranged process under Chapter 11 of the US Bankruptcy Code. The proposed restructuring contemplates a deleveraging of the business and will provide the company with at least $450 million of new capital.
“The steps we are taking will allow our company to maximize future opportunities and compete more effectively with significantly less debt on our balance sheet,” said Randy Limbacher, CEO of Samson Resources. “We are confident the successful restructuring will have long-term benefits for our employees, vendors and business partners and are committed to upholding our commitments to these stakeholders as we work to achieve our financial goals. We fully expect to operate our business as usual throughout this process and to emerge as a financially stronger company.”
In conjunction with the petitions filed on Sept. 16 in the US Bankruptcy Court for the District of Delaware, Samson Resources filed a series of motions that, pending Court approval, will allow the company to operate its business in the ordinary course throughout the Chapter 11 process. The first day motions will allow the company to continue producing oil and gas from its existing operations, pay employee wages, honor existing employee benefit programs, and pay royalties to mineral owners under the current terms of these agreements.
Samson Resources has also filed a motion seeking authority to pay operating expenses associated with production activities, joint interest billings for non-operated properties, marketing expenses, shipping and storage costs, payments for any goods delivered to the company within 20 days prior to the filing, and payments for goods ordered prior to the filing but not yet delivered.
As outlined in the restructuring support agreement (RSA) dated Aug. 14, Samson Resources has obtained a commitment from second lien lenders, including Silver Point, Cerberus, and Anschutz, to provide at least $450 million of new capital to increase liquidity post-reorganization and permanently pay down existing first lien debt. This investment may be increased under certain circumstances to $485 million to further bolster liquidity.
As part of the restructuring and recapitalization, Samson Resources’ second lien lenders, together with the second lien lenders that are backstopping the equity rights offering, will own substantially all of the equity in the reorganized company and all second lien lenders will have the right to participate in the new money investment. The RSA contemplates a hearing to consider confirmation of the company’s plan of reorganization by Dec. 1.