Magnum Hunter Resources files Chapter 11

Magnum Hunter Resources Corp. (OTC PINK: MHRC) and certain of its wholly owned subsidiaries have filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the District of Delaware to facilitate the restructuring of their consolidated balance sheet through a prearranged restructuring plan. 

Magnum is also entering into a restructuring support agreement with lenders that hold, in the aggregate, 75% in principal amount of the company's funded debt claims. Specifically, the parties to the restructuring support agreement hold all of the company's first lien debt, 66.5% in principal amount of Magnum’s second lien debt, and 79% in principal amount of its senior unsecured notes. The restructuring support agreement contemplates the debt-to-equity conversion of all Magnum’s pre-petition funded indebtedness and 100% of the company's contemplated post-petition debtor-in-possession (DIP) financing, resulting in a deleveraged balance sheet upon the company's anticipated emergence from the Chapter 11 bankruptcy process in April 2016. In addition, the restructuring support agreement contemplates a cash recovery to vendors and trade claimants.

The restructuring support agreement provides for DIP financing in the form of a $200 million senior secured multi-draw term loan that will be backstopped by lenders who are parties to the restructuring support agreement. Magnum anticipates that the DIP financing will provide liquidity to stabilize its operations and satisfy key vendor, employee, and other key stakeholder commitments during the restructuring process, and the DIP financing is expected to be converted to equity on Magnum’s exit from the Chapter 11 process. 

PJT Partners LP is serving as financial advisor to Magnum Hunter, Kirkland & Ellis LLP is serving as legal counsel, and Alvarez & Marsal North America LLC is serving as restructuring advisor. Weil, Gotshal & Manges LLP and Houlihan Lokey are serving as legal counsel and financial advisors, respectively, to an ad hoc group of holders of the company's first lien debt and second lien debt, in their capacity as pre-petition lenders and post-petition DIP lenders. Akin Gump Strauss Hauer & Feld LLP and Centerview Partners are serving as legal counsel and financial advisors, respectively, to an ad hoc group of holders of the company's first lien debt and senior unsecured notes, in their capacity as pre-petition lenders and post-petition DIP lenders.



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