New Gulf Resources and certain 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 a pre-arranged restructuring of their balance sheet through a collaborative reorganization plan.
The company has entered into a restructuring support agreement (RSA) with an ad hoc committee of creditors holding more than 72% of its second lien notes and 22% of its subordinated PIK notes, who have agreed, subject to the terms thereof, to provide at least $125 million of new capital to increase liquidity post-reorganization and permanently pay down existing first lien debt.
The RSA provides for $75 million in debtor-in-possession (DIP) secured credit financing to be funded by, and a $50 million rights offering to be backstopped by, the ad hoc committee RSA.
New Gulf Resources also filed a series of motions which the company anticipates will be granted, enabling the company to maintain business-as-usual operations throughout the Chapter 11 process. These first-day motions will enable NGR to continue to produce 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.
The company has also filed a motion seeking authority to pay expenses associated with production operations activities, drilling and completion activities, costs associated with gathering, processing, transportation, and marketing, and expenses related to joint interest billings for non-operated properties.
The ad hoc committee of creditors has retained PJT Partners LP as its financial advisor and Stroock & Stroock & Lavan LLP as legal counsel. New Gulf Resources has retained Barclays and Zolfo Cooper LLC as its financial and restructuring advisors. The company is represented by Baker Botts LLP.