LINN Energy LLC (Nasdaq: LINE) has warned that the company may have to file for Chapter 11 bankruptcy, according to various media outlets. On Tuesday, LINN confirmed that it had defaulted on the terms of a $3.6 billion credit agreement, and that this action could result in a Chapter 11 filing.
LINN Energy has said that the company will delay interest payments totaling about $60 million due March 15. LINN has a 30-day grace period to make the interest payments or to obtain a waiver or similar relief. If it cannot, then LINN will be in default and debt payments could be accelerated.
In February, LINN announced that the company would be working with advisors to review strategic alternatives for the company. LINN retained Lazard as its financial advisor and Kirkland & Ellis LLP as its legal advisor to assist the board of directors and management team with the strategic review process. Baker Botts LLP is providing ongoing corporate and finance representation.
LINN reported full-year 2015 revenue of $2.88 billion, down about 42% from 2014, and fourth-quarter 2015 revenue of $647 million, down from $2.2 billion in the same quarter a year earlier. The company has a 2016 CAPEX of $340 million, which is with $250 million allocated for oil and gas capital expenditures – down 44% from its 2015 CAPEX. Last year, LINN's board of directors approved a 2015 budget that included a 53% reduction in oil and natural gas CAPEX to $730 million, from $1.55 billion in 2014.