SandRidge Energy Inc. (OTC PINK: SDOC) has voluntarily filed petitions under Chapter 11 of the US Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas to consummate a "pre-arranged" reorganization through a restructuring support agreement entered into with holders of approximately (i) 98% in principal amount outstanding under the company's reserve-based lending facility (RBL), (ii) 79% in principal amount of the company's second lien notes, and (iii) 55% in principal amount of the company's senior unsecured notes.
Concerns about the company's ability to weather the current industry climate were raised in March.
The restructuring support agreement contemplates an RBL facility and the equitization of approximately $3.7 billion of other funded indebtedness. Under the agreement, the company's pro forma capital structure will consist of (i) $425 million in first lien RBL debt (maturing in 2020), and (ii) $300 million in mandatorily convertible debt that will accrue interest on a non-cash basis and convert into equity in the reorganized company at the earlier of certain conversion events or four years from the effective date of the Chapter 11 plan of reorganization.
The company projects having ample liquidity to fund its ongoing operations and its capital programs throughout the Chapter 11 and upon emergence thereafter, without the need for debtor-in-possession financing or other additional capital. As part of the Chapter 11, SandRidge has filed motions that, when granted, will enable the company's day-to-day operations to continue as usual.
Kirkland & Ellis LLP is serving as legal counsel to SandRidge and Houlihan Lokey, Inc. is serving as financial advisor.