Chaparral Energy Inc. completed its financial restructuring and emerged from Chapter 11 as a private, non-SEC filing company (OGJ Online, Aug. 17, 2020). Through execution of its pre-packaged plan of reorganization, the company equitized all $300 million of its unsecured 8.75% senior notes due 2023 and reduced its annual interest expense by more than $25 million.
Lenders received a full recovery of their claims through a combination of paydown and participation in an amended and restated credit facility, and trade and other general unsecured claims were unimpaired and reinstated.
The company obtained a $300 million exit revolving credit facility with an initial borrowing base of $175 million and a $35 million second lien convertible note. Upon its emergence from bankruptcy, the borrowings under its first lien revolving credit agreement were partially repaid using a portion of cash on hand and the proceeds from the $35 million second lien convertible note. The resulting liquidity of the company upon exit is $58 million, comprised of availability under the exit facility borrowing base and $10 million of cash on hand.
At emergence, each holder of senior notes received its pro rata share of 100% of new common equity issued by the reorganized company, subject to terms provided under the plan of reorganization. Equity outstanding prior to the reorganization was canceled and its holders were provided consideration of $1.2 million in cash as well as warrants to acquire up to an aggregate of 10% of the restructured company or, in some cases, additional cash in lieu thereof.
The company’s new board of directors comprises Craig Kelleher, co-founder, Millstreet Capital Management LLC; Brian Connolly, co-founder, Millstreet Capital Management LLC; Jason Hammerman, senior vice-president, Avenue Capital Management II LP; Sam Barker, portfolio manager Amzak Capital Management; Mark Castiglione, partner Meridian Energy LLC; Jim Addison, chief executive officer, Hawkwood Energy LLC; and Chuck Duginski, chief executive officer, Chaparral Energy.
