Unit Corp., Tulsa, Okla. has filed voluntary petitions under Chapter 11 of the Bankruptcy Code to pursue a pre-negotiated plan of reorganization that would reduce the firm’s funded debt obligations by more than $650 million.
The Chapter 11 petitions were filed in a Houston bankruptcy court in accordance with a Restructuring Support Agreement (RSA) between the company, the holders of more than 70% of the company’s 6.625% senior subordinated notes due 2021 and all of the lenders under the company’s senior credit agreement. The RSA sets forth the principal terms of the restructuring transaction that will be effectuated by the plan, including an equitization of all of the outstanding subordinated notes and the replacement of the existing RBL facility and the DIP financing with a $180 million exit financing facility.
The company’s 50%-owned midstream affiliate, Superior Pipeline Co. LLC and its subsidiaries are not debtors in the cases and are unaffected.
Subject to court approval, Unit has received a commitment from the RBL lenders that are parties to the RSA to provide up to $36 million in debtor-in-possession financing. The company anticipates up to $18 million will be available on an interim basis.
The company expects to continue to operate in the ordinary course throughout the process and has filed customary motions with the court seeking authorization to support its operations, including authority to continue payment of employee wages, salaries, and benefits, and to continue paying all vendors and suppliers of Unit Drilling Co.
