Chaparral Energy Files for Chapter 11 Bankruptcy Protection
NYSE-listed Chaparral Energy Inc. has filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware and has entered into a Restructuring Support Agreement (RSA) with 78% holders of its first-lien revolving credit facility and 78% holders of its 8.75% senior notes due 2023.
Pursuant to the RSA, Chaparral will secure US$300 million in exit credit facility, issue common shares to equitize US$300 million of outstanding senior notes, and raise US$35 million by way of a convertible note rights offering. The restructuring will help the company de-leverage its balance sheet, it said in a statement on August 17th.
Oklahoma-based Chaparral operates in the mid-continent region of the United States, with a primary focus on the STACK play opportunities in Oklahoma. The company had previously filed for bankruptcy protection in 2016 to cut US$1.2 billion in debt. As of August 14th, 2020, Chaparral reported US$32 million of cash in hand, which, combined with its normal operating cash flow, is expected to be sufficient to allow it to maintain normal operations and meet its other financial commitments throughout the restructuring period.
“While we have taken carefully measured and decisive action to address the challenges of 2020, the overall impact to the energy industry, including Chaparral, has been severe. Therefore, after thorough analysis of our strategic options, we determined that a voluntary Chapter 11 filing with broad creditor support provides the best course for Chaparral and its stakeholders,” said Chuck Duginski, Chaparral’s CEO.
Opportune LLP is acting as financial advisor, and Davis Polk & Wardwell LLP is acting as the legal counsel to Chaparral in connection with the Chapter 11 cases.
The restructuring is subject to customary closing conditions, including the receipt of the Bankruptcy Court approval.