Item 1.01
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Entry into a Material Definitive Agreement.
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First Amended and Restated
Restructuring Support Agreement
On May 11, 2016 (the Petition Date), Linn Energy, LLC (the Company),
LinnCo, LLC, an affiliate of the Company (LinnCo), certain of the Companys direct and indirect subsidiaries (collectively with the Company, the LINN Debtors), and Berry Petroleum Company, LLC (Berry and,
collectively with the LINN Debtors and LinnCo, the Debtors), filed voluntary petitions (the Bankruptcy Petitions) for reorganization under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in
the United States Bankruptcy Court for the Southern District of Texas (the Court). The Debtors Chapter 11 cases are being administered jointly under the caption
In re Linn Energy, LLC, et al.
, Case No. 16-60040
(the Chapter 11 Cases).
On October 21, 2016, the LINN Debtors entered into the First Amended and Restated Restructuring
Support Agreement (the Amended and Restated RSA) with (i) certain holders of the Companys 12% Senior Secured Second Lien Notes due December 2020 (such notes, the Second Lien Notes, and such holders, the
Consenting Second Lien Noteholders); (ii) certain holders of the Companys unsecured notes (such notes, the Unsecured Notes, such holders of the Unsecured Notes, the Consenting Unsecured Noteholders, and
together such Consenting Unsecured Noteholders with the Consenting Second Lien Noteholders, the Consenting Noteholders); and certain lenders (the Consenting LINN Lenders, and together with the Consenting Noteholders, the
Consenting Creditors) under the Companys Sixth Amended and Restated Credit Agreement, dated as of April 24, 2013 (the LINN Credit Agreement). The Amended and Restated RSA amends and restates that certain restructuring
support agreement dated as of October 7, 2016 (the Original RSA), by and among the LINN Debtors and the Consenting Noteholders, which was previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange
Commission (the Commission) on October 11, 2016. In addition, the Amended and Restated RSA replaces and supersedes that certain restructuring support agreement with certain of the Consenting LINN Lenders, dated as of May 10,
2016, with respect to the terms of the restructuring of the LINN Debtors, which was previously disclosed in a Current Report on Form 8-K filed with the Commission on May 11, 2016.
The Amended and Restated RSA sets forth, subject to certain conditions, the commitment of the LINN Debtors and the Consenting Creditors to
support a comprehensive restructuring of the LINN Debtors long-term debt (the Restructuring). The Restructuring will be effectuated through the Proposed Joint Chapter 11 Plan of Reorganization of Linn Energy, LLC and its
Debtor Affiliates (the Plan) filed with the Court on October 21, 2016.
Other than as provided below, the majority of the
terms of the Amended and Restated RSA are substantially identical to those set forth in the Original RSA. The Amended and Restated RSA includes limited changes to the treatment of claims under the LINN Credit Agreement, including that such
claims will be allowed as fully secured claims under the Plan and will not be subject to off-set, avoidance, recharacterization, recoupment, or subordination. Further, the Amended and Restated RSA provides that holders of claims under the LINN
Credit Agreement will receive, as part of the Plan, (i) a cash paydown equal to the sum of (a) $500 million from cash equity contributions at the closing of the take-back debt facility, plus (b) other amounts from LINNs cash on
hand (net of Chapter 11 and transaction expenses) consistent with the Plan and subject to anti-cash hoarding provisions in the take-back debt facility, and (ii) a take-back debt facility on the terms and conditions set forth in the Amended and
Restated RSA.
The foregoing description of the Amended and Restated RSA is only a summary, does not purport to be complete and is
qualified in its entirety by reference to the Amended and Restated RSA attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Backstop Commitment Agreement
On October 25, 2016, the Company entered into a backstop commitment agreement (the Backstop Commitment Agreement) with the
parties thereto (collectively, the Backstop Parties), pursuant to which the Backstop Parties, which are also Consenting Noteholders under the Amended and Restated RSA, have agreed to backstop a $530 million new money investment in
the LINN Debtors pursuant to rights offerings (the Rights Offerings) to be conducted in accordance with the Plan.
In
accordance with the Plan, the Backstop Commitment Agreement and the Rights Offerings procedures filed in the Chapter 11 Cases, the LINN Debtors will offer eligible creditors, including the Backstop Parties, the right to purchase new common stock or
limited liability company interests in the reorganized Company (the New Common Stock) upon emergence from the Chapter 11 Cases for an aggregate purchase price of $530 million. The Rights Offerings will consist of the following
offerings:
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Holders of Unsecured Notes as of the record date set therefor shall be granted rights (the Unsecured Subscription Rights) entitling each such holder to subscribe to the Rights Offering in an amount up to its
pro rata share of New Common Stock (the Unsecured Rights Offering, and such New Common Stock offered for purchase thereunder, the Unsecured Rights Offering Shares), which Unsecured Rights Offerings Shares, collectively, will
reflect an aggregate purchase price of $319,004,408 at the per share price set forth in the Backstop Commitment Agreement.
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Holders of Second Lien Notes as of the record date set therefor shall be granted rights (the Secured Subscription Rights) entitling each such holder to subscribe to the Rights Offering in an amount up to its
pro rata share of New Common Stock (the Secured Rights Offering, and such New Common Stock offered for purchase thereunder, the Secured Rights Offering Shares), which Secured Rights Offering Shares, collectively, will reflect
an aggregate purchase price of $210,995,592 at the per share price set forth in the Backstop Commitment Agreement.
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Under
the Backstop Commitment Agreement, certain Backstop Parties have agreed to purchase their pro rata share of the Unsecured Rights Offering Shares and the Secured Rights Offering Shares, as applicable, that are not duly subscribed to pursuant to the
Unsecured Rights Offering or the Secured Rights Offering, as applicable, at the discounted per share price set forth in the Backstop Commitment Agreement by parties other than Backstop Parties (the Backstop Commitment).
Subject to Court approval, the LINN Debtors will pay the Backstop Parties on the Plan effective date (the Effective Date) a
commitment premium equal to 4.0% of the $530 million committed amount (the Backstop Commitment Premium), of which 3.0% will be paid in cash and 1.0% will be paid in the form of New Common Stock at the discounted per share price set forth
in the Backstop Commitment Agreement. The Backstop Commitment Premium shall be fully earned and nonrefundable as of the date of the Court order approving the LINN Debtors entry into the Backstop Commitment Agreement. All amounts payable to the
Backstop Parties in their capacities as such for the Backstop Commitment Premium shall be paid pro rata based on the amount of their respective Backstop Commitments on the Effective Date (as compared to the aggregate Backstop Commitment of all
Backstop Parties).
The rights to purchase New Common Stock in the Rights Offerings, any shares issued upon exercise thereof, and all
shares issued to the Backstop Parties in respect of their Backstop Commitments pursuant to the Backstop Commitment Premium, will be issued in reliance upon the exemption from the registration requirements of the securities laws pursuant to Section
1145 of the Bankruptcy Code. All shares issued to the Backstop Parties pursuant to the Backstop Commitment Agreement in respect of their Backstop Commitment will be issued in reliance upon the exemption from registration under the Securities Act of
1933, as amended (the Securities Act), provided by Section 4(a)(2) thereof and/or Regulation D thereunder. As a condition to the closing of the transactions contemplated by the Backstop Commitment Agreement, the Company will enter into a
registration rights agreement with certain Backstop Parties entitling such Backstop Parties to request that the Company register their securities for sale under the Securities Act at various times.
The Backstop Parties commitments to backstop the Rights Offerings, and the other transactions contemplated by the Backstop Commitment
Agreement, are conditioned upon the satisfaction of all conditions to the effectiveness of the Plan and other applicable conditions precedent set forth in the Backstop Commitment Agreement. The issuances of New Common Stock pursuant to the Rights
Offerings and the Backstop Commitment Agreement are conditioned upon, among other things, confirmation of the Plan by the Court, and the Plans effectiveness upon the Companys emergence from its Chapter 11 Cases.
The foregoing description of the Backstop Commitment Agreement is only a summary, does not purport to be complete and is qualified in its
entirety by reference to the Backstop Commitment Agreement attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.