Item 1.01 Entry into a Material Definitive Agreement.
Plan Support Agreement
As previously disclosed on a
Current Report on Form 8-K filed on December 23, 2016 (the “December 8-K”), on December 22, 2016, Memorial Production Partners LP (the “Partnership”) and certain of its subsidiaries (together with the Partnership, the
“Memorial Parties”) entered into a Plan Support Agreement (the “Noteholder PSA”) with holders of the Partnership’s 7.625% Senior Notes due 2021 (the “2021 Notes”) and the Partnership’s 6.875% Senior Notes due
2022 (together with the 2021 Notes, the “Unsecured Notes”). As of the date hereof, holders of approximately 67% of the aggregate outstanding principal amount of the Unsecured Notes are party to the Noteholder PSA.
On January 13, 2017, the Memorial Parties entered into a Plan Support Agreement (the “RBL PSA” and, together with the Noteholder PSA, the
“PSAs”) with lenders holding 100% of the loans (the “Consenting Lenders”) under that certain Credit Agreement, dated as of December 14, 2011 (the “RBL Credit Facility”), by and among Memorial Production Operating
LLC, as borrower (“Operating LLC”), the Partnership, as parent guarantor, Wells Fargo Bank, National Association as administrative agent (the “RBL Credit Facility Agent”), the lenders from time to time party thereto, and the
other parties thereto. Certain of the Consenting Lenders also entered into the RBL PSA in their capacities as parties to certain existing swap agreements (in such capacities, “Continuing Hedging Lenders”).
The RBL PSA was entered into on terms substantially similar to those of the Noteholder PSA. In addition, among other things, the RBL PSA provides that
(i) the Consenting Lenders may terminate the RBL PSA upon the termination of the Noteholder PSA or if there is an amendment to the Noteholder PSA that is, or would reasonably be expected to be, adverse to the RBL Credit Facility Agent or the
Consenting Lenders and (ii) each of the Memorial Parties agrees to not file a voluntary petition for relief under chapter 11 of title 11 of the United States Code (“Chapter 11”) until the Memorial Parties terminate each of their Swap
Agreements (as defined in the RBL Credit Facility), other than the Existing Swap Agreements (as defined in the RBL PSA), and use the net proceeds thereof to repay outstanding RBL Loans (as defined in the RBL PSA).
A copy of the RBL PSA is filed as Exhibit 10.1 hereto and is incorporated herein by reference. The above description of the RBL PSA is qualified in its
entirety by the full text of such exhibit. It is still expected that the Partnership and certain of its subsidiaries will commence Chapter 11 proceedings by January 16, 2017.
Proposed Joint Chapter 11 Plan of Reorganization
Also as
disclosed in the December 8-K, the Memorial Parties have agreed to undertake a financial restructuring, to be effected through a joint plan of reorganization (the “Plan”).
In addition to the terms of the Plan previously disclosed in the December 8-K, as set forth on a term sheet attached as an exhibit to the RBL PSA (the
“Restructuring Term Sheet”), on the effective date of the Plan (the “Effective Date”), among other things:
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the Partnership will enter into an exit credit facility (the “Exit Credit Facility”) on terms attached as an annex to the Restructuring Term Sheet;
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the Amended and Restated Swap Agreements (as defined in the Restructuring Term Sheet) will be assumed by the reorganized Operating LLC pursuant to the Plan; and
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each holder of an Allowed RBL Credit Facility Claim (as defined in the Restructuring Term Sheet) will receive
(a) cash in the amount of its pro rata share of all accrued and unpaid interest (calculated in the manner described in the Interim Cash Collateral Order attached to the RBL PSA as Exhibit C (the “CCO”) and subject to the rights of the
RBL Credit Facility Agent and the other RBL Credit Facility Secured Parties (as defined in the Restructuring Term Sheet) to seek cash payment of the Rate Differential (as defined in the CCO) and/or additional interest from and after the Petition
Date on the Prepetition
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Indebtedness (as defined in the CCO) at the post-default rate of two percent (2%) as provided in Section 3.02(c) of the RBL Credit Facility, all as more fully set forth in the CCO),
fees and certain other amounts owing under the RBL Credit Facility through the Effective Date, to the extent not previously paid, (b) (x) its pro rata share of the Exit Credit Facility as a first lien, second-out term loan under the Exit Credit
Agreement (as defined in the Restructuring Term Sheet), or (y) if a holder elects to participate in the Exit Credit Facility as a revolver lender, its pro rata share of first lien, first-out revolving loans under the Exit Credit Agreement, and
(c) cash in an amount equal to certain claims for indemnities, expense reimbursement and certain other amounts due and owning under the RBL Credit Facility Loan Documents (as defined in the Restructuring Term Sheet).
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Amendment to Noteholder PSA
On January 12, 2017,
the Memorial Parties and the Requisite Noteholders (as defined in the Noteholder PSA) entered into an amendment to the Noteholder PSA (the “PSA Amendment”). The PSA Amendment extends certain milestone dates set forth in the Noteholder PSA
to conform to the milestones contained in the RBL PSA. A copy of the PSA Amendment is filed as Exhibit 10.2 hereto and is incorporated herein by reference. The foregoing description of the PSA Amendment is qualified in its entirety by the full text
of such exhibit.
Third Amendment to Limited Waiver
As previously disclosed on November 1, 2016, in connection with the interest payment default on the 2021 Notes, the Partnership, Operating LLC, certain
subsidiaries of the Partnership, the RBL Credit Facility Agent, and the lenders consenting thereto, entered into the Limited Waiver and Twelfth Amendment thereto (as amended, the “Limited Waiver”) with respect to the RBL Credit Facility.
On November 30, 2016, the Partnership entered into the First Amendment to Limited Waiver, which extended the outside date of the limited waiver
period under the Limited Waiver from November 30, 2016 to December 16, 2016.
On December 16, 2016, the Partnership entered into the Second
Amendment to Limited Waiver, which among other things, extended the outside date of the limited waiver period under the Limited Waiver from December 16, 2016 to January 13, 2017.
On January 13, 2017, the Partnership entered into the Third Amendment to Limited Waiver (the “Waiver Amendment”), which extended the outside
date of the limited waiver period under the Limited Waiver from January 13, 2017 to January 16, 2017.
A copy of the Waiver Amendment is filed
as Exhibit 10.3 hereto and incorporated herein by reference. The above description of the Waiver Amendment is qualified in its entirety by the full text of such exhibit.