MIDLAND, Texas, June 11, 2019 /PRNewswire/ -- Legacy
Reserves Inc. (NASDAQ: LGCY) ("Legacy", and collectively with its
subsidiaries, the "Company") announced today that its board of
directors has approved, and the Company has executed, a
restructuring support agreement (the "Restructuring Agreement")
with its lenders under its reserve based revolving credit facility
("RBL Lenders") and its lenders under its second lien term loan
("Second Lien Lenders"). The proposed financial restructuring
would significantly reduce the Company's debt, provide access to
additional capital, and establish a more sustainable capital
structure.
To facilitate the financial restructuring and implement the
pre-arranged plan of reorganization (the "Plan") contemplated by
the Restructuring Agreement, the Company expects to file voluntary
petitions for reorganization in the
United States Bankruptcy Court for the Southern District of
Texas (the "Court") pursuant to
chapter 11 of the United States Bankruptcy Code. The Plan,
which the RBL Lenders and Second Lien Lenders have agreed to
support, will provide for, among other things:
(1) significant de-leveraging of the Company's
capital structure by over $900
million, including an infusion of at least $200 million
in equity capital through a rights offering and a committed equity
backstop; and (2) payment in full of the Company's other
secured creditors, tax and other priority claimants, trade
creditors and employees. Consummation of the Plan, including
the infusion of new equity, will be subject to confirmation by the
Court in addition to other conditions to be set forth in the Plan
and related transaction documents. The Plan is expected to be
filed within 30 days following the commencement of the chapter 11
cases. The Company is also in active discussions with the
advisors for a group of the Company's noteholders regarding terms
for their support of the Restructuring Agreement.
The Company will continue to operate its business in the normal
course without material disruption to its vendors, partners or
employees, and expects to have sufficient liquidity to meet its
financial obligations during the restructuring. The
Restructuring Agreement contemplates that the Company will obtain
debtor-in possession ("DIP") financing provided by certain of its
existing RBL Lenders, including Wells Fargo Bank, National
Association. The DIP financing, subject to Court approval,
will refinance portions of the Company's existing reserve-based
credit facility and provide an additional $100 million in new money to support the
Company's day-to-day operations and finance the restructuring
process. The Restructuring Agreement further provides that,
upon confirmation of the Plan and emergence from chapter 11, the
Company will obtain access to a senior secured asset-based lending
credit facility in a maximum amount of $500
million provided by certain of the existing RBL Lenders.
Dan Westcott, Chief Executive
Officer of the Company, said, "We explored a wide variety of
alternatives to address our balance sheet and looming bank maturity
during a sustained downturn in oil and gas prices.
After concluding this broad process, we believe that the financial
restructuring negotiated with our creditors provides the best path
forward for the Company. Through the proposed terms of the plan of
reorganization, we believe our right-sized balance sheet will
enable us to successfully compete in the current
environment.
"I want to express my gratitude to the employees for their
continued dedication and hard work, and to our service providers,
business partners and other stakeholders for their ongoing support
during this time. We are grateful to GSO Capital Partners LP,
who, as Plan Sponsor, has committed to ensure that at least
$200 million of new equity is
invested into the Company. Following the negotiated
restructuring, we look forward to having substantially less debt
and significantly enhanced prospects for our Company, our employees
and our future stakeholders."
Perella Weinberg Partners and its affiliate, Tudor Pickering
Holt & Co., is acting as financial advisor for the Company,
Sidley Austin LLP is acting as legal advisor, and Alvarez &
Marsal is acting as restructuring advisor. PJT Partners LP is
acting as financial advisor for GSO Capital Partners LP, and Latham
& Watkins LLP is acting as legal advisor.
For inquiries regarding the restructuring, please call the hotline
established by the Company's noticing agent, Kurtzman Carson
Consultants LLC, at (866) 967-0495 (toll-free domestic) or (310)
751-2695 (international).
About Legacy Reserves Inc.
Legacy Reserves Inc. is an independent energy company engaged in
the development, production and acquisition of oil and natural gas
properties in the United States. Its current operations are
focused on the horizontal development of unconventional plays in
the Permian Basin and the cost-efficient management of
shallow-decline oil and natural gas wells in the Permian Basin,
East Texas, Rocky Mountain and
Mid-Continent regions. Additional information regarding the
Company is available at www.legacyreserves.com.
Forward-Looking Statements
This press release may include "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts,
included in this press release that address activities, events or
developments that the Company expects, believes or anticipates will
or may occur in the future, are forward-looking statements. Words
such as "anticipates," "expects," "intends," "plans," "targets,"
"projects," "believes," "seeks," "schedules," "estimated," and
similar expressions are intended to identify such forward-looking
statements. These forward-looking statements rely on a number of
assumptions concerning future events and are subject to a number of
uncertainties, factors and risks, many of which are outside the
control of the Company, which could cause results to differ
materially from those expected by management of the Company. Such
risks and uncertainties include, but are not limited to, the
Company's ability to obtain Bankruptcy Court approval with respect
to motions or other requests made to the Bankruptcy Court; the
ability of the Company to negotiate, develop, confirm and
consummate a plan of reorganization; the ability of the Company to
consummate the rights offering; the effects of the chapter 11 cases
on the Company's liquidity or results of operations or business
prospects; the effects of the bankruptcy filing on the Company's
business and the interests of various constituents; the length of
time that the Company will operate under chapter 11 protection;
risks associated with third-party motions in the chapter 11 cases;
realized oil and natural gas prices; production volumes, lease
operating expenses, general and administrative costs and finding
and development costs; future operating results; and the factors
set forth under the heading "Risk Factors" in Legacy Reserves
Inc.'s filings with the U.S. Securities and Exchange Commission,
including its Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K. The reader should not place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. Unless legally required,
the Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Contact:
Legacy Reserves Inc.
Robert L. Norris
Chief Financial Officer
432-689-5200
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SOURCE Legacy Reserves Inc.