LINN Energy, LLC (NASDAQ:LINE) (“LINN”), LinnCo, LLC (NASDAQ:LNCO)
(“LinnCo”), and Berry Petroleum Company, LLC (“Berry,” and with
LINN and LinnCo, the “Company”) announced today that the United
States Bankruptcy Court for the Southern District of Texas has
granted the relief requested by the Company in key first day
motions related to ordinary course business activities. The
approved motions give the Company the authority to, among other
things, continue to pay employee wages and benefits without
interruption, to utilize its current cash management system, and to
make royalty payments.
Mark E. Ellis, Chairman, President and Chief
Executive Officer, said, “With these approvals, the Company will
continue normal operations as we implement a comprehensive
financial restructuring. Importantly, I would like to thank all of
our employees for their continued dedication to our Company as we
continue working constructively with our vendors, suppliers, and
partners.”
The Company received Court approval of a motion
that will allow it to use its cash to fund its Chapter 11 cases,
pursuant to the agreement with the first lien lenders. The approval
will be reflected in a Court Order entered Monday, May 16, 2016.
The Company anticipates that the cash available to it during its
Chapter 11 Cases will likely provide sufficient liquidity to
support the business during the financial restructuring
process.
For goods and services provided post-Chapter 11
filing, the Company intends to pay vendors in full under normal
terms. The Company intends to meet its obligations in the ordinary
course and expects its operations to continue uninterrupted
throughout the reorganization process.
As previously announced, on May 11, the Company
entered into a Restructuring Support Agreement with holders of at
least 66.67% by aggregate outstanding principal amounts of LINN’s
Amended and Restated Credit Agreement, dated as of April 24, 2013,
as amended, and Berry’s Second Amended and Restated Credit
Agreement, dated as of November 15, 2010, as amended. To implement
the terms of the agreement, the Company filed voluntary petitions
for a court-supervised restructuring under Chapter 11 of the United
States Bankruptcy Code.
Advisors
Kirkland & Ellis LLP is serving as legal
advisor to LINN, Lazard is serving as its financial advisor and
AlixPartners is its restructuring advisor.
Additional Information about the Court
Supervised Restructuring Process
Additional information is available on LINN’s
website at www.linnenergy.com/restructuring or by calling LINN’s
Restructuring Hotline, toll-free in the U.S., at 1-844-794-3479.
(For calls originating outside the U.S., please dial
1-917-962-8892). In addition, court filings and other documents
related to the reorganization proceedings are available on a
separate website administered by LINN’s claims agent, Prime Clerk,
at https://cases.primeclerk.com/linn.
Exchange Offer
As previously announced, on April 26, 2016,
LinnCo commenced a subsequent offering period to exchange each
outstanding unit of LINN for one LinnCo share (the “Exchange
Offer”). The subsequent offering period will expire at 12:00
midnight (New York City time) on May 23, 2016, unless extended. The
Bankruptcy Court has approved keeping the Exchange Offer open
uninterrupted. Procedures for tendering LINN units during the
subsequent offering period are the same as during the initial
offering period, except that pursuant to Rule 14d-7(a)(2) under the
Securities Exchange Act of 1934, as amended, LINN units validly
tendered during the subsequent offering period will be accepted on
a daily, “as tendered” basis and, accordingly, may not be
withdrawn.
The purpose of the Exchange Offer is to permit
holders of LINN units to maintain their economic interest in LINN
through LinnCo, an entity that is taxed as a corporation rather
than a partnership, which may allow LINN unitholders to avoid
future allocations of taxable income and loss, including
cancellation of debt income (“CODI”), that could result from the
court-supervised reorganization process. In general, CODI will be
allocated to persons who are deemed to hold the units when the
events giving rise to such CODI occur. The filing of a
petition under Chapter 11 of the United States Bankruptcy Code does
not itself cause LINN to recognize CODI; however, it is likely that
the final resolution of a bankruptcy plan would cause LINN to
recognize an amount of CODI, which may be substantial.
ABOUT LINN ENERGY
LINN Energy’s mission is to acquire, develop and
maximize cash flow from a portfolio of long-life oil and natural
gas assets. More information about LINN Energy is available at
www.linnenergy.com.
ABOUT LINNCO
LinnCo was created to enhance LINN Energy's
ability to raise additional equity capital to execute on its
acquisition and growth strategy. LinnCo is a Delaware limited
liability company that has elected to be taxed as a corporation for
United States federal income tax purposes, and accordingly its
shareholders will receive a Form 1099 in respect of any dividends
paid by LinnCo. More information about LinnCo is available at
www.linnco.com.
SAFE HARBOR FOR FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking
statements. These statements, including those relating to the
intent, beliefs, plans or expectations of the Company are based
upon current expectations and are subject to a number of risks,
uncertainties and assumptions. It is not possible to predict or
identify all such factors and the following list should not be
considered a complete statement of all potential risks and
uncertainties relating to the bankruptcy filing by the Company,
including, but not limited to: (i) the Company’s ability to obtain
the Bankruptcy Court approval with respect to motions or other
requests made to the Bankruptcy Court in the Chapter 11 cases,
including maintaining strategic control as debtor-in-possession,
(ii) the ability of the Company and its subsidiaries to negotiate,
develop, confirm and consummate a plan of reorganization, (iii) the
effects of the bankruptcy filing on the Company’s business and the
interests of various constituents, (iv) the Bankruptcy Court
rulings in the Chapter 11 cases, as well the outcome of all other
pending litigation and the outcome of the Chapter 11 Cases in
general, (v) the length of time that the Company will operate under
Chapter 11 protection and the continued availability of operating
capital during the pendency of the Chapter 11 proceedings, (vi)
risks associated with third party motions in the Chapter 11 cases,
which may interfere with the Company’s ability to confirm and
consummate a plan of reorganization, (vii) the potential adverse
effects of the Chapter 11 proceedings on the Company’s liquidity or
results of operations, (viii) increased advisory costs to execute
the Company’s reorganization, (ix) the impact of a potential NASDAQ
suspension of trading and commencement of delisting proceedings on
the liquidity and market price of the units representing limited
liability company interests of the Company (“units”) and on the
Company’s ability to access the public capital markets, (x) the
uncertainty that any trading market for units will exist or develop
in the over-the-counter markets, (xi) the completion of the
subsequent offering period and (xii) other risks and uncertainties.
These risks and uncertainties could cause actual results to differ
materially from those described in the forward-looking statements.
For a more detailed discussion of risk factors, please see Part I,
Item 1A, “Risk Factors” of LINN and LinnCo’s most recent Annual
Report on Form 10-K for more information. The Company assumes no
obligation and expressly disclaims any duty to update the
information contained herein except as required by law.
Contacts:
LINN Energy, LLC and LinnCo, LLC
Investors and Media:
Clay Jeansonne, Vice President – Investor and Public Relations
(281) 840-4193
Sarah Nordin, Public Relations and Media
(713) 904-6605