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Item 1.03
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Bankruptcy or Receivership.
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On April 2, 2018, EV
Energy Partners, L.P. (“EVEP”), EV Energy GP, L.P., EV Management, LLC and certain of EVEP’s wholly owned subsidiaries
(each a “Debtor” and, collectively, the “Debtors”), filed a prepackaged plan of reorganization (the “Plan”)
under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”). The Debtors have filed a motion with the Bankruptcy Court seeking joint
administration of their Chapter 11 cases under the caption In re EV Energy Partners, L.P., et al. (the “Chapter 11 Cases”).
The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy
Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. EVEP expects
ordinary-course operations to continue substantially uninterrupted during and after the Chapter 11 Cases.
As previously disclosed,
on March 13, 2018, the Debtors entered into a Restructuring Support Agreement (the “RSA”) with (i) holders of approximately
70% of the 8.0% Senior Notes due 2019 (the “Senior Notes”) issued pursuant to that certain Indenture, dated as of March
22, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), among EVEP,
EV Energy Finance Corp., each of the guarantors party thereto, and Delaware Trust Company, as indenture trustee, that are signatories
to the RSA; (ii) lenders under our reserve-based lending facility (the “RBL Facility”), by and among EVEP, EV Properties,
L.P., JPMorgan Chase Bank, N.A., as administrative agent, BNP Paribas and Wells Fargo, National Association, as co-syndication
agents, the guarantors party thereto, and the lenders signatory thereto, constituting approximately 94% of the principal amount
outstanding thereunder; (iii) EnerVest, Ltd. (“EnerVest”) and (iv) EnerVest Operating, L.L.C. (“EnerVest Operating”).
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the RSA. Neither of EnerVest
nor EnerVest Operating is seeking Chapter 11 bankruptcy relief.
The RSA contemplates
a restructuring (the “Restructuring”) of the Debtors pursuant to a joint pre-packaged plan of reorganization (the “Plan”)
consistent in all material respects with the restructuring term sheet attached to the RSA. EVEP expects ordinary-course operations
to continue substantially uninterrupted during and after the Chapter 11 Cases. The RSA provides for certain milestones requiring,
among other things, that the Debtors complete the Restructuring on or before June 22, 2018.
Proposed Pre-Packaged Chapter 11 Restructuring
Pursuant to the RSA,
the Debtors commenced the solicitation of votes on the Plan on March 14, 2018, by causing the Plan and a related disclosure statement
to be distributed to certain creditors of the Debtors that are “accredited investors” (as defined in Regulation D of
the Securities Act of 1933, as amended). As of the March 30, 2018 voting deadline, each class of claims entitled to vote had voted
to accept the Plan. 100% of the lenders under the Company’s reserve-based lending facility voted to accept the plan, and
noteholders holding more than 99% in amount of Senior Notes that voted on the Plan voted to accept the Plan.
The Plan, which remains
subject to confirmation by the Bankruptcy Court and other closing conditions, provides that, among other things, on the effective
date of the Plan (the “Effective Date”), subject to the occurrence and completion of certain structuring steps:
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the lenders under the RBL Facility that vote to accept the Plan will receive (a) pro rata loans
under an amendment to the RBL Facility (the “Amended RBL Facility”), (b) cash in an amount equal to the accrued but
unpaid interest payable to such lenders under the RBL Facility as of the Effective Date, and (c) unfunded commitments and letter
of credit participation under the Amended RBL Facility equal to the unfunded commitments and letter of credit participation of
such lender as of the Effective Date;
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lenders under the RBL Facility that vote to reject the Plan, or fail to properly submit a ballot,
will receive (a) term loans under a new term loan facility and (b) cash in an amount equal to the accrued and unpaid interest payable
to such lender under the RBL Facility as of the Effective Date. However, because all prepetition RBL lenders voted to accept the
Plan, no RBL lender will receive such treatment under the Plan;
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the holders of the Senior Notes will receive 95% of the new common stock (subject to dilution)
in the new, reorganized company, on a pro rata basis;
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the holders of general unsecured claims, including customers, will be paid in full or will otherwise
be unimpaired; and
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the holders of the existing common interests in EVEP will receive 5% of the new common stock (subject
to dilution) and five-year warrants for 8% of the new common stock (subject to dilution) in the new, reorganized company, on a
pro rata basis, with an exercise price set at an equity value at which the holders of the Senior Notes would receive a recovery
equal to par plus accrued and unpaid interest as of the Petition Date in respect of the Senior Notes (after taking into account
value dilution on account of the 3% of the new common stock to be allocated to the participants in the management incentive plan
on the Effective Date pursuant to a management incentive plan).
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Bankruptcy Court filings
and other information related to the Chapter 11 Cases are available at a website administered by EVEP’s claims agent, Prime
Clerk LLC, at https://cases.primeclerk.com/evep.