Dune Energy Chapter 11 filing prompts credit agreement, notes defaults

By Caroline Salls

Pittsburgh, March 12 – Dune Energy, Inc.’s Chapter 11 bankruptcy filing constituted events of default under the company’s credit agreement with administrative agent Bank of Montreal and its floating-rate senior secured notes due 2016, according to an 8-K filed Thursday with the Securities and Exchange Commission.

In connection with the defaults, payments due on the credit agreement and notes were automatically accelerated.

However, Dune said it believes the ability of its creditors to enforce default-related rights is stayed under the provisions of the Bankruptcy Code.

According to the 8-K, there were $38 million in outstanding borrowings under the credit agreement as of March 8 and $2 million in outstanding letters of credit.

A total of $70 million was outstanding under the notes as of March 8.

Dune is a Houston-based energy company that filed for bankruptcy on March 9 in the U.S. Bankruptcy Court for the Western District of Texas. The Chapter 11 case number is 15-10336.

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