Linc USA files Chapter 11 bankruptcy after out-of-court efforts fail

By Caroline Salls

Pittsburgh, June 1 – Linc USA GP filed Chapter 11 bankruptcy May 29 in the U.S. Bankruptcy Court for the Southern District of Texas.

Vice president – corporate development Jude Rolfes said in a statement filed with the court that, facing a $6 million April 2016 interest payment on its first-lien notes and an $18 million interest payment on its second-lien notes, the company began negotiations with its lenders in 2015 to reach an agreed restructuring and recapitalization.

However, Rolfes said the Linc USA debtors were not able to complete a reorganization outside of Chapter 11.

An informal group of holders of more than 75% of the value of the first-lien notes has agreed to support the company’s use of cash collateral and debtor-in-possession financing in furtherance of a liquidating Chapter 11 proceeding.

“Faced with the impending expiration of the 30-day grace period related to the April 2016 interest payments, the debtors file these Chapter 11 cases to further an orderly sale process within these Chapter 11 proceedings and maximize the value of the debtors’ assets for their creditors,” Rolfes said.

In conjunction with the bankruptcy filing, Linc obtained a commitment for $10 million in DIP financing, with an initial draw of up to $3 million.

Cantor Fitzgerald Securities is the administrative agent.

The facility will mature on the earliest of 180 days from the bankruptcy filing date, 30 days following entry of the interim order if a final order has not been approved, the effective date of a Chapter 11 plan, acceleration of the advances or termination of the commitments, dismissal or conversion of the Chapter 11 cases, the closing of a sale of the company’s assets and court appointment of a trustee, examiner or receiver for the cases.

Interest will accrue at a base rate of Libor plus 900 basis points with a 1% Libor floor and a payment-in-kind rate of 3%.

According to court documents, Linc has $50 million to $100 million in assets and $100 million to $500 million in debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Linc Energy GP1 Pty Ltd. and Linc Energy GP2 Pty Ltd. are the company’s parent companies.

The company is represented by Bracewell LLP.

Linc Energy is a Brisbane, Australia-based energy producer with a commodity portfolio including oil, gas, shale and coal. The U.S. subsidiaries’ Chapter 11 case number is 16-32689.

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