Linn support deal amended, $530 million investment backstop agreed

By Caroline Salls

Pittsburgh, Oct. 27 – Linn Energy, LLC entered into a first amended and restated restructuring support agreement with some holders of its 12% senior secured second-lien notes due December 2020, its unsecured notes and consenting lenders, according to an 8-K filed Thursday with the Securities and Exchange Commission.

As previously reported, the company’s restructuring will be implemented through a joint Chapter 11 plan of reorganization.

Linn said the amended and restated support agreement includes limited changes to the treatment of claims under the company’s credit agreement, including that those claims will be allowed as fully secured claims under the plan and will not be subject to off-set, avoidance, recharacterization, recoupment or subordination.

In addition, the amended and restated support agreement provides that holders of credit agreement claims will receive a cash paydown equal to $500 million from cash equity contributions at the closing of a take-back debt facility, plus other amounts from Linn’s cash on hand, net of Chapter 11 and transaction expenses, as well as the take-back debt facility.

The company said it entered into a backstop commitment agreement on Tuesday under which consenting noteholders agreed to backstop a $530 million new-money investment in the Linn debtors under rights offerings to be conducted in accordance with the plan.

Linn said it will offer eligible creditors, including the backstop parties, the right to purchase new common stock or limited liability company interests in the reorganized company upon emergence from the Chapter 11 cases for a total purchase price of $530 million.

Under the rights offering, the unsecured noteholders’ stock will be purchased at a total price of $319 million, and second-lien noteholders’ stock will be purchased for $211 million.

Subject to court approval, Linn will pay the backstop parties a commitment premium equal to 4% of the $530 million committed amount, of which 3% will be paid in cash and 1% in the form of new common stock at a discounted price per share.

Linn Energy, a Houston-based oil and gas company, filed for bankruptcy on May 11 in the U.S. Bankruptcy Court for the Southern District of Texas. The Chapter 11 case number is 16-60040.

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