Lone Pine files restructuring plan; calls Jan. 6 creditors meetings

By Caroline Salls and Toni Weeks

San Luis Obispo, Calif., Dec. 17 - Lone Pine Resources Inc. announced on Tuesday that it filed with the Court of Queen's Bench of Alberta a plan of compromise and arrangement under the Companies' Creditors Arrangement Act relating to its previously announced restructuring plan.

According to a press release, the plan provides for, among other things, the conversion of outstanding 10 3/8% senior notes due 2017 and other unsecured debt into new common shares, an offering of new preferred shares to eligible affected creditors to raise between $100 million and $110 million and the cancellation of all outstanding shares of Lone Pine common stock. Current shareholders will not receive any distributions under the plan, the release noted.

The court has also authorized the company and its subsidiaries to hold meetings of the affected unsecured creditors to consider and vote on the plan. Separate meetings will be held on Jan. 6 for the affected unsecured creditors of each of the company and its subsidiaries.

In order to be approved by the relevant class of affected creditors, the plan for a class must be approved by a majority in number of affected creditors with voting claims representing at least two-thirds in value of the total voting claims of all such unsecured creditors who vote in person or by proxy at the meeting.

If the plan is approved by the required majorities of affected creditors, Lone Pine plans to apply to the court for an order under the CCAA sanctioning and approving the plan. A hearing for the sanction order is set for Jan. 9.

Hedging charges recognized

The company also announced separately that its foreign representative was granted recognition by the U.S. Bankruptcy Court for the District of Delaware of a CCAA order approving hedging charges and liens on assets located in the U.S. jurisdiction, according to a Dec. 17 court filing.

The company said the Nov. 28 order authorized the Lone Pine debtors to negotiate and enter required hedges and grant a lien on the U.S. assets for the benefit of hedge counterparties, up to a maximum of $40 million.

According to the motion, a C$130 million ABL loan commitment requires Lone Pine Resources Canada Ltd. to enter into commodity hedge arrangements covering specified minimum volumes of its oil and gas production at prices acceptable to the arrangers.

Lone Pine said entering into hedging arrangements is a prudent way to protect the debtors and their stakeholders from the potential risk of negative price movements for crude oil and natural gas.

Lone Pine, a Calgary, Alta., company engaged in the exploration and development of natural gas and light oil in Canada, filed for CCAA proceedings in the Court of Queen's Bench of Alberta and Chapter 15 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Sept. 25. The Chapter 15 case number is 13-12487.

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