Midstates Petroleum emerges from bankruptcy, cuts $2 billion of debt

By Caroline Salls

Pittsburgh, Oct. 21 – Midstates Petroleum Co., Inc. said Friday that it emerged from Chapter 11 bankruptcy protection after satisfying all of the conditions precedent to the effectiveness of its plan of reorganization.

The plan was confirmed by the U.S. Bankruptcy Court for the Southern District of Texas on Sept. 29.

According to a company news release, with the completion of its restructuring, Midstates has eliminated roughly $2 billion of debt along with more than $185 million of annual interest expense.

The company’s new capital structure consists of a $170 million first-lien revolving credit facility maturing in 2020.

SunTrust Bank is the administrative agent for the exit facility.

Interest will accrue at Libor plus 450 basis points, with a 1% floor.

Midstates said it exits its restructuring with about $75 million in total liquidity and a business plan that projects positive free cash flow at current strip pricing.

“We look forward to working closely with all of our key stakeholders going forward, and we are excited about the opportunities that lie ahead,” president and chief executive officer Jake Brace said in the release.

Creditor treatment

Treatment of creditors under the plan will include the following:

• Holders of priority and secured claims, other than secured claims arising under the company’s RBL facility and the second-lien and third-lien notes, will be paid in full, in cash;

• The RBL lenders will receive $82 million in cash and, in return, will provide a $170 million reserve-based exit facility;

• Holders of second-lien notes will receive cash equal to the debtors’ cash on hand as of the plan effective date, less cash payments and reserves to be funded under the plan and $70 million of balance sheet cash, but in no event more than $60 million, as well as 97.5% of the equity in reorganized Midstates;

• Holders of third-lien notes will receive 2.5% of the equity in reorganized Midstates and warrants to acquire an additional 15% of equity. The warrants will strike at a $600 million equity valuation for reorganized Midstates and will expire 42 months after the plan effective date;

• Holders of unsecured notes and general unsecured claims will receive their share of 3.7% of the equity in reorganized Midstates; and

• All existing equity interests will be extinguished, and existing equityholders will receive no distribution.

New board

In accordance with the plan, the terms of the company’s previous board of directors expired, and Midstates has appointed a new board, effective Friday.

The new board consists of Alan Carr, Patrice Douglas, Neal Goldman, Todd Snyder, Michael Reddin, Bruce Vincent and Brace.

Stock listing

In connection with its emergence, Midstates also received approval for its common stock to be listed for trading on the NYSE MKT platform.

The common stock will begin trading on Oct. 24 under the symbol “MPO.”

Midstates Petroleum, a Tulsa, Okla.-based exploration and production company, filed for bankruptcy on April 30. The Chapter 11 case number is 16-32237.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.