Unit Corp. files Chapter 11 cases to restructure balance sheet

Chicago, May 22 – Unit Corp. announced that it has filed voluntary petitions under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division to effectuate a pre-negotiated plan of reorganization, according to a press release late on Friday evening.

The plan will reduce the company’s funded debt obligations by more than $650 million and “right-size the company’s balance sheet for go-forward operations,” according to the release.

The company’s 50%-owned midstream affiliate, Superior Pipeline Co., LLC and its subsidiaries, is not a debtor in the Chapter 11 cases and is unaffected by the company’s Chapter 11 filing.

The Chapter 11 petitions were filed in accordance with a restructuring support agreement (RSA) between the company, the holders of more than 70% of the company’s 6 5/8% senior subordinated notes due 2021 and all of the lenders under the company’s senior credit agreement.

The agreement includes an equitization of all the outstanding subordinated notes and the replacement of the existing credit agreement. It also includes debtor-in-possession (DIP) financing with an $180 million exit financing facility.

Consummation of the plan will be subject to confirmation by the court and other conditions in the plan, the RSA and related transaction documents.

The bank loan lenders that are parties to the agreement have provided a commitment up to $36 million of DIP financing.

The company anticipates up to $180 million will be available on an interim basis.

The financing, combined with the company’s usual operating cash flow, is expected to provide sufficient liquidity for the company to continue to operate in ordinary course through the restructuring process.

The company has filed several customary motions with the court seeking authorization to support its operations while this process is ongoing, including authority to continue payment of employee wages, salaries and benefits without interruption, and to continue paying all vendors and suppliers of Unit Drilling Co. in the ordinary course of business. The company expects to receive court approval for these requests.

Vinson & Elkins LLP is serving as legal advisor, Evercore Group LLC is serving as investment banker, and Opportune LLP is serving as restructuring advisor to the Company.

Weil, Gotshal & Manges LLP is serving as legal advisor and Greenhill & Co., LLC is serving as financial advisor to an ad hoc group of holders of subordinated notes.

The case number is 20-32740.

Unit Corp. is a Tulsa, Okla.-based energy company engaged through its subsidiaries in oil and natural gas exploration, production, contract drilling and natural gas gathering and processing.

© 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.