Unit completes financial restructuring, emerges from Chapter 11 case

By Caroline Salls

Pittsburgh, Sept. 3 – Unit Corp. announced Thursday that it emerged from Chapter 11 bankruptcy, marking the completion of its financial restructuring process and the implantation of its plan of reorganization, according to a company news release.

The plan was confirmed by the U.S. Bankruptcy Court for the Southern District of Texas on Aug. 6.

“Our successful financial restructuring positions us to handle current challenges in the oil and gas industry and realize the potential of our company,” president and chief executive officer David T. Merrill said in the release.

“We look forward to continuing to enhance our financial strength and using our strengths, teamwork and focus to improve our performance as a company.”

Under the plan, the company will complete a debt-for-equity exchange with the holders of its previous 6 5/8% senior subordinated notes and will exchange its old common stock for warrants to purchase its new common stock.

As part of the plan, Unit said it converted its existing credit facility led by BOKF, NA into a $140 million reserve-based lending revolving loan and $40 million term loan.

The exit financing is scheduled to mature on March 1, 2024.

Additionally, the company said it will have significantly reduced its unsecured debt, further bolstering its balance sheet.

Unit said it will issue a total of 12 million shares of new common stock, 95% of which will be issued to holders of the subordinated notes and holders of specified allowed general unsecured claims, while 5% has been issued to the lenders under the exit credit agreement.

The reorganized company will also issue warrants to purchase up to 1.8 million shares of the new common stock to holders of old common stock.

The exercise price of the warrants will be determined and the warrants will become exercisable once all general unsecured claims are resolved. The company said it will calculate the initial exercise price per share for the warrants, which will be set at an amount that implies a recovery by holders of the subordinated notes of the $650 million principal amount of those notes plus interest to the May 15, 2021 maturity date of the notes.

The new board of directors appointed upon Unit’s emergence consists of Robert Anderson, Alan Carr, Phil Frohlich, Steven Hildebrand, David Merrill, Philip Smith and Andrei Verona.

The company said it is seeking to facilitate trading of the new common stock on one of the OTC markets, with this process expected to be completed during the fourth quarter. The debt-for-equity exchange and common stock-for-warrant exchange is also expected to be completed in the fourth quarter.

Vinson & Elkins LLP served as legal adviser, Evercore Group LLC served as investment banker and Opportune LLP served as restructuring adviser to the company.

Unit 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. The company filed bankruptcy on May 22 under Chapter 11 case number 20-32740.

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