Shoreline Energy sale procedures approved; auction set for Jan. 23

By Caroline Salls

Pittsburgh, Dec. 15 – Shoreline Energy LLC obtained court approval of the bid procedures for the proposed sale of its assets, according to an order filed Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, affiliates of second-lien lender Highbridge Capital Management LLC and the first-lien lenders agreed on the basic terms of a sale process for substantially all of the assets of the debtors.

Specifically, a partnership will be established to serve as stalking horse bidder for the company’s core assets.

In consideration for the assets, the purchaser and oil and gas hedging agreement party Morgan Stanley Capital Services LLC agreed to submit a credit bid of the outstanding amount under the company’s debtor-in-possession credit agreement, plus an amount equal to $115 million less the amount of claims bid under the DIP credit agreement under a first-lien credit bid, plus $1.5 million in cash.

The purchaser’s capital structure will include a $40 million 4.5-year first-lien multi-draw term loan facility that will bear interest at a rate equal to Libor plus 700 basis points with a 1% Libor floor and carry a 2% original issue discount, a $35 million five-year second-lien term note, which will bear interest at Libor plus 600 bps with a 1% Libor floor, preferred A equity with zero coupon in the face amount of $60 million, preferred B equity with zero coupon in the face amount of $60 million and common equity.

Competing bids are due by 5 p.m. ET on Jan. 17 and must exceed the cash component of the stalking horse bid by at least $300,000.

An auction will be held on Jan. 23, if necessary, and a sale hearing is scheduled for Feb. 10.

Houston-based Shoreline is a privately owned oil and gas exploration and production company The company filed bankruptcy on Nov. 2 under Chapter 11 case number 16-35571.

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