Rockall Energy Holdings files pre-packaged plan, sets bid procedures

By Sarah Lizee

Olympia, Wash., March 10 – Rockall Energy Holdings, LLC filed a joint pre-packaged Chapter 11 plan and disclosure statement Thursday with the U.S. Bankruptcy Court for the Northern District of Texas.

The company said it had explored many alternatives prior to filing the Chapter 11 cases in an effort to deleverage its balance sheet, bolster its liquidity position and maximize value for stakeholders, including by pursuing a capital raise via a public offering, running an out-of-court sales process, and seeking to settle certain liabilities and modify contracts.

Ultimately, given the company’s liquidity position and significant debt service and other financial obligations, the company and its board of directors determined that pursuing an in-court sales process with the support of its secured lenders and filing the Chapter 11 cases was necessary.

Goldman Sachs Bank USA and the company’s other prepetition secured lenders signed a restructuring support agreement that outlines terms for the debtors to pursue the sale or alternative equitization.

Plan terms

According to the disclosure statement, administrative expense claims, professional fee claims and priority tax claims will be paid in full.

DIP claims will be paid in cash in full if a payout event occurs. Otherwise, they will be paid cash proceeds resulting from a successful bid and any available cash of the debtors. Any remaining DIP claims would be converted into an exit facility.

Holders of other priority claims and other secured claims will receive payment in full in cash or other treatment leaving the claims unimpaired.

If a payout event occurs, holders of secured parties claims will receive their pro rata share of cash resulting from any asset sale. Otherwise, they will receive their pro rata share of an equity distribution and cash, if any.

Holders of general unsecured claims will not receive nay distribution unless all senior claims are paid in full. In the event there are no proceeds from the sale process available for this class, all general unsecured claims will be canceled.

Intercompany claims and intercompany interests will be adjusted, reinstated, compromised or discharged.

Holders of subordinated claims will not receive any distribution.

Holders of Rockall equity interests will not receive any distribution unless all senior claims are paid in full.

Bid procedures

The company said it is hoping to choose a stalking horse bidder and provide bid protections that would include a 2.5% breakup fee and a $400,000 expense reimbursement.

Under the proposed bid procedures, the company would have until April 18 to choose a stalking horse, bids would be due by 6 p.m. ET on April 29, an auction would be held on May 4, and a sale hearing would take place on May 13.

DIP financing

The company is also seeking court approval of a $51 million debtor-in-possession facility with Goldman as lender. The facility consists of $17 million in new money term loans and $34 million of DIP roll-up obligations.

The debtor is seeking interim access to $5 million of the new money and $10 million of the roll-up.

Interest would be SOFR plus 700 basis points with a 1% floor. There is a 2% commitment fee.

The financing is set to mature on 90 days after the petition date.

The company is also seeking access to the cash collateral of the prepetition secured parties.

The Dallas-based oil exploration and production company filed Chapter 11 bankruptcy on March 9 under case number 22-90000.

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