Alpine Summit posits settlement term sheet after rash of objections

Chicago, July 7 – Alpine Summit Energy Partners, Inc. submitted a settlement term sheet after multiple entities objected to the debtor obtaining post-petition financing, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of Texas.

Objectors included ERC Acquisitions II LLC, Paleo Oil Co. LLC, Knight Energy Services, LLC, Prominence Oil & Gas, LLC, Halliburton Energy Services, Inc. and Aldonsa Inc. (Oilfield Instrumentation USA).

Alpine Summit responded with a document that would be attached to an interim debtor-in-possession order.

Term sheet

According to the proposed term sheet, the debtors, the ad hoc group and lender Bank7 agree that the debtors will file a motion to sell all of their assets within the current milestones.

The parties will work together on an agreement for the allocation and distribution of the sale proceeds.

All of the parties named above agreed to expedited mediation on a timeline to be agreed of all issues amongst them including but not limited to, property interests, commercial title and ownership disputes.

If the mediation is not successful, the court will determine the title disputes.

Alpine Summit will not object to the ad hoc group’s standing to assert the rights of the drilling partnerships with respect to the title disputes.

Alpine Summit will pay up to $350,000 per month for legal fees for the mediation and litigation for the title disputes for the ad hoc group.

Bank7 will not be subject to a cap on fees, but if the fees are higher than $350,000 per month, the cap will be raised for the ad hoc group in like amount.

Bank7 agrees to limit its DIP roll up to a one-to-one ratio.

Bank7 will permit payments to the drilling partnerships for up to $1.52 million with the ad hoc group and Bank7 reserving their respective rights for additional amounts.

Two wells have been excluded from DIP liens. They will not be considered disputed wells and are considered the property of the drilling partnerships.

In return for the modification, the ad hoc group withdraws its objections and agrees to support the DIP order.

Further, the group will not oppose entry of bid procedures consistent with the terms or any other first-day relief.

DIP loan

As previously reported, Alpine Summit secured about $15.5 million in DIP financing to be provided by their existing bank group, which includes Bank7. Following an interim order, the debtors had access to $8 million of the financing.

Following a final order, the DIP financing will also include a $31 million rollup of prepetition loans.

Interest on the DIP facility will be the Prime rate plus 200 basis points per annum, with a default interest rate of 15% per annum. Each would be payable monthly in kind.

There is a closing fee of 1%.

Nashville-based Alpine Summit Energy Partners develops, owns and operates oil and gas properties in several formations in Texas. The Chapter 11 case number is 23-90739.

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