Chaparral Energy completes restructuring and emerges from bankruptcy

By Caroline Salls

Pittsburgh, March 21 – Chaparral Energy Inc. completed its financial restructuring and emerged from Chapter 11 bankruptcy protection, according to a Tuesday news release.

The company, whose financial reorganization plan was confirmed by the U.S. Bankruptcy Court for the District of Delaware on March 10, said it converted $1.2 billion of pre-bankruptcy debt to equity and eliminated about $100 million of annual interest expense.

Chaparral said its new capital structure includes its cash on hand, as well as a reserve-based lending facility with an initial borrowing base of $225 million and an additional $150 million term loan. Both the revolver and term loan will mature in four years.

The company also received an additional $50 million in cash after issuing equity from a rights offering. Chaparral currently has more than $100 million in liquidity.

“Our emergence marks a new and prosperous time in Chaparral’s storied history,” chief executive officer K. Earl Reynolds said in the release.

“Our balance sheet now provides the stability and opportunity needed to focus our operations on developing our approximate 100,000 net acre position in the STACK Play. With more than 5,000 potential STACK locations and one of the industry’s lowest operating cost structures, we are well-positioned to generate significant returns for Chaparral and our investors in the near- and long-term future.”

In accordance with its restructuring plan, Chaparral has a newly appointed independent, seven-member board of directors.

The new board includes Reynolds, Douglas Brooks, Matt Cabell, Robert Heinemann, Sam Langford, Ken Moore and Gysle Shellum.

Plan terms

As previously reported, the plan of reorganization includes a $50 million rights offering to be offered to pre-bankruptcy noteholders, as well as a rights offering for holders of general unsecured claims.

Waived post-bankruptcy default interest on the credit agreement will be deemed released and holders of pre-bankruptcy credit agreement claims will receive either a share of the exit facility loans and, to the extent the outstanding claims exceed the exit facility loans, cash sufficient to satisfy the excess or another agreed treatment.

Holders of pre-bankruptcy notes claims and general unsecured claims will receive a share of a new equity interest pool and subscription rights to purchase rights offering shares.

Holders of convenience class claims will be paid in full in cash.

Holders of royalty payment litigation claims will receive either a share of $6 million and the payment of up to $1.5 million of attorneys’ fees if the class votes to accept the plan or a share of the new equity interest pool and subscription rights if it votes to reject the plan.

Intercompany claims will be reinstated, compromised or canceled.

Holders of old parent company interests will not receive any recovery under the plan.

Old affiliate interests will remain effective and outstanding on the plan effective date and will be owned and held by the same person that held them before the plan effective date.

Based in Oklahoma City, Chaparral Energy is an oil and gas company. It filed for bankruptcy on May 9, 2016 under Chapter 11 case number 16-11144.

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