Tenrgys receives confirmation of Chapter 11 plan of reorganization

By Sarah Lizee

Olympia, Wash., March 2 – Tenrgys, LLC’s amended Chapter 11 plan of reorganization was confirmed on Wednesday by the U.S. Bankruptcy Court for the Southern District of Mississippi, according to an order.

As previously reported, the company said it developed a path to exit Chapter 11 through a plan that is supported by secured lender PanAm19 Holdings, LLC, which had opposed the company’s previously filed plans, FS/EIG Advisor, LLC, investment adviser to FS Energy and Power Fund, sole stockholder of FSEP Investments, Inc., and Tellus Operating Group, LLC.

The amended plan includes equitization of the entirety of PanAm’s allowed secured claim through a new class of equity in reorganized Tenrgys entitling PanAm to 51% of the voting interests and a right to receive distributions though a waterfall, under which PanAm’s share of distributions initially would be 90%, but would scale down based on PanAm’s return on investment to 50% as more distributions are made; and 70% of the equity in debtor Telpico.

It also includes treatment of the FSEP’s allowed unsecured claim through the payment of $20 million cash on the effective date, a new $20 million second-lien loan with a five-year maturity, a new class of equity in reorganized Tenrgys equivalent to a 5% economic interest, and an indirect 5% interest in Telpico.

Holders of existing Tenrgys equity interests will receive a new class of equity in reorganized Tenrgys entitling existing Tenrgys equity holders to 49% of the voting interests and a right to receive distributions though the waterfall, under which existing Tenrgys equity’s share of distributions initially would be 5% but would scale up based on PanAm’s return on investment to 45% as more distributions are made; and an indirect 25% interest in Telpico.

The plan provides for the payment in full or reinstatement of all other claims.

About $25 million of exit financing will be funded on the effective date by PanAm and Tellus to make the cash payment to FSEP and for working-capital needs and to fund the other distributions under the plan, plus an additional $5 million in available liquidity under a working-capital facility.

The company will have a total of about $45 million in funded debt at emergence.

PanAm has committed to fund 100% of the initial exploration work program for Telpico’s Colombian assets.

The company said it believes that these restructuring transactions represent a better recovery for all stakeholders and are in the best interests of the debtors’ estates and their creditors.

Ridgeland, Miss.-based Tenrgys operates an independent oil and natural gas business. The company filed bankruptcy on Sept. 17 under Chapter 11 case number 21-01515.

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