Chaparral Energy Inc has revealed that it has voluntarily filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in accordance with a restructuring support agreement it has made.
The company outlined that it has entered into the agreement to pursue a prepackaged plan of reorganization which will restructure its balance sheet by equitizing all $300 million of its existing unsecured bond obligations. It will also “substantially” bolster its liquidity position through $175 million in lending obligations under a reserves-based exit facility and a fully backstopped $35 million new money convertible note rights offering, according to Chaparral.
The company said it has commenced soliciting votes to approve the prepackaged plan. Holders of approximately 78 percent of the loans under Chaparral’s first lien revolving credit facility and holders of approximately 78 percent of its 8.75 percent senior notes due 2023 have agreed to vote in favor of the plan.
Chaparral said it expects the pre-packaged Chapter 11 reorganization to be completed relatively quickly due to the broad support of its creditors.
“While we have taken carefully measured and decisive action to address the challenges of 2020, the overall impact to the energy industry, including Chaparral, has been severe,” Chaparral Chief Executive Officer Chuck Duginski said in a company statement.
“Therefore, after thorough analysis of our strategic options, we determined that a voluntary Chapter 11 filing with broad creditor support provides the best course for Chaparral and its stakeholders,” he added.
“A swift restructuring will right-size our balance sheet, improve our cost structure and best position Chaparral for the future. Importantly, we intend to maintain normal operations and meet all of our trade commitments timely and under their existing terms,” Duginski continued.
The Chaparral CEO went on to say that the restructuring will allow the company to continue to efficiently operate without interruption and focus on delivering strong results.
Chaparral said it had cash on hand of approximately $32 million as of August 14, which, combined with its normal operating cash flow, is expected to be sufficient to allow it to maintain normal operations and meet its other financial commitments throughout the Chapter 11 restructuring period.
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