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American Energy - Woodford Boosts Equity by $100 Million

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   |    Friday,June 26,2015

 American Energy – Woodford, LLC, an affiliate of American Energy Partners, LP, today announced that it has completed a series of transactions that increased the equity invested in the company by $100 million, reduced its debt by approximately $152 million and increased the company's liquidity by approximately $171 million. 

These transactions include the settlement of AEW's private offer to exchange any and all of its outstanding 9.00% Senior Notes due 2022 for its new 12.00% Second Lien notes due 2020.  The Exchange Offer was conducted upon the terms and subject to the conditions set forth in an offering memorandum and consent solicitation statement, dated May 26, 2015, and the related letter of transmittal, and expired at 11:59 p.m. New York City time on June 22, 2015.  As of the Expiration Date, $339.7 million in aggregate principal amount of the Existing Notes, representing approximately 97.1% of the outstanding principal amount of the Existing Notes, were validly tendered (and not validly withdrawn) pursuant to the Exchange Offer.

On June 24, 2015, AEW delivered an aggregate principal amount of approximately $237.6 million of New Notes, and a cash amount of approximately $8.4 million for accrued and unpaid interest on the Existing Notes accepted for exchange as well as for amounts payable in lieu of fractional New Notes otherwise issuable under the terms of the Exchange Offer.  A total of $10.3 million in aggregate principal amount of the Existing Notes remains outstanding after settlement of the Exchange Offer.  As part of the Exchange Offer, AEW also received the requisite consents from eligible holders of the Existing Notes to amend the indenture under which the Existing Notes were issued.  On the Settlement Date, AEW entered into a new indenture for the Remaining Notes, which, among other things, eliminates or amends substantially all of the restrictive covenants and reporting requirements, and modifies certain events of default and various other provisions contained in the Existing Indenture.  

The settlement of the Exchange Offer closed concurrently with the funding of $100 million of additional equity from AEW's private equity sponsor, The Energy & Minerals Group, Aubrey K. McClendon and other parties affiliated with Mr. McClendon.  AEW used a portion of this additional equity contribution to fully repay and terminate its existing revolving credit facility, and replace it with a new $500 million revolving credit facility with an initial and undrawn borrowing base of $140 million, fully underwritten by MUFG Union Bank, N.A.  AEW anticipates using the liquidity provided by the additional equity contribution and the New Credit Facility to accelerate its 2015 drilling program through the addition of a second drilling rig on its acreage in July.

Mr. McClendon, AEW's Chief Executive Officer and Chairman of the Board, stated, "The close of this exchange offer and consent solicitation marks what we believe will be the beginning of accelerated growth for AEW.  With a strengthened balance sheet and approximately $200 million in liquidity, AEW is now able to play offense with a faster tempo through increased rig activity and an opportunistic approach to bolt-on acquisitions that will drive significant value creation.  We appreciate the support that EMG, our noteholders and our commercial bankers showed for AEW throughout this transaction, and we look forward to delivering on our operating plan and creating enhanced value for all of our stakeholders."

Jennifer M. Grigsby, AEW's Chief Financial Officer, stated, "The combination of this successful exchange offer, the additional equity from EMG and Mr. McClendon, and the new credit facility significantly enhances the financial position of AEW and demonstrates market confidence in the quality and potential of our asset base.  I am proud of the collective efforts of all of our capital providers to work together on this solution that gives the company a much stronger balance sheet and greatly enhanced liquidity to grow its production and proved reserves over the next several years."

Mitsubishi UFJ Securities (USA), Inc., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co LLC served as the joint dealer managers and solicitation agents for the Exchange Offer and Consent Solicitation. The information agent and exchange agent for the Exchange Offer and Consent Solicitation (the "Information Agent") was Global Bondholder Services Corporation.