Bankruptcy / Restructure Update | Capital Markets | Private Equity Activity

Midstates Petroleum Files Chapter 11 Bankruptcy

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   |    Sunday,May 01,2016

Midstates Petroleum Company, Inc. announced that they have filed voluntary petitions for relief under Chapter 11. 

The Chapter 11 filing will facilitate a pre-arranged restructuring of the Company's consolidated balance sheet through a reorganization plan.

The Company has entered into a Plan Support Agreement with its lenders under the Company's reserve-based revolving credit facility representing approximately 80% in principal amount of its first lien debt, along with certain other creditors holding approximately 74% in principal amount of the Company's second lien debt and approximately 77% in principal amount of the Company's third lien debt. Among other things, the PSA contemplates

• (i) the permanent pay-down of $82 million of the Company's first lien debt and a $170 million credit facility upon emergence, in the form of either a reserve-based revolving credit facility, a term loan, or a combination thereof,
• (ii) the pay-down of up to $60 million of the Company's second lien debt, and
• (iii) the conversion into equity of all of the Company's remaining debt junior to the first lien debt.

Jake Brace, President and Chief Executive Officer, said, "The sharp decline in oil prices since 2014 has put much of the oil and gas industry in financial difficulty. While our premier Mississippian Lime assets can achieve solid rates of return in the current price environment, our highly leveraged balance sheet has severely limited our ability to sustain our operations during an extended period of low prices. We believe that by restructuring the Company's balance sheet now, we will be able to navigate through this downturn and create a much stronger and more financially sound company that will have long-term benefits for our employees, vendors, and all our stakeholders. We will operate our business as usual throughout this process and will complete our reorganization as quickly and cost effectively as possible."