Finance & Investing | Bankruptcy / Restructure Update | Capital Markets

LINN Energy, Berry Petroleum Files Chapter 11 Bankruptcy

Share Print Bookmark    |    Wednesday,May 11,2016

LINN Energy LLC and Berry Petroleum Company, LLC have entered into a Restructuring Support Agreement with holders of at least 66.67% by aggregate outstanding principal amounts of LINN's Amended and Restated Credit Agreement, dated as of April 24, 2013, as amended, and Berry's Second Amended and Restated Credit Agreement, dated as of November 15, 2010, as amended.

LINN acquired Berry Petroleum in December 2013.

Assets:

• Mid-Continent - Anadarko / Arkoma Basin
• East Texas Cotton Valley
• Permian - Delaware Basin
• Hugoton Basin
• Rockies - Uinta, Williston, Powder River, Piceance, Green River basins
• San Joaquin Basin - California
• Antrim Shale - Michigan / Illinois

In order to implement the terms of the Restructuring Support Agreement, the Company today filed voluntary petitions for restructuring under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.

The Company expects its operations across its asset base to continue in the ordinary course throughout the Chapter 11 process.

Mark E. Ellis, Chairman, President and Chief Executive Officer, said, "We believe the Restructuring Support Agreement reflects the confidence of our first lien lenders in the quality of our assets and represents an important step forward for the Company. After our review of the available options, with the assistance of our financial and legal advisors, we determined that this court supervised financial restructuring process is the best course of action for the Company and our stakeholders. Like many others in our industry, LINN has been impacted by continued low commodity prices. We believe that these steps will provide us the financial flexibility to successfully manage in the current commodity price environment and, when combined with constructive agreements with our remaining creditors and potential third party financing, will provide a platform for future growth."

Mr. Ellis continued, "Importantly, we expect to continue normal operations across our diverse and high-quality asset base. The hard work and dedication of our employees has enabled us to achieve strong operational results, and we are truly grateful for their commitment to safety and to driving the Company's success. Together, we look forward to working cooperatively with our vendors, suppliers and partners as we move through this process."   

Under the Restructuring Support Agreement, the parties agreed to support a plan of reorganization for the Company that would include: (1) a new LINN $2.2 billion reserve-based and term loan credit facility on the terms set forth in the Restructuring Support Agreement, (2) the consensual use of LINN and Berry's cash collateral to fund the Chapter 11 Cases under negotiated terms and conditions, and (3) the broad terms of a comprehensive restructuring of the Company's indebtedness.  The Restructuring Support Agreement will be filed as an exhibit to a Current Report on Form 8-K with the Securities and Exchange Commission on May 11, 2016.

The Company anticipates that the cash available to it during its Chapter 11 Cases will likely provide sufficient liquidity to support the business during the financial restructuring process. As such, the Company does not currently intend to seek debtor-in-possession (DIP) financing.

LINN has filed various customary motions with the Bankruptcy Court in support of its financial restructuring. The Company intends to continue to pay employee wages and provide healthcare and other defined benefits without interruption in the ordinary course of business and to pay suppliers and vendors in full under normal terms for goods and services provided on or after the Chapter 11 filing date. 

Advisors

Kirkland & Ellis LLP is serving as legal advisor to LINN, Lazard is serving as its financial advisor and AlixPartners is its restructuring advisor.