EV Energy Partners LP (NASDAQ:EVEP) and its subsidiaries reported that the firm has finalized a restructuring support agreement with certain holders of around 70% of its 8% senior notes due 2019 and lenders holding around 94% of the principal sum outstanding under the firm’s reserve-based lending facility. The RSA was also supported by EnerVest, Ltd. and EnerVest Operating, L.L.C. as they will continue to offer services to the firm.
The RSA plans a comprehensive restructuring of EV Energy’s capital structure, to be deployed through a proposed pre-packaged program of reorganization that will considerably deleverage the firm’s balance sheet. Consistent with this deal, the firm will start the solicitation of votes to reject or accept the plan and start its prepackaged bankruptcy litigation in the U.S. Bankruptcy Court around April 8, 2018. Neither EnerVest Operating nor EnerVest is looking for Chapter 11 bankruptcy relief.
Specifically, the Plan, which is contingent to sanction by the Bankruptcy Court, considers the equitization of all of the firm’s Senior Notes and the move into a modified reserve-based lending facility with firm’s existing lenders. In addition, the Plan considers that customers, suppliers and other owners of general unsecured claims will be compensated in full in the ordinary progression of business and otherwise be unaffected. The firm does not intend to reject any of its current contracts under the restructuring.
It anticipates EnerVest Operating to remain as the main operator for its natural gas and oil properties in the San Juan Basin, Barnett Shale, Michigan, Appalachian Basin, Permian Basin, Central Texas, Karnes County and Monroe Field. Michael Mercer, the CEO and President, expressed that they consider that this offers the best path forward for their firm to maintain access to liquidity, lower leverage and enhance value for all of their stakeholders. Upon emergence and during the restructuring, they project to have ample liquidity and don’t expect the requirement for any capital.