Whether in court or out of court, in most restructuring situations involving stakeholders with various claims to a Company’s assets, the valuation of these assets is a critical component. In restructurings involving oil and gas reserves, the valuation analyses are often more complex because of the technical data and skillset required to value these reserves.
Using their recent work on the Energy XXI case as a backdrop; LM+Co’s Managing Director, Aaron Kibbey and Associate, Brian Bostwick, along with HJ Gruy and Associates’ Robert Rasor, outline the complexities and key considerations when valuing gas and oil assets in the February 2017 issue of Finance Monthly.
In the wake of Energy XXI’s December 30, 2016 plan effective date, WilmerHale bankruptcy and financial restructuring co-chair Phil Anker, Loughlin Management Partners managing directors Aaron Kibbey and John Sordillo, and H.J. Gruy and Associates executive vice president Robert Rasor joined Debtwire legal analyst Richard Goldman for an in-depth discussion on the litigation tactics these advisors employed to protect the interests of, and increase recoveries for, an ad hoc committee of EPL Oil & Gas noteholders. During their conversation, the expert panel addressed an inter-debtor cash collateral dispute that arose in the early days of the Chapter 11 case, the committee’s efforts to recharacterize, subordinate and disallow almost USD $1b in intercompany transfers, and proposed best practices when attempting to value oil and gas assets in support of plan confirmation.
Key Topic Time Stamps
06:26 Case background, capital structure and Chapter 11 descent discussion.
16:55 Cash collateral discussion.
29:15 Intercompany transfer discussion.
1:03:11 Asset valuation discussion.
As first reported in Debtwire | 10 November 2016 | 17:12 EST
The bankruptcy judge overseeing the Chapter 11 case of Erickson Inc today approved the company’s first day motions, including use of its two debtor-in-possession (DIP) financing facilities.
Judge Harlin “Cooter” Hale of the US Bankruptcy Court for the Northern District of Texas approved the helicopter services provider’s motions to pay employee wages, cash management and retention of Kurtzman Carson Consultants (KCC) as claims agent. The judge did not set a “second day” hearing for final approval of today’s motions.
Erickson filed for Chapter 11 on 8 November with USD 66.67m in term loan DIP financing from its second lien lenders and another DIP from its first lien lenders that will partially roll up USD 130m in first lien debt. The DIP requires the company to confirm a reorganization plan by 7 April 2017. Debtor counsel Kenric Kattner of Haynes & Boone said today that the company is taking a three-pronged approach to its reorganization: reduce costs, restructure its balance sheet and determine what, if any, aircraft leases it will reject.
The company met resistance to its DIP financing from the office of the US Trustee, who took issue with a provision that would have the company make a USD 14.2m payment to perform under a contract with Military Sealift Command, the transportation provider for the US Department of Defense. The trustee said that the debtor had not taken the proper steps to make the payment, and that the company was essentially assuming a lease on the first day without actually filing a motion to do so.
The parties broke this afternoon to negotiate and returned with an agreement that will approve the DIP on an interim basis, though the details of the deal were not revealed.
The term loan DIP comes from holders of the company’s USD 355m 8.25% second lien notes due 2020, while Wells Fargo is agent on the first lien debt and the revolver DIP. The financing requires the company to win final DIP approval by 12 December, confirm a Chapter 11 plan by 7 April and put a plan into effect by 17 April.
The 8.25% notes last traded today at 37.75, down from 44.5 a month ago, according to MarketAxess.
There is definitely no “one size fits all” when it comes to investment bankers. An experienced investment banker can help guide a company in choosing the best solution to address its specific capital needs.
LM+Co’s Guide to Middle Market Debt Financings provides an overview of the various debt financing instruments and related capital providers in today’s middle market and highlights important considerations for potential borrowers prior to a refinancing or recapitalization. Download our article to read more.
Loughlin Management Partners is proud to share some of our recently completed engagement summaries. These success stories, whether the focus was on Performance Improvement, Private Equity Value Creation, Restructuring or Corporate Finance, offer a snapshot of both the breadth of LM’s services and the results we achieve for our clients.
Please download our Capability Fact Sheet and read about Our Recent Success Stories to learn more!
Finance Monthly hears from James J. Loughlin, Jr. and Patrick J. Fodale from Loughlin Management Partners + Co who offer us a rich insight into the turnaround management sector in the US including recent trends, tips on when to retain a turnaround manager and strategies in regards to successful turnarounds.
Managing Director Pat Fodale will serve as moderator for the Middle Market Energy Entrepreneur Roundtable.
You’ve sourced a proprietary deal, invested millions in a company and dedicated countless man-hours throughout the past several years enhancing the business. Now it’s time to sell and realize the return on your investment. But today’s uncertain market is telling you otherwise. In a period defined by low earnings growth, financial sponsors are finding it difficult to exit their portfolio companies with strong returns on their investment. LM+Co’s Private Equity Value Creation team has developed and successfully implemented three roadmaps that ensure a smooth ride and provide financial sponsors with a market-ready plan that establishes the company’s value creation history and future growth potential.
LM+Co Capital is pleased to present our Q3 2016 middle market update, which highlights the key trends impacting US M+A and Capital Markets activity through the first half of 2016. Overall M+A and asset sales deal flow has slowed in this low-growth earnings environment and private equity firms have narrowed their focus to the purchasing of “quality” assets and improving the performance of existing assets. We expect a reversion to the mean in the remainder of 2016, after record levels of activity in 2014 and 2015 – leading to contracted leverage and valuation multiples across the middle-market. We see continued opportunities in the lower-middle-market as buyers look to “roll-up” smaller companies with continued support from the debt markets in the form of low rates and high levels of available levels of capital.
*LM+Co Capital is an independently operated affiliate of LM+Co. A licensed broker dealer, LM+Co Capital is registered with FINRA, SIPC.
In an exclusive interview with Acquisition International, Managing Directors Richard Zytkowicz, Patrick Fodale and John Krupar provide their views on turnaround management an corporate renewal.
The interview, published in the May 2016 issue of the magazine, discusses the importance of turnaround management in today’s business world, the importance of having the right team of turnaround professionals and the challenges that industry faces in 2016 and beyond.
For further information on LM+Co’s Turnaround and Restructuring Practice, Click Here
To read the full interview featured in Acquisitiion International, Click Here