PetroQuest secures conditional court approval of disclosure statement

By Caroline Salls

Pittsburgh, Nov. 15 – PetroQuest Energy, Inc. received conditional court approval of the disclosure statement for its pre-packaged plan of reorganization, according to an order filed Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, PetroQuest filed bankruptcy to implement a restructuring support agreement with its first-lien lenders and second-lien noteholders to permanently reduce its debt and the related interest expense.

PetroQuest said the support agreement calls for a comprehensive restructuring of its capital structure and has the support of holders of 81.83% of its 10% second-lien senior secured notes due 2021, holders of 84.76% of its 10% second-lien senior secured PIK notes due 2021 and the lenders under its multi-draw term loan agreement.

The company said the proposed pre-packaged plan of reorganization would eliminate $204.5 million in debt from its balance sheet.

Under the plan, $50 million in principal amount plus accrued interest on pre-bankruptcy term loans would be paid in full.

A $50 million exit facility will be entered with existing second-lien lenders. The company has agreed to pay commitment parties a put option premium equal to 3% of the principal amount of the exit facility in the form of new equity.

More than $284.4 million in principal amount and accrued interest on the notes would be exchanged for new common stock in the reorganized company, subject to dilution by new common stock to be issued in connection with a management incentive plan and new common stock to be issued to exit facility backstop parties, as well as $80 million of secured PIK notes.

Existing common stock and preferred stock would be extinguished, and existing equityholders would not receive or retain any distribution.

Holders of priority claims will be paid in full in cash.

Holders of other secured claims and priority tax claims will either be paid in full in cash, have their claims reinstated or receive the collateral securing the claim.

Holders of general unsecured claims will receive their share of $400,000, less the out-of-pocket expenses of the claims administrator.

Intercompany claims and intercompany interests will be reinstated or canceled, at the debtors’ option.

The plan confirmation hearing is scheduled for Dec. 20.

PetroQuest is an oil and natural gas explorer and producer based in Lafayette, La. The company filed bankruptcy on Nov. 6 under Chapter 11 case number 18-36322.

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