Energy Partners files pre-packaged plan of reorganization, disclosure

By Jennifer Lanning Drey

Portland, Ore., May 18 - Energy Partners, Ltd. filed its pre-packaged joint plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan is supported by an ad hoc committee of Energy Partners' senior noteholders comprising more than 66.6% of the outstanding aggregate principal amount of the company's 9¾% senior unsecured notes due 2014 and senior floating notes due 2013, according to a company news release.

"By achieving this important milestone in our restructuring within the anticipated timeframe, we move one step closer to emerging from bankruptcy as a stronger company," Alan D. Bell, chief restructuring officer of Energy Partners, said in the release.

Under the plan, Energy Partners' three series of outstanding senior unsecured notes, which represent $455 million, would be converted into 100% of the outstanding common stock in the reorganized company.

Current stockholders would receive warrants exercisable for 12.5% of the common stock of the reorganized company.

Secured debt obligations under Energy Partners' credit agreement, which represent approximately $83 million, will be paid in full.

Energy Partners is also seeking a new first-lien working capital facility to fund its ongoing operations and pay obligations under the plan.

Creditor treatment

Under the proposed plan of reorganization:

• Holders of administrative claims, priority tax claims and priority claims will recover 100% in cash;

• Holders of secured claims will recover 100% by having their claim reinstated, paid in full in cash or satisfied with the collateral securing the claim;

• Holders of unsecured claims will recover 100% in cash or have their claim reinstated;

• Holders of the 9¾% senior notes and the company's 8¾% senior notes due 2010 will receive their share of 100% of the outstanding common stock in the reorganized company;

• Current stockholders will receive warrants exercisable for 12.5% of the common stock of the reorganized company, which will be issued in two classes, with 50% of the warrants expiring on the earlier of 30 months after the effective date of the plan of reorganization and a change of control of the reorganized company, and the remaining 50% of the warrants expiring on the earlier of 54 months after the effective date and a change of control of the reorganized company.

The warrants will have an initial exercise price equal to the sum of $455 million and the total exercise price of any stock options for the reorganized company's common stock outstanding as of the effective date, divided by the number of shares of common stock of the reorganized company as of the effective date.

A hearing on the disclosure statement is scheduled for June 10. The plan confirmation hearing is scheduled for July 22.

Energy Partners, a New Orleans-based oil and natural gas exploration and production company, filed for bankruptcy on May 1. The Chapter 11 case number is 09-32957.

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