Energy Partners disclosure statement approved by bankruptcy court

By Jennifer Lanning Drey

Portland, Ore., June 16 - Energy Partners, Ltd. received court approval of the disclosure statement for its plan of reorganization from the U.S. Bankruptcy Court for the Southern District of Texas, according to a company news release.

The plan confirmation hearing is July 29.

The company said it would begin soliciting votes on the plan on June 22.

"EPL is positioned to emerge from Chapter 11 as a stronger company, with a significantly improved balance sheet that will enable it to operate through the current economic environment and beyond," Alan D. Bell, the company's chief restructuring officer, said in the release.

Plan support

As previously reported, the plan is supported by an ad hoc committee of Energy Partners' senior noteholders comprising more than 66.6% of the outstanding principal amount of the company's 9¾% senior unsecured notes due 2014 and senior floating-rate notes due 2013.

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 about $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.

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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