Energy XXI, creditors ink plan support agreement; changes detailed

By Caroline Salls

Pittsburgh, Nov. 14 – Energy XXI Ltd. entered into a plan support agreement with substantially all of its creditor constituencies, according to a news release.

The parties to the support agreement include holders of roughly 70% of the company’s secured second-lien 11% notes, the official committee of unsecured creditors appointed for the Energy XXI case and two informal groups of unsecured noteholders.

The restructuring is also supported by Energy XXI’s first-lien lenders and the indenture trustee for its senior convertible notes.

Energy XXI filed an amended plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the Southern District of Texas that incorporates the support agreement.

The company said the plan confirmation hearing is scheduled to begin on Dec. 8, and it expects to emerge from Chapter 11 by the end of the year.

“This plan support agreement significantly accelerates our financial restructuring process and reflects global consensus among our key creditors,” chief executive officer John Schiller said in the release.

“This agreement is the result of successful mediation and settlement discussions and paves the way for Energy XXI to move forward with enhanced financial flexibility.

“In addition, we are pleased to note that under the terms of the plan support agreement, most of our trade vendors will receive nearly full recoveries. We thank our business partners, vendors and customers for their support and we look forward to continuing our relationships following our emergence.”

Plan changes

According to court documents, the changes to the plan include the following:

• An increase of the general unsecured claim distribution to $1.47 million from $850,000, resulting in an increase in the estimated percentage recoveries for holders of general unsecured claims to 7.5% from 4.3%;

• The elimination of an intercompany note trust. All disputes that were formerly placed in the trust are now settled under the plan;

• A recovery, not subject to the litigation risk of the outcome of the now-deleted note dispute, for the holders of specified unsecured notes claims;

• Each holder of an Energy XXI Gulf Coast (EGC) unsecured notes claim, other than EGC, will receive a share of 12% of new equity and a new warrant package. EGC will receive no distribution on account of its repurchased bonds;

• Each holder of an EPL unsecured notes claim, other than EGC, will receive a share of 4% of the new equity and new warrants packages. EGC will receive no distribution on account of its repurchased bonds;

• The new warrant agreement that governs the new warrant package will provide for anti-dilution adjustments solely for spinoffs and other asset distributions and extraordinary cash distributions, and provide that, in connection with a merger or similar sale of the new parent company, each warrant will become exercisable for cash, stock, securities or other assets or property as would have been payable in the sale transaction in connection with new parent securities issuable upon exercise of the warrant if it had been exercised immediately before the transaction;

• A cash distribution to holders of Energy XXI 3% senior convertible notes claims of $2 million, instead of equity in the reorganized company, and a corresponding increase in the estimated percentage recoveries for holders of class 9 Energy XXI 3% senior convertible notes claims of 0.5%; and

• Each holder of a first-lien claim will receive a share of the reorganized debtors’ obligations under an exit facility, having already received a share of restricted cash.

In connection with the plan support agreement, Schiller will continue in his role as CEO upon emergence.

Energy XXI, an independent oil and natural gas development and production company based in Houston, filed for bankruptcy on April 14, 2016 under Chapter 11 case number 16-31928.

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