Energy XXI plan confirmed, looks to emerge from bankruptcy by year-end

By Caroline Salls

Pittsburgh, Dec. 15 – Energy XXI Ltd. is targeting an emergence from Chapter 11 bankruptcy by the end of the year now that its plan of reorganization has been confirmed, according to an 8-K filed Thursday with the Securities and Exchange Commission.

As previously reported, the company announced on Dec. 13 that the U.S. Bankruptcy Court for the Southern District of Texas would confirm its plan. The ordered was entered that day.

Energy XXI said in the 8-K that it expects that the effective date will occur as soon as all conditions to the plan are satisfied. The company said it is also possible that technical amendments could be made to the plan.

In addition, the company said it reached a settlement with the official committee of equity security holders under which Energy XXI will deposit $160,000 into a trust account to be distributed or used by the equity committee on the effective date in its sole discretion.

On the plan effective date, a new board of directors will take office. The company said Bruce Busmire will resign as a director. The board will consist of seven directors, including John D. Schiller Jr., Michael S. Reddin, Michael S. Bahorich, George Kollitides, Steven Pully, James “Jay” W. Swent III and Charles W. Wampler.

According to the 8-K, the reorganized Energy XXI debtors and new parent company expect to enter into an exit facility comprised of a term loan facility resulting from the conversion of the roughly $69 million remaining drawn amount under the company’s current revolving credit facility and a revolving credit facility resulting from the conversion of the former EGC tranche of the current revolver, which provides for the making of revolving loans and the issuance of letters of credit.

On the effective date, the total commitments for the exit revolver will be $227.74 million, all of which will be used to maintain in effect letters of credit issued in favor of ExxonMobil to secure plugging and abandonment obligations.

The commitments under the exit revolver will be permanently reduced by 50% of the amount of the reduction in the stated amount of all letters of credit outstanding in favor of ExxonMobil resulting from any reduction, replacement or cancellation of the letters of credit. The remaining 50% will be available for borrowing as revolving loans subject to a ceiling for all such loans of $25 million before the date the borrowing base is initially determined and of the borrowing base amount on and after the date the borrowing base is initially determined.

The exit loans will mature in three years and will bear interest at a rate of either the alternative Base rate plus 350 basis points or Libor plus 450 bps.

Upon emergence, the new parent company will be required under the exit facility to have liquidity of at least $90 million.

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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