Gulfport Chapter 11 plan of reorganization effective as of May 17

By Sarah Lizee

Olympia, Wash., May 17 – Gulfport Energy Corp.’s Chapter 11 plan of reorganization became effective on Monday, according to an 8-K filing with the Securities and Exchange Commission.

The plan was confirmed on April 28 by the U.S. Bankruptcy Court for the Southern District of Texas, as previously reported.

Facility details

On Monday, the debtors entered into a second amended and restated credit agreement with Bank of Nova Scotia as administrative agent providing for a new money senior secured reserve-based revolving exit facility in a maximum principal amount of up to $1.5 billion, and a senior secured first-out term loan in a maximum principal amount of up to $180 million, collectively with an initial borrowing base and elected commitments amount of up to $580 million.

The borrowing base will be redetermined semiannually on or around May 1 and Nov. 1 of each year, with one interim “wildcard” redetermination available to each of Gulfport and the administrative agent between scheduled redeterminations during each calendar year. The next scheduled redetermination will be on or around Nov. 1.

Loans drawn under the exit facility will not be subject to amortization, while loans drawn under the first-out term loan facility will amortize with quarterly installments in an amount equal to $15 million, starting on the closing date and occurring every three months after the closing date.

The exit facility provides for a $150 million sublimit of commitments available for the issuance of letters of credit.

The exit facility bears interest at Libor plus 300 basis points to 400 bps. The first-out term loan facility bears interest at Libor plus 450 bps, subject to a 1% Libor floor.

The exit facility and first-out term loan facility will mature on May 17, 2024.

The facilities require Gulfport to maintain a net funded leverage ratio of less than or equal to 3 to 1, a net senior secured leverage ratio of less than or equal to 2 to 1, and a current ratio of greater than or equal to 1 to 1.

Gulfport is required to pay a commitment fee of 50 bps per annum on the average daily unused portion of the current commitments under the exit facility. Gulfport is also required to pay customary letter of credit and fronting fees.

Plan terms

Through the plan, the debtors will substantially deleverage their balance sheet, reducing funded debt and letters of credit by over $1.4 billion, and reduce annual interest expense by over $86 million on a go-forward basis.

Under the plan, holders of other secured claims will receive payment in full in cash, the collateral securing their claims or reinstatement of their claims.

Holders of other priority claims will receive payment in full.

If holders of RBL claims elect to participate in the exit revolver and term loan A facility, they will receive their pro rata share of the facilities. Otherwise, they will receive their pro rata share of the exit term loan B facility.

Holders of general unsecured claims against the Gulfport parent will receive their pro rata share of the Gulfport parent equity pool, which is 4% of all new common stock; the $10 million Gulfport parent cash pool and the Mammoth Energy Services, Inc. shares. However, once all holders have received a 100% recovery, then any excess value will be reallocated.

To the extent the claims exceed $5 million, 50% of the excess value will go to the unsecured claims distribution trustee for holders of convenience claims, until they’ve been paid in full, up to the $300,000 convenience claim threshold. The remaining 50% will be transferred to the reorganized debtors, with any new common stock that is a portion of the remaining 40% being canceled instead of transferred.

Then, any remaining share off new common stock in the Gulfport parent equity pool will be canceled and other remaining property held by the unsecured claims distribution trust will be transferred to the reorganized debtors.

Holders of general unsecured claims against the Gulfport subsidiaries will receive their pro rata share of the Gulfport subsidiaries equity pool, which is 96% of all new common stock; rights offering subscription rights; and $550 million of new unsecured notes.

Holders of convenience claims will receive their pro rata share of the $3 million convenience claims distribution pool.

Holders of note claims against the Gulfport parent will receive their pro rata share of the Gulfport parent equity pool.

Holders of notes claims against the Gulfport subsidiaries will receive their pro rata share of the Gulfport subsidiaries equity pool, rights offering subscription rights and new unsecured notes.

Holders of intercompany interests will receive no recovery.

Existing Gulfport parent interests and section 510(b) claims will be canceled.

Gulfport is a natural gas and oil company based in Oklahoma City. The company filed Chapter 11 bankruptcy on Nov. 13 under case number 20-35562.

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