Quicksilver Resources, U.S. subsidiaries file Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, March 17 – Quicksilver Resources Inc. and several U.S. subsidiaries filed Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the District of Delaware.

According to a company news release, the filing subsidiaries include Barnett Shale Operating LLC, Cowtown Drilling, Inc., Cowtown Gas Processing LP, Cowtown Pipeline Funding, Inc., Cowtown Pipeline LP, Cowtown Pipeline Management, Inc., Makarios Resources International Holdings LLC, Makarios Resources International Inc., QPP Holdings LLC, QPP Parent LLC, Quicksilver Production Partners GP LLC, Quicksilver Production Partners LP and Silver Stream Pipeline Co. LLC.

Quicksilver said its Canadian subsidiaries were not included in the Chapter 11 filing. Quicksilver Resources Canada Inc. has reached a forbearance agreement under which its first-lien secured lenders agreed not to act on any default arising from the Chapter 11 filing through June 16.

The company said it does not expect its U.S. and Canadian operations to be interrupted as a result of the Chapter 11 filing.

“Quicksilver’s strategic marketing process has not produced viable options for asset sales or other alternatives to fully address the company’s liquidity and capital structure issues,” chief executive officer Glenn Darden said in the release.

“We believe that Chapter 11 provides the flexibility to accomplish an effective restructuring of Quicksilver for its stakeholders.”

During the Chapter 11 process, suppliers will be paid in full for all goods and services provided after the filing date as required by the Bankruptcy Code.

Debt details

According to court documents, Quicksilver had $1,214,302,000 in total assets and $2,352,173,000 of total debt as of Dec. 31.

The company’s largest unsecured creditors are:

• Wilmington Trust, NA of Minneapolis, with a $361.57 million claim related to the company’s 7 1/8% senior subordinated notes due 2016;

• Delaware Trust Co. of Wilmington, Del., with a $332.65 million claim related to the company’s 11% senior notes due 2021;

• U.S. Bank NA of Las Vegas, with a $312.73 million claim related to the company’s 9 1/8% senior notes due 2019;

• Oasis Pipeline LP of Dallas, with a $1.33 million trade claim; and

• Energy Transfer Fuel LP of Dallas, with a $1.03 million trade claim.

Filing defaults

According to an 8-K filed with the Securities and Exchange Commission, the Chapter 11 filing triggered events of default under several of the company’s debt instruments, including its U.S. credit agreement, with $137 million plus interest outstanding; its Canadian credit agreement with $98 million plus interest outstanding; its senior secured second-lien term loan, with $625 million plus interest outstanding; its second-lien notes, with $200 million plus interest outstanding; its 9 1/8% senior notes due 2019, with $298 million plus interest outstanding; its 11% senior notes due 2021, with $325 million plus interest outstanding; and its 7 1/8% senior subordinated notes due 2016, with $350 million plus interest outstanding.

The company said any efforts to enforce the payments or other obligations are currently stayed as a result of the bankruptcy filing.

Stock transfer procedures

Quicksilver filed a motion to establish notification and hearing procedures for the transfer of its equity securities to protect and preserve its net operating losses and other tax attributes.

Under the procedures, substantial shareholders must declare their status.

In addition, notification must be provided of any proposed transfer of shares that would result in changes in the number of securities held by a substantial shareholder or that would result in a shareholder becoming a substantial shareholder.

Quicksilver will then have 20 days to object to any proposed transfer. If the company does object, the transfer cannot be completed without a final court order.

Substantial shareholders own 4.75% or more of the company’s equity securities.

The company’s legal advisers are Akin Gump Strauss Hauer & Feld LLP in the United States and Bennett Jones in Canada. Houlihan Lokey Capital, Inc. is serving as financial adviser.

Quicksilver is a Fort Worth-based independent oil and gas exploration and production company. The Chapter 11 case number is 15-10585.

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