Saratoga Resources reaches deal to allow uncontested plan confirmation

By Caroline Salls

Pittsburgh, April 1 - Saratoga Resources, Inc. expects uncontested confirmation of its plan of reorganization after reaching a settlement with its senior secured lenders and the only known remaining party objecting to the plan, according to a company news release.

Saratoga's plan was previously confirmed by the U.S. Bankruptcy Court for the Western District of Louisiana, but the parties were unable to agree on some terms of senior secured credit facilities, ultimately resulting in the revocation of the plan confirmation order.

According to the release, the company has submitted immaterial modifications to the plan that set the stage for Saratoga to exit Chapter 11 bankruptcy shortly after April 19 with payment in full for all trade creditors within 12 months and equity holders retaining substantially all of their interests.

The plan confirmation hearing is scheduled for April 19.

"We believe the effect of this restructuring will have a positive financial impact on the company," chairman and chief executive officer Thomas F. Cooke said in the release.

"With significantly lower interest costs which will lead to more available capital, the company should be well positioned to use this additional working capital to accelerate our oil and gas development plans."

Under the plan:

• Payment on the Macquarie and Wayzata secured claim will include interest and attorneys fees and expenses and will be made in monthly payments in accordance with the credit agreement. Wayzata will also receive a warrant for up to $2 million shares;

• Holders of Oil Well Lien Act claims and other secured claims will receive payment for 80% of their claim on the plan effective date and 20% within 12 months of the effective date;

• Holders of general unsecured claims will be paid 75% of their claim on the effective date and the other 25% within 12 months;

• State lessor audit royalty claims will be paid in 24 monthly installments;

• Holders of non-warrant equity claims and warrants will retain their interests and warrants; and

• Interest on management note claims will be paid over 40 months, with the claim to be paid in full on the 40th month after the effective date.

Saratoga, an Austin, Texas-based oil and gas exploration and production company, filed for bankruptcy on April 1, 2009. Its Chapter 11 case number is 09-50398.

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