Stone Energy plan confirmed; company targets Feb. 28 effective date

By Caroline Salls

Pittsburgh, Feb. 15 – Stone Energy Corp.’s plan of reorganization was confirmed Wednesday by the U.S. Bankruptcy Court for the Southern District of Texas, according to an 8-K filed with the Securities and Exchange Commission.

The company said it is targeting a Feb. 28 plan effective date.

Treatment of creditors will include the following:

• Holders of first-lien credit facility claims will receive a share of commitments under a new $200 million first-lien reserve-based revolving credit facility and cash in an amount equal to the amount of unrestricted cash of the Stone debtors in excess of $25 until the debt is reduced to zero;

• Holders of existing unsecured notes claims will receive a share of $100 million in cash, $225 million of 7˝% senior second-lien notes due 2022 and 95% of the common stock in the reorganized company, subject to dilution by a management incentive plan and warrants;

• General unsecured claims will be unaltered and paid in full; and

• Holders of the company’s existing common stock will receive a share of 5% of the common stock in the reorganized company, subject to dilution, and new warrants representing the right to purchase 15% of the common stock with an exercise price equal to a total equity value of reorganized Stone that implies a 100% recovery of outstanding principal to the noteholders plus accrued interest through the effective date less the face amount of the new secured notes and the pre-bankruptcy notes cash.

The company’s new organizational documents will authorize it to issue up to 60 million shares of new common stock, 20 million of which will be issued to holders of allowed claims and interests under the plan, and 5 million shares of preferred stock for future issuances.

Stone said it will also reserve for issuance the maximum number of shares of new common stock issuable upon the exercise of the new warrants.

On the plan effective date, the term of any current members of the board of directors will expire, and a new board of directors will take office. The new board will initially consist of Neal P. Goldman, John “Brad” Juneau, David Rainey, Charles M. Sledge, James M. Trimble, David N. Weinstein and David H. Welch.

As part of the plan, the court approved and the company will establish the Stone Energy Corporation 2017 Long-Term Incentive Plan, which is an equity-based compensation plan for employees and directors under which Stone may issue up to 10% of the fully diluted common stock in the form of options, restricted stock, restricted stock units, dividend equivalents and other equity, as well as cash-based awards.

Stone Energy is a Lafayette, La., oil and gas exploration and production company. The company filed bankruptcy on Dec. 14 under Chapter 11 case number 16-36390.

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