Venoco disclosure statement approved; confirmation hearing July 13

By Caroline Salls

Pittsburgh, May 16 – Venoco, Inc. received court approval of the disclosure statement for its plan of reorganization, according to an order filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

The plan confirmation hearing is scheduled for July 13.

Under the company’s plan support agreement, its lenders have agreed to support a restructuring transaction that will eliminate roughly $1 billion of debt from Venoco’s balance sheet. Unsecured noteholder Candlewood Investment Group, LP also joined the company’s restructuring support agreement on behalf of funds it manages or advises.

The restructuring support agreement sets the terms of a Chapter 11 plan, including a debt-to-equity conversion of the company’s pre-bankruptcy funded debt for substantially all of the equity of reorganized Venoco.

Holders of first-lien notes claims will receive 90% of the new equity, and holders of second-lien notes claims will receive a share of new 10% second-lien warrants at a strike price of $195.18 million.

Holders of Denver Parent Corp. (DPC) senior payment-in-kind toggle note claims and DPC general unsecured claims will receive 2% warrants at a strike price of $691.41 million and a share of DPC residual value. Holders of Venoco general unsecured claims will receive cash and, if necessary, a share of any Venoco residual value.

Holders of DPC and Venoco subordinated securities claims and equity interests will receive no distribution.

Holders of the company’s 8 7/8% senior notes would receive a $6.5 million cash payment, 2.6% of the common stock in the reorganized company, which will be completed through a transfer of the equity the backstoppers of Venoco’s debtor-in-possession facility are to receive as a backstop fee, as well as a sliding scale 1% to 5% overriding royalty interest to specified oil and gas.

Interests in each Venoco subsidiary will be reinstated.

Venoco, a Denver-based energy company, filed bankruptcy on March 18. The Chapter 11 case number is 16-10655.

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