Venoco Chapter 11 plan confirmed; emergence expected later this month

By Caroline Salls

Pittsburgh, July 13 – Venoco Inc.’s plan of reorganization was confirmed Wednesday by the U.S. Bankruptcy Court for the District of Delaware, clearing the way for the company to officially emerge from the restructuring process later this month, according to a news release.

The company said the plan eliminates $1 billion of debt from its balance sheet.

Under the court-approved plan, Venoco will retain its leadership team and its energy-producing assets.

“The court’s approval today marks another step forward in our efforts to address the challenges before us and strengthen our position for long-term success,” chief executive officer Mark DePuy said in the release.

“The low price of oil and the ongoing closure of Plains All American pipeline 901 continue to be serious problems. With this restructuring, Venoco is in a much stronger position to withstand these challenges and others that may follow.”

As previously reported, the plan calls for 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 a share of new DPC warrants and a share of 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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