Warren Resources announces reorganization plan effective as of Oct. 5

By Caroline Salls

Pittsburgh, Oct. 5 – Warren Resources, Inc.’s plan of reorganization took effect on Wednesday, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan was confirmed on Sept. 14.

According to a company news release, Warren’s pre-bankruptcy common stock and preferred stock were cancelled on the effective date of the plan, and Warren is issuing new common stock to its pre-bankruptcy creditors, including first-lien and second-lien lenders, an unsecured contractual claimholder and unsecured noteholders.

“With our new capital structure, we are positioned to further develop and potentially expand our asset base in order to enhance value for our new stockholders,” president, chief executive officer and chairman of the board James A. Watt said in the release.

“We look forward to working with our new board of directors, and with the support of all of our key stakeholders, to execute on our strategic goals during the current industry downturn and the next industry recovery.”

As previously reported, the terms of the company’s restructuring include the following:

• Conversion of the claims of the company’s pre-bankruptcy first-lien lenders into 82.5% of the equity, subject to dilution by a management incentive plan, in the reorganized Warren debtors and a new first-lien secured term exit facility not to exceed $130 million, plus, at the plan sponsor’s option, the amount outstanding under a $20 million debtor-in-possession facility;

• Conversion of the claims of pre-bankruptcy second-lien lender Claren Road, senior noteholders and the claims of Citrus Energy into the remaining 17.5% of the equity in the reorganized company.

In addition, holders of second-lien facility claims will receive their portion of a Claren Road supplemental equity distribution and new warrants;

• Other general unsecured creditors will receive a discounted cash payment or notes equal to the economic value of the equity being provided to the second-lien lenders, senior noteholders and Citrus Energy; and

• Existing equity in Warren will be canceled, and holders will receive no further payments or recovery.

In connection with its restructuring and cost-reduction measures, Warren said it plans to relocate its headquarters to Dallas by Jan. 1 and close its current offices in Houston and Plano, Texas.

The company said it also plans to reduce leased office space in other locations, but it expects to maintain a small team in Denver and field offices and associated personnel in Long Beach, Calif., Rollins and Casper, Wyo., and Tunkhannock, Pa.

Jefferies LLC acted as financial adviser to Warren in connection with its restructuring, and Andrews Kurth Kenyon LLP represented Warren as its legal counsel throughout the restructuring.

Warren, a New York-based energy company, filed for bankruptcy on June 2. The Chapter 11 case number is 16-32760.

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