Linn Energy, 12% noteholders eye restructuring; Chapter 11 possible

By Caroline Salls

Pittsburgh, April 5 – Linn Energy, LLC, Linn Energy Finance Corp. and some of their subsidiaries entered into a settlement agreement with some holders of Linn’s 12% senior secured second-lien notes due 2020 and indenture trustee Delaware Trust Co., according to an 8-K filed Tuesday with the Securities and Exchange Commission.

Under the settlement, the parties will launch good faith negotiations with each other regarding the terms of a potential comprehensive and consensual restructuring, including a potential restructuring under a Chapter 11 plan of reorganization.

If the parties are unable to reach agreement on the terms of a consensual restructuring on or before the date on which the Chapter 11 cases are filed, they will support entry by the bankruptcy court of a settlement order that approves the issuance of additional notes in the principal amount of $1 billion plus accrued interest to existing noteholders and releases mortgages and other collateral upon the issuance of the additional notes.

The settlement will terminate 91 days after it takes effect unless Linn and the guarantors have filed Chapter 11 bankruptcy cases or the bankruptcy court orders a final order denying the motion for approval of the settlement.

Holders of more than two-thirds of the outstanding principal amount of the notes executed the settlement. Linn subsidiary Berry Petroleum Co., LLC is not a party to the settlement.

According to the 8-K, Linn and the guarantors agreed under the notes indenture, collateral trust agreement and exchange agreements to deliver and make arrangements for recordation of mortgages by Feb. 18, subject to a 45-day grace period.

The company said it and the guarantors previously elected to exercise their right to use the grace period and not deliver or make arrangements for recordation of the mortgages. As a result, Linn was in default under the notes indenture.

Linn said arrangements have since been made for recordation of the mortgages, and it is no longer in default under the indenture.

Linn is a Houston-based oil and gas company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.