Extraction Oil & Gas Chapter 11 plan effective as of Jan. 20

By Sarah Lizee

Olympia, Wash., Jan. 20 – Extraction Oil & Gas, Inc.’s sixth amended joint plan of reorganization went into effect on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The plan was confirmed on Dec. 23 by the U.S. Bankruptcy Court for the District of Delaware, as previously reported.

According to the amended disclosure statement, the plan calls for a stand-alone restructuring.

The reorganized debtors will fund distributions under the plan with cash on hand, revenues and proceeds of all assets of the debtors, exit facilities, a $200 million fully backstopped equity rights offering, new common shares and new warrants.

The exit facilities include an up to $1 billion 3.5-year senior secured revolving credit facility with Wells Fargo Bank, NA as administrative agent and lead arranger. To the extent that the existing revolving credit agreement lenders do not consent to becoming exit revolving credit facility lenders, the reorganized company will enter into a four-year second-lien exit term loan facility.

Under the plan, holders of other secured claims will receive payment in full in cash or have their claims reinstated.

Holders of other priority claims will be paid in full in cash.

If revolving credit agreement claimholders elect to participate in the exit revolving facility, they will become lenders of the exit revolver. If they do not elect to participate in the revolving exit facility, they will receive their pro rata share of the exit term loans.

Holders of senior notes claims will receive their pro rata share of the claims equity allocation and the senior noteholder subscription rights.

Holders of trade claims will receive payment in full.

Holders of general unsecured claims will receive their pro rata share of the claims equity allocation and the GUC subscription rights. In lieu of the subscription rights, general unsecured claimholders may receive cash in an amount equal to 65% of the value of their subscription rights.

Existing preferred interests will be canceled, and holders will receive their pro rata share of 50% of the existing interests equity allocation, the existing preferred interest subscription rights, 50% of the tranche A warrants, and 50% of the tranche B warrants. However, if class 3, 4, 6 or 8 claimholders vote to reject the plan, holders of allowed existing preferred interests will receive no distribution and their subscription rights will be canceled.

Existing common interests will be canceled, and holders will receive their pro rata share of 50% of the existing interests equity allocation, the existing common interests subscription rights, 50% of the tranche A warrants and 50% of the tranche B warrants. However, if class 3, 4, 6 or 7 claimholders vote to reject the plan, holders of existing common interests will receive no distribution and their subscription rights will be canceled.

Other equity interests will be canceled with no distribution.

Intercompany claims will be adjusted, reinstated, modified or canceled at the election of the debtors.

Intercompany interests will be reinstated, recharacterized as intercompany claims or canceled without any distribution.

Section 510(b) claims will be canceled with no distribution.

Extraction Oil & Gas is based in Denver. The company filed bankruptcy on June 14, 2020 under Chapter 11 case number 20-11548.

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