Shoreline Energy first amended plan of liquidation confirmed by court

By Caroline Salls

Pittsburgh, Feb. 24 – Shoreline Energy LLC’s amended Chapter 11 plan was confirmed on Friday by the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, affiliates of second-lien lender Highbridge Capital Management LLC and the first-lien lenders agreed on the basic terms of a sale process for substantially all of the assets of the debtors.

Last month, the company cancelled the auction and named an entity formed by second-lien lender Highbridge Capital Management LLC as the winning bidder.

In consideration for the assets, the purchaser and oil and gas hedging agreement party Morgan Stanley Capital Services LLC agreed to submit a credit bid of the outstanding amount under the company’s debtor-in-possession credit agreement, plus an amount equal to $115 million less the amount of claims bid under the DIP credit agreement under a first-lien credit bid, plus $1.5 million in cash.

The purchaser’s capital structure will include a $40 million 4.5-year first-lien multi-draw term loan facility that will bear interest at a rate equal to Libor plus 700 basis points with a 1% Libor floor and carry a 2% original issue discount, a $35 million five-year second-lien term note, which will bear interest at Libor plus 600 bps with a 1% Libor floor, preferred A equity with zero coupon in the face amount of $60 million, preferred B equity with zero coupon in the face amount of $60 million and common equity.

Under the plan of liquidation, the debtor-in-possession financing agent will credit bid all of the outstanding obligations under the DIP credit agreement, satisfying those obligations in full.

The first-lien agent will credit bid up to 100% of the credit facility claims to purchase designated assets. Any unsecured portion of the first-lien facility claims will be treated as general unsecured claims.

Holders of second-lien facility claims will retain liens attached to liquidating trust assets, and the claims will be paid from any remaining proceeds from the liquidation of those trust assets after payment of the costs of administration of the trust and the payment in full of all first-lien facility claims.

Holders of general unsecured claims will receive their share of any proceeds from the liquidation of the trust assets remaining after the payment of the costs of administering the trust and the payment in full of all first-lien and second-lien facility claims.

Existing equity interests will be cancelled, and holders will receive no distribution.

Houston-based Shoreline is a privately owned oil and gas exploration and production company The company filed bankruptcy on Nov. 2 under Chapter 11 case number 16-35571.

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