Knight Energy Chapter 11 reorganization plan effective as of Dec. 12

By Caroline Salls

Pittsburgh, Dec. 12 – Knight Energy Holdings, LLC’s plan of reorganization took effect on Tuesday, according to a notice filed with the U.S. Bankruptcy Court for the Western District of Louisiana.

The plan was confirmed on Dec. 1.

As previously reported, Knight made a pre-negotiated Chapter 11 filing to implement a restructuring support agreement reached with debtholders representing more than 87% of its senior secured credit facility due 2018.

Knight said the support agreement provides for a substantial deleveraging transaction under which it will meaningfully improve its balance sheet by equitizing more than $175 million of its existing secured obligations and will substantially bolster its liquidity position through an exit financing facility.

Under the plan, the company will establish a new first-lien credit facility, including first-lien takeback notes and a first-lien revolving credit facility.

In addition, the company will sell non-core assets or property securing loans held by mortgage holders.

Knight’s JPMorgan and Iberia loans will be repaid from the net sale proceeds. In addition, the company will restructure or replace the JPMorgan and Iberia loans in full or in part with new takeback loans.

The company will establish a fund to allow for payments to holders of general unsecured claims.

Claims arising from the provision of goods and services will be fully satisfied.

A comprehensive settlement distribution will also be made to consenting debtholders.

Also under the plan support agreement, reorganized Knight will issue new membership interests in either a newly established holding company or one of the reorganized debtors.

All of the new equity interests will be distributed to the senior credit facility lenders, subject to dilution by the settlement distribution and a management incentive plan.

Under the comprehensive settlement, consenting holders will receive 20% of the new equity and two classes of five-year warrants entitling them to 7% of the equity with an exercise price equal to a $120 million valuation and 6% of the equity with an exercise price equal to a $175 million valuation.

Knight, a Lafayette, La., oilfield rental tool company, filed bankruptcy on Aug. 8. The Chapter 11 case number is 17-51014.

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