HighPoint files bankruptcy to carry out pre-packaged plan, merger

By Sarah Lizee

Olympia, Wash., March 15 – HighPoint Resources Corp. and two of its affiliates, HighPoint Operating Corp. and Fifth Pocket Production, LLC, filed Chapter 11 bankruptcy Sunday in the U.S. Bankruptcy Court for the District of Delaware to effectuate a previously announced pre-packaged plan of reorganization and close a merger with Bonanza Creek Energy, Inc.

Conditions to Bonanza Creek’s exchange offer for HighPoint Operating’s 7% senior notes due Oct. 15, 2022 and 8¾% senior notes due June 15, 2025 were not satisfied at the expiration time of the exchange offer, as previously reported.

However, in response to HighPoint’s solicitation of votes from holders of the HighPoint senior notes to accept or reject the pre-packaged plan, over 99% in aggregate principal amount of the HighPoint senior notes and over 90% of the holders of the HighPoint senior notes that voted on the pre-packaged plan voted to accept it.

Meanwhile, holders of over 99% of the HighPoint stock that voted on the pre-packaged plan voted to accept it.

In addition, at a special meeting of Bonanza Creek’s stockholders, holders of over 99% of the Bonanza Creek stock that voted on the issuance of Bonanza Creek common stock in connection with the merger voted in favor of the issuance.

Key terms of the plan include cancelation of notes claims in exchange for Bonanza Creek common stock and new Bonanza Creek senior notes. Holders of allowed notes claims will receive their pro rata share of 9,314,214 shares of Bonanza Creek common stock, which will constitute around 30.4% of the fully diluted aggregate outstanding shares of Bonanza Creek common stock, subject to dilution, and $100 million in principal of newly issued 7½% senior notes due 2026 of Bonanza Creek.

Existing HighPoint Resources interests will be canceled in exchange for Bonanza Creek common stock. Holders of existing HighPoint Resources interests will receive their pro rata share of 490,221 shares of Bonanza Creek common stock, which will constitute 1.6% of the fully diluted aggregate outstanding shares of Bonanza Creek common stock, subject to dilution.

The capital structure of Bonanza Creek will include an up to $250 million senior secured revolving credit facility. Allowed RBL claims are unimpaired under the pre-packaged plan.

Holders of allowed administrative claims, allowed priority tax claims, allowed other secured claims, allowed other priority claims and allowed general unsecured claims are unimpaired.

The company is seeking a combined hearing on approval of the disclosure statement and confirmation of the pre-packaged Chapter 11 plan on March 18.

HighPoint has filed customary motions with the court seeking first-day relief, including authority to pay owner royalties, employee wages and benefits and certain vendors and suppliers in the ordinary course for goods and services provided.

The company is seeking court approval to use the cash collateral of its pre-bankruptcy secured lenders. Without the cash collateral, the debtors would be unable to satisfy employee compensation obligations, satisfy trade payables, preserve and maximize the value of their estates, and fund the administration of the Chapter 11 cases, the motion said.

According to the HighPoint’s petition, the company has $826.64 million in total assets and $760.43 million in total debt.

The company’s largest unsecured creditors are Deutsche Bank Trust Co. Americas with a $360.14 million unsecured debt claim and a $280.95 million unsecured debt claim, and Meadowlark Midstream Co. LLC with a $2.14 million trade payable claim.

Kirkland & Ellis LLP is serving as legal adviser, Tudor, Pickering, Holt & Co. and Perella Weinberg Partners are serving as financial advisers, and AlixPartners, LLP is serving as restructuring adviser to HighPoint.

Evercore is serving as financial adviser and Vinson & Elkins LLP is serving as legal adviser to Bonanza Creek. Akin Gump LLP is serving as legal adviser to an informal group of HighPoint noteholders that have signed the transaction support agreement. J.P. Morgan Securities LLC also served as an adviser to HighPoint.

HighPoint is a company focused on the development of oil and gas assets located in the Denver-Julesburg Basin of Colorado. Bonanza Creek is an independent oil and gas company. Both are based in Denver. HighPoint’s Chapter 11 case number is 21-10565.

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