Vanguard Natural Resources Chapter 11 plan effective as of July 16

By Caroline Salls

Pittsburgh, July 16 – Vanguard Natural Resources, Inc.’s plan of reorganization took effect on Tuesday, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The company said in a news release that it emerged from bankruptcy under the name Grizzly Energy, LLC.

The plan was confirmed on July 9.

According to the release, through its financial restructuring, the company eliminated more than $500 million of secured debt from its balance sheet and significantly enhanced its financial flexibility.

At emergence, Grizzly is entering into an amended and restated $65 million reserve-based revolving credit facility, a first-lien term loan A facility of $65 million and a "last-out" first lien-term loan B facility of $285 million.

The initial borrowing base under the revolver will be $65 million, with the first scheduled redetermination of the borrowing base in April 2020.

Grizzly said it emerged from Chapter 11 with roughly $375 million of funded debt and $47 million of liquidity comprised of more than $7 million in cash and $40 million of unused revolver capacity.

As previously reported, the plan was amended to provide a recovery to holders of general unsecured claims of cash equal to 2% of the holder’s allowed general unsecured claim, capped at a total of $600,000, and a share of post-confirmation trust assets, including $400,000 in cash, the right to object to or otherwise contest specified claims and 50% of the proceeds of any claims or causes of action that vest in the reorganized debtors, other than claims which are released under the plan and claims against entities that received payments in accordance with a court order.

Holders of debtor-in-possession facility claims will receive a share of participation in a post-effective date first-lien reserve-based revolving credit facility with an initial borrowing base of $65 million and a $65 million term loan facility.

The revolver will be reduced on a dollar-for-dollar basis equal to 75% of the net cash proceeds of any assets of the reorganized debtors before the effective date.

Holders of revolver claims and secured swap claims will receive their share of a new term loan in the amount of $350 million, less the total amount of the exit term loan A facility, as well as at least 86.1% of new series A convertible preferred stock to be issued by the reorganized company and 75% or 89% of new common stock, depending on whether class five voted to accept or reject the plan.

Holders of term loan claims will receive a share of 10% of the new common stock, as well as the option of either a share of the new preferred class A equity or of the new series of class B convertible preferred stock.

Holders of senior notes claims will receive a share of the new common stock, with the percentage depending on whether the class voted to accept or reject the plan.

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

The company’s new board of directors is comprised of RPA Advisors, LLC executive director Kevin Asarnow, Redan Advisors LLC managing member Patrick Bartels, oil and gas consultant Stephen McDaniel, former Alvarez & Marsal, North America, LLC managing director Dean Swick and Three Rivers Operating Co. founder and chief executive officer Mike Wichterich.

Vanguard is a Houston-based oil and gas exploration and development company. The company filed bankruptcy on March 31 under Chapter 11 case number 19-31786.

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