DENVER, Feb. 01, 2016 (GLOBE NEWSWIRE) — Warren Resources, Inc. (“Warren”) (NASDAQ:WRES) today announced that it has elected not to make the approximately $7.5 million semi-annual interest payment due February 1, 2016 on its outstanding $167.3 million aggregate principal amount of 9.00% Senior Notes due 2022 (the “Notes”), although it currently has sufficient liquidity to make the interest payment in full.
Failure to pay this interest amount on February 1 is not immediately an event of default under the indenture governing the Notes, but would become an event of default if the payment is not made within 30 days of such date. Upon an event of default under the indenture governing the Notes, the trustee or holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare the principal amount of the Notes plus accrued and unpaid interest to be due and payable. A failure to pay interest on the Notes within the 30-day grace period would also result in events of default under Warren’s first lien credit facility and second lien credit facility, which would entitle the administrative agents and lead lenders thereunder to declare all obligations thereunder to be immediately due and payable.
Warren has engaged Jefferies LLC as financial adviser in connection with a potential restructuring of its balance sheet, and has initiated restructuring discussions with representatives of the creditors under its first and second lien credit facilities.
With respect to Warren’s restructuring efforts, James A. Watt, Warren’s President and Chief Executive Officer, stated “Based on positive discussions with secured lenders, and with approval from our board of directors, we have made the strategic decision to defer the February 1 interest payment on our unsecured notes in anticipation of beginning a similarly constructive dialogue with our unsecured noteholders. Our substantial cash position allows us to continue to meet all of our obligations to pay suppliers, employees and others, and to continue to fund our operations. We look forward to using the interest payment grace period to begin discussions aimed at achieving an improved capital structure that, in light of challenging commodity prices, would be viable in the long term and in the best interests of all of Warren’s stakeholders, including our creditors, equity holders and employees.”