Files for Chapter 11 to Implement Agreed Plan
LAFAYETTE, La., Nov. 07, 2018 (GLOBE NEWSWIRE) — PetroQuest Energy, Inc. (the “Company”) (OTCQX: PQUE) today announced that it and certain of its direct and indirect subsidiaries entered into a restructuring support agreement (“RSA”) with its first lien lenders and second lien noteholders to permanently reduce its debt and the related interest expense in ways that support the long-term growth and success of the business. To implement the RSA and thus achieve its financial goals, the Company also filed for protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”).
The RSA, which was executed on November 6, 2018, contemplates a comprehensive restructuring of the Company’s capital structure, has the support of certain holders of 81.83% of its 10% Second Lien Secured Senior Notes due 2021 (the “2021 Notes”), certain holders of 84.76% of its 10% Second Lien Senior Secured PIK Notes due 2021 (the “2021 PIK Notes” and, together with the 2021 Notes, the “Notes”) and the lenders under the Company’s multi-draw term loan agreement (the “Prepetition Term Loan Agreement”) (the holders and lenders, the “Consenting Creditors”).
The proposed plan of reorganization (the “Plan”) would eliminate approximately $204.5 million in debt from the Company’s balance sheet. It contemplates (i) the payment in full of $50.0 million of principal plus accrued interest of the term loans made pursuant to the Prepetition Term Loan Agreement, (ii) the entry into an Exit Facility in an aggregate principal amount of $50.0 million with the Company’s existing second lien lenders, and (iii) the elimination of more than $284.4 million of principal plus accrued interest with respect to the Notes, in exchange for (x) new common stock issued by the reorganized Company, subject to (1) dilution by the new common stock issued in connection with the management incentive plan and (2) the new common stock issued to the parties backstopping the Exit Facility, and (y) $80.0 million of secured PIK notes issued by the Company and guaranteed by each of the operating entities.
“The restructuring support agreement and associated actions announced today begin a rebuilding process and new era for our company and our stakeholders because they allow us to definitively address the financial challenges that have made it difficult for us to compete. These steps will also allow us to resume investments in growth – most notably to develop our Cotton Valley assets in East Texas as well as our onshore assets in Central and South Louisiana,” said PetroQuest President & CEO Charles Goodson. “We thank our first and second lien lenders for their continued belief in and support of our business and look forward to completing the process as a stronger partner and employer.”
The Company fully expects to operate its business as usual throughout the restructuring, honoring its commitments to employees, royalty owners and partners. The Company is confident in its ability to fund all of its go-forward financial commitments with existing cash on hand and, under the terms of the RSA, will continue to be led by the current executive management team.
The Company has requested that the Bankruptcy Court (i) approve commencement of solicitation on the Plan on November 20, 2018; (ii) set December 18, 2018 as the date that votes on the Plan must be received by Epiq Corporate Restructuring, LLC, the Company’s voting agent, unless the deadline is extended; and (iii) set November 13, 2018 as the record date for voting. Subject to Bankruptcy Court approval of the Plan and the satisfaction of certain conditions to the Plan and related transactions, the Company has proposed to consummate the Plan and emerge from chapter 11 before the end of the year. There can be no assurances that the Plan will be approved or confirmed by the Bankruptcy Court, by that time, or at all.
Additional information, including court filings and other documents related to the reorganization proceedings, is available on a website administered by the Company’s claims agent, Epiq Corporate Restructuring, LLC, at http://dm.epiq11.com/PetroQuest.
More detailed information on the restructuring can be found in the RSA, Plan and Disclosure Statement, which are included with the Form 8-K filed with the Securities and Exchange Commission today.