Warren Resources Inc fka WRESQ

[Dallas66]

they very well might...at minimum it looks like maximum dilution will happen. see below

Form 8-K for WARREN RESOURCES INC

3-Jun-2016

Entry into a Material Definitive Agreement, Bankruptcy or Receivership, Crea

Item 1.01 Entry into a Material Definitive Agreement

The information set forth below under Item 1.03 of this Current Report on Form 8-K regarding the Restructuring Support Agreement (as defined below) is incorporated herein by reference.

Item 1.03 Bankruptcy or Receivership.

On June 2, 2016, Warren Resources, Inc. (the "Company") and certain of its wholly owned subsidiaries (together with the Company, the "Debtors") filed voluntary petitions (the "Bankruptcy Petitions") for reorganization under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). The Debtors have filed a motion with the Bankruptcy Court seeking to jointly administer all of the Debtors' Chapter 11 cases (the "Chapter 11 Cases") under the caption In re Warren Resources, Inc., et al., Case No. 16-32760. The Debtors will continue to operate their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company has filed a series of first day motions with the Court that will allow it to continue to conduct business without interruption. These motions are designed primarily to minimize the effect of bankruptcy on the Company's operations, customers and employees.

The Company expects to continue operations in the normal course during the pendency of the Chapter 11 Cases, and anticipates making royalty payments and payments to working interest owners when due, subject to Bankruptcy Court approval. Employees should expect no change in their daily responsibilities and to be paid in the ordinary course of business.

Restructuring Support Agreement

In connection with its Chapter 11 filing, the Company announced today that it has reached an agreement (the "Restructuring Support Agreement"), executed on June 2, 2016, with the lenders under its existing first-lien credit agreement (the "Plan Sponsor") and the holders of a majority of its senior notes for a consensual restructuring of its balance sheet. Under the Restructuring Support Agreement:

? the lenders under the Company's first-lien credit agreement will become lenders under a new first-lien credit facility and will obtain 82.5% of the post-restructuring common equity of the Company (subject to dilution under a new management incentive program and the exercise of certain warrants, to the extent issued, as described in the bullet below);

? the lenders under the Company's second-lien credit facility, the holders of the Company's unsecured notes and, at the option of the Plan Sponsor, a holder of another claim (if allowed) will be entitled to share pro rata in 17.5% of the post-restructuring common equity of the Company; and

? the reorganized Company may, subject to the satisfaction of certain conditions, issue to the lenders under the Company's second-lien credit facility five-year warrants exercisable into up to 5% of the post-restructuring common equity of the Company (subject to dilution under a new management incentive plan).

The Restructuring Support Agreement contemplates the approval by the Bankruptcy Court of the DIP Credit Agreement described below under "-Debtor-in-Possession Financing." Upon the effectiveness of the plan of reorganization contemplated by the Restructuring Support Agreement, any outstanding principal amount of the DIP Credit Agreement may be, at the option of the Plan Sponsor, exchanged or rolled into the new first-lien credit facility.

The Restructuring Support Agreement includes an agreed timeline for the Chapter 11 Cases that, if met, would result in the Company confirming a Chapter 11 plan and emerging from bankruptcy within 130 days. The proposed terms of the DIP Credit Agreement and the proposed terms of the restructuring set forth in the Restructuring Support Agreement are to be effectuated through the Chapter 11 Cases and remain subject to Bankruptcy Court approval.

. . .


Item 2.03 Creation of a Direct Financial Obligation or Obligation under an Off Balance Sheet Arrangement of a Registrant

The information set forth above in Item 1.03 of this Report regarding the DIP Credit Agreement is incorporated herein by reference.



Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligations under an Off-Balance Sheet Arrangement

The commencement of the Chapter 11 Cases described in Item 1.03 above constitutes an event of default that accelerated the Company's obligations under the following debt instruments (the "Debt Instruments"):

? the Credit Agreement dated as of May 22, 2015, among Warren Resources, Inc., as Borrower, Wilmington Trust, National Association, as Administrative Agent, the lenders party thereto, with GSO Capital Partners LP, as Sole Lead Arranger and Sole Bookrunner, as amended;

? the Swap Intercreditor Agreement dated as of May 22, 2015 among Warren Resources, Inc. and certain of its subsidiaries, Cargill, Incorporated, as the Initial Secured Swap Counterparty, the Secured Swap Counterparties listed therein, Wilmington Trust, National Association, as administrative agent and each other Person that from time to time becomes a party thereto;

? the Intercreditor Agreement dated as of October 22, 2015, among Wilmington Trust, National Association as First Lien Credit Agreement Agent, each Other First Priority Lien Obligations Agent from time to time party thereto and Cortland Products Corp., as Second Lien Credit Agreement Agent;

? the Second Lien Credit Agreement, dated as of October 22, 2015, among Warren Resources, Inc., as Borrower, Cortland Products Corp., as Administrative Agent, and the lenders party thereto, as amended;

? the Indenture governing the 9.000% Senior Notes due 2022, dated as of August 11, 2014, among Warren Resources, Inc., as Issuer, the subsidiary guarantors parties thereto and U.S. Bank National Association, as Trustee;

? the Indenture, dated as of June 1, 1997, by and between Warren Resources, Inc., as Issuer, and Continental Stock Transfer & Trust Company, as Trustee; and

? the Indenture, dated as of February 1, 1998, by and between Warren Resources, Inc., as Issuer, and Continental Stock Transfer & Trust Company, as Trustee.

The Debt Instruments provide that as a result of the commencement of the Chapter 11 Cases the principal and accrued interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the filing of the Chapter 11 Cases and the holders' rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.


Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

On May 26, 2016, the Company received an Additional Staff Determination - Delinquency letter from the Listing Qualifications Department of The Nasdaq Stock Market (the "Staff"), notifying the Company that the Company's delay in filing its quarterly report on Form 10-Q serves as an additional basis for delisting the Company's securities from The Nasdaq Stock Market. The letter from the Staff notes that the Company may, pursuant to Nasdaq Listing Rule 5185(a)(1)(B), request an appeal to a Hearings Panel of the Staff within seven days of the letter, which would stay the delisting of the Company's securities for up to 15 days from the date of the request.



Item 7.01 Regulation FD Disclosure

On June 2, 2016, certain confidentiality agreements between Warren Resources, Inc. (the "Company") and certain of the holders of the Company's 9% Senior Notes due 2022 (the "Noteholders") expired. During the term of these confidentiality agreements, the Company presented a presentation, a summary budget of the Company and reserve data to the Noteholders. The presentation, summary budget and reserve data are included as Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.



Item 8.01 Other Events

The Company cautions that trading in the Company's securities during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for the Company's securities may bear little or no relationship to the actual recovery, if any, by holders of the Company's securities in the Chapter 11 Cases.

Forward-Looking Statements

This Current Report on Form 8-K and the accompanying exhibits contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements in this Report and the Exhibits that are not historical facts are forward-looking statements. Forward-looking statements are typically identified by use of terms such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursue," "target" or "continue," the negative of such terms or other comparable terminology, although some forward-looking statements may be expressed differently.

These forward-looking statements relate, in part, to the risks and uncertainties relating to the ability of the Company to continue as a going concern; the Debtors' ability to obtain approval by the Bankruptcy Court of the Restructuring Support Agreement and the DIP Motion and the plan of reorganization of the Company as proposed, including with respect to the plan of reorganization, the treatment of the claims of the Company's lenders and trade creditors, among others; the ability of the Debtors to develop and consummate one or more plans of reorganization with respect to the Chapter 11 Cases; the Court's rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; the length of time the Debtors will operate under the Chapter 11 Cases; risks associated with third-party motions in the Chapter 11 Cases, which may interfere with the Debtors' ability to develop and consummate one or more plans of reorganization once such plans are developed; the potential adverse effects of the Chapter 11 Cases on the Debtors' liquidity, results of operations or business prospects; the ability to execute the Company's business and restructuring plan; increased legal costs related to the Chapter 11 Cases and other litigation and the inherent risks involved in a bankruptcy process; the negotiation of the terms, conditions and other provisions of the DIP Facility with the prospective lenders; the anticipated closing of the DIP Credit Agreement; the need for Court orders approving the DIP Motion; the sufficiency of the liquidity purported to be made available by the DIP Credit Agreement; and the additional risks and uncertainties that are described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as amended, as well as in other reports filed from time to time by the Company with the Securities and Exchange Commission.

All forward-looking statements speak only as of the date of this Current Report on Form 8-K. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.



Item 9.01 Financial Statements and Exhibits

(d) Exhibits:

Exhibit
Number Description

10.1 Restructuring Support Agreement, dated June 2, 2016, by and among Warren Resources, Inc., certain of its subsidiaries, GSO Capital Partners LP on behalf of itself and on behalf of certain funds and accounts it manages, advises or sub-advises named as signatories therein, and each beneficial holder (or investment manager or advisor therefor) of the 9.0% Senior Notes due 2022 issued by Warren Resources, Inc. identified on the signature pages thereto.

99.1 Presentation dated March 2016

99.2 Summary Budget of Warren Resources, Inc.

99.3 Reserve data as of July 31, 2016