DJ Goodrich Petroleum Switches Gears, Pursues Sale
Jun 24, 2016 14:41:00 (ET)
By Stephanie Gleason
Goodrich Petroleum Corp. has changed the direction of its chapter 11 case, pursuing a sale of its assets rather than the debt-for-equity swap it negotiated with bondholders before filing for bankruptcy.
The oil and gas production company on Thursday requested an emergency hearing in bankruptcy court, scheduled for next Wednesday, on its proposed sale.
A Goodrich lawyer couldn't immediately be reached Friday to comment on the status of the company's prior restructuring agreement with its bondholders. In court papers, it said "good cause exists to expose the debtors' assets to competing bids and, if appropriate, an auction."
Goodrich added that it also will be on the hunt for financing for a debt-payment plan.
The Houston company filed for bankruptcy on April 15 amid a downturn in oil and gas prices that has devastated the industry. Scores of producers and companies that rely on these producers as clients have entered bankruptcy this year. Although prices have ticked up, many more companies are expected to fail.
The majority of oil and gas bankruptcy filings have followed the path that Goodrich originally sought to execute--negotiating a pre-bankruptcy agreement with a group of debtholders who agree to take ownership of the company in exchange for forgiving their debt. These companies have bucked the broader trend in bankruptcy by shying away from court-overseen sales to avoid fire-sale prices for oil and gas assets.
Now, however, Goodrich is seeking permission to test the market.
According to court documents filed with the U.S. Bankruptcy Court in Houston, Goodrich will entertain bids from buyers that would purchase the company as a whole, buy assets in individual lots or fund a plan to exit bankruptcy. The company asked that bids be due by Sept. 30 and that a hearing to approve any successful bids be scheduled around Oct. 14. Creditors will be allowed to enter so-called credit bids, using their debt as currency.
Prior to filing for bankruptcy, Goodrich had negotiated a plan to swap $175 million in debt owed to bondholders that included Franklin Advisors Inc., Penn Capital Management and Jefferies LLC in exchange for Goodrich's equity. The plan would have wiped out $224 million in lower-ranking unsecured bonds and carried over $40 million in secured bank debt.
Although the company had an agreement with bondholders to support the proposal, it still needed to formalize the plan in bankruptcy through a broad creditor vote and gain a bankruptcy judge's approval. A hearing on Goodrich's bankruptcy-exit proposal was removed from the court's calendar earlier this month.
Goodrich operates in Texas, Louisiana and Mississippi. The company's April bankruptcy filing capped a yearlong effort to reduce leverage and raise liquidity to weather low prices.
The only breaks you get in life...are those you give yourself!!!
