DJ Goodrich Receives Conditional Approval of New Financing Package
Aug 05, 2016 12:35:00 (ET)
By Stephanie Gleason
Goodrich Petroleum Corp. received conditional approval Thursday evening of a new $40 million exit financing package, putting the oil and gas producer back on course to restructure its assets.
Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston approved the financing commitment, conditioned on Goodrich reaching a deal with unsecured creditors, resolving their objections, by Friday at 5 p.m. CT. If no deal is reached, the approval will be withdrawn and Judge Isgur will hold a full hearing on the financing.
The committee of unsecured creditors had objected specifically to the fees associated with the financing, adding that the restructuring agreement Goodrich plans to put forth is both "coercive" to unsecured creditors and "too rich for other parties."
Judge Isgur said he agreed with the unsecured creditors' position on the fees and signaled that he wouldn't approve the financing unless the objection from unsecured creditors was resolved.
Rather than address the fee issue directly, Goodrich is near a deal with unsecured creditors that involves improved treatment under Goodrich's bankruptcy-exit plan, in exchange for the committee's agreement to pull their objection.
A lawyer for the committee representing unsecured creditors said during the hearing Thursday that the parties were close to reaching a deal that would promise unsecured creditors 2% equity in the restructured company, as well as some additional recovery.
The motion for approval of new exit financing comes after a previous financing package fell apart and threatened Goodrich's restructuring all together. Since then, Goodrich was moving toward a sale of its assets in bankruptcy.
When Goodrich filed for bankruptcy in April, junior bondholders including Franklin Advisors were going to provide the exit financing. But in May, Franklin withdrew its commitment and Goodrich said it would pursue a sale of its assets.
Recently, Goodrich was able to reach a new deal with Shenkman Capital Management Inc., CVC Capital Partners, J.P. Morgan Securities LLC as well as Franklin to provide the necessary funding. The $40 million would come in the form of new junior bonds bearing a 13.5% interest rate. Half of the financing would be used to repay senior debt while the other $20 million would finance a shale drilling program. The new bonds would be convertible at maturity to 15% equity in the restructured Goodrich.
The full terms of Goodrich's restructuring are scheduled to be considered by Judge Isgur on Aug. 18 during a disclosure statement hearing, and final approval of the plan is slated for Sept. 28.
Write to Stephanie Gleason at stephanie.gleason@wsj.com
(END) Dow Jones Newswires
August 05, 2016 12:35 ET (16:35 GMT)
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