NEW BOGAQ news
By Rachel Feintzeig
Of DOW JONES DAILY BANKRUPTCY REVIEW
A judge approved Baseline Oil & Gas Corp.'s (BOGAQ) plan to repay creditors
and exit bankruptcy less than a month after the Houston company sought Chapter
11 protection.
According to court papers filed with the U.S. Bankruptcy Court in Houston,
100% of the company's noteholders, set to receive new subordinated secured
notes and new shares of junior preferred and common stock in the reorganized
Baseline, backed the plan. Four of the noteholders also agreed to fund a $5
million bankruptcy-exit loan.
The company entered Chapter 11 on Aug. 28 with its plan in hand and 87% of
the noteholders on board with the reorganization proposal. That group included
hedge-fund manager Third Point LLC, Baseline's majority owner and holder of
$19.29 million in notes.
Other noteholders committed to funding the loan now include Jefferies & Co.
and Jefferies High Yield Trading LLC. They will receive senior secured notes
and shares of senior preferred stock in addition to the subordinated notes and
junior and common stock.
In the days leading up to its Friday confirmation hearing, Baseline had
stressed that its plan provided a "high likelihood of success" for a company
weighed down by debt. It said its new capital structure - especially its use of
payment-in-kind notes and stock - would help to ward off the possibility of a
repeat reorganization or liquidation.
Still, it cautioned that its new business plan would only prove effective "so
long as commodity prices continue to fluctuate within foreseeable bounds."
Last year's decrease in oil and gas prices had helped to push Baseline into
bankruptcy protection, the company said in its initial court filings. Declining
production at its natural-gas and crude-oil properties - located in Texas and
Indiana - further worsened Baseline's liquidity problem, as did its inability
to obtain credit to pay off obligations on its notes.
Baseline reported $48.5 million in assets and $138.9 million in liabilities
upon entering Chapter 11. It intends to pay its other creditors - including
unsecured creditors owed $937,000 - in full. All existing equity is to be
canceled.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and
those under bankruptcy protection.)
-By Rachel Feintzeig, Dow Jones Daily Bankruptcy Review; 267-639-6000;
rachel.feintzeig@dowjones.com
