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Penn Virginia Files Chapter 11, Alvarez & Marsal Named Restructuring Advisor

May 12, 2016, 07:40 AM
Filed Under: Bankruptcy

Penn Virginia Corporation announced that it and certain of its subsidiaries have filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia, Richmond Division, to facilitate the deleveraging of their consolidated balance sheet through a prearranged restructuring that will reduce the company’s long-term debt by more than $1 billion.  In connection with the chapter 11 filing, the company announced its entry into a restructuring support agreement with holders of 87% (or $1.03 billion) of the company’s nearly $1.20 billion in total funded-debt obligations.  Subject to Court approval, the company has received a commitment for $25 million in debtor-in-possession (DIP) financing from its RBL lenders, which combined with the company’s cash reserves and cash from operations, is expected to provide liquidity throughout the chapter 11 process.  Additionally, the Company has obtained a commitment for up to $128 million in exit financing from its RBL lenders, led by Wells Fargo as agent, as well as a $50 million rights offering that is backstopped and supported by certain of the company’s senior unsecured noteholders.

“This is an important step forward for Penn Virginia,” said Edward B. Cloues, II, Chairman and interim Chief Executive Officer of Penn Virginia.  “Once the restructuring is implemented, the company will have substantially less debt and a much stronger balance sheet.  We will be in a better position to navigate the current industry environment and leverage the value of our underlying assets and operational expertise.  Importantly, the announcement today provides Penn Virginia with an expedited plan to emerge from this process with committed financing, a new money investment, and a clear path to future production and success.”

As part of the company’s “first day” motions, Penn Virginia has asked the Court for authorization to generally continue its ongoing employee compensation and benefit programs without change or interruption.  Additionally, Penn Virginia has filed a Plan of Reorganization and Disclosure Statement, which incorporate the terms of the restructuring agreement and other commitments made by the RBL Lenders and the supporting noteholders.  The company anticipates emerging from chapter 11 by the end of the summer.

“Like many other exploration and production companies, Penn Virginia has been significantly affected by the recent and continued dramatic decline in oil and natural gas prices.  We believe using the chapter 11 process is the most efficient way to achieve our financial objectives and deleverage the Company's balance sheet,” said cCloues.  “The ongoing commitment from our valued business partners and hard-working employees is a testament to the strength of our organization, and we sincerely appreciate their loyalty and support.”

Jefferies is acting as financial advisor, Alvarez & Marsal is acting as restructuring advisor (with R. Seth Bullock of Alvarez & Marsal serving as Chief Restructuring Officer), and Kirkland & Ellis LLP is acting as legal counsel to the company in connection with the debt restructuring.  PJT Partners is acting as financial advisor and Milbank, Tweed, Hadley & McCloy LLP is acting as legal advisor to the ad hoc committee of noteholders.  Opportune LLP is acting as financial advisor and Bracewell LLP is acting as legal advisor to Wells Fargo (as agent) and the RBL lenders.  For more information about the chapter 11 case, including access to Court documents, see:

Penn Virginia Corporation is an independent oil and gas company engaged in the exploration, development and production of oil, NGLs and natural gas in various domestic onshore regions of the United States, with a primary focus in the Eagle Ford Shale in South Texas.

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