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Legacy Reserves Inc. Reaches Agreement With RBL And Second Lien Lenders On Terms Of Financial Restructuring


MIDLAND, TexasJune 11, 2019 /PRNewswire/ — Legacy Reserves Inc. (NASDAQ: LGCY) (“Legacy”, and collectively with its subsidiaries, the “Company”) announced today that its board of directors has approved, and the Company has executed, a restructuring support agreement (the “Restructuring Agreement”) with its lenders under its reserve based revolving credit facility (“RBL Lenders”) and its lenders under its second lien term loan (“Second Lien Lenders”).  The proposed financial restructuring would significantly reduce the Company’s debt, provide access to additional capital, and establish a more sustainable capital structure.

To facilitate the financial restructuring and implement the pre-arranged plan of reorganization (the “Plan”) contemplated by the Restructuring Agreement, the Company expects to file voluntary petitions for reorganization in the United States Bankruptcy Court for the Southern District of Texas (the “Court”) pursuant to chapter 11 of the United States Bankruptcy Code.  The Plan, which the RBL Lenders and Second Lien Lenders have agreed to support, will provide for, among other things: (1) significant de-leveraging of the Company’s capital structure by over $900 million, including an infusion of at least $200 million in equity capital through a rights offering and a committed equity backstop; and (2) payment in full of the Company’s other secured creditors, tax and other priority claimants, trade creditors and employees.  Consummation of the Plan, including the infusion of new equity, will be subject to confirmation by the Court in addition to other conditions to be set forth in the Plan and related transaction documents.  The Plan is expected to be filed within 30 days following the commencement of the chapter 11 cases.  The Company is also in active discussions with the advisors for a group of the Company’s noteholders regarding terms for their support of the Restructuring Agreement.

The Company will continue to operate its business in the normal course without material disruption to its vendors, partners or employees, and expects to have sufficient liquidity to meet its financial obligations during the restructuring.  The Restructuring Agreement contemplates that the Company will obtain debtor-in possession (“DIP”) financing provided by certain of its existing RBL Lenders, including Wells Fargo Bank, National Association.  The DIP financing, subject to Court approval, will refinance portions of the Company’s existing reserve-based credit facility and provide an additional $100 million in new money to support the Company’s day-to-day operations and finance the restructuring process.  The Restructuring Agreement further provides that, upon confirmation of the Plan and emergence from chapter 11, the Company will obtain access to a senior secured asset-based lending credit facility in a maximum amount of $500 million provided by certain of the existing RBL Lenders.

Dan Westcott, Chief Executive Officer of the Company, said, “We explored a wide variety of alternatives to address our balance sheet and looming bank maturity during a sustained downturn in oil and gas prices.   After concluding this broad process, we believe that the financial restructuring negotiated with our creditors provides the best path forward for the Company. Through the proposed terms of the plan of reorganization, we believe our right-sized balance sheet will enable us to successfully compete in the current environment.

“I want to express my gratitude to the employees for their continued dedication and hard work, and to our service providers, business partners and other stakeholders for their ongoing support during this time.  We are grateful to GSO Capital Partners LP, who, as Plan Sponsor, has committed to ensure that at least $200 millionof new equity is invested into the Company.  Following the negotiated restructuring, we look forward to having substantially less debt and significantly enhanced prospects for our Company, our employees and our future stakeholders.”

Perella Weinberg Partners and its affiliate, Tudor Pickering Holt & Co., is acting as financial advisor for the Company, Sidley Austin LLP is acting as legal advisor, and Alvarez & Marsal is acting as restructuring advisor.  PJT Partners LP is acting as financial advisor for GSO Capital Partners LP, and Latham & Watkins LLP is acting as legal advisor.

For inquiries regarding the restructuring, please call the hotline established by the Company’s noticing agent, Kurtzman Carson Consultants LLC, at (866) 967-0495 (toll-free domestic) or (310) 751-2695 (international).

About Legacy Reserves Inc.

Legacy Reserves Inc. is an independent energy company engaged in the development, production and acquisition of oil and natural gas properties in the United States.  Its current operations are focused on the horizontal development of unconventional plays in the Permian Basin and the cost-efficient management of shallow-decline oil and natural gas wells in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions.  Additional information regarding the Company is available at www.legacyreserves.com.



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