CHAPARRAL ENERGY, INC. Item 1.01 Entry into a Material Definitive Agreement.
Restructuring Support Agreement
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Specifically, the Restructuring Support Agreement provides, in pertinent part, as follows:
• The Company will emerge from chapter 11 with a
facility (the "Exit Facility"). The Exit Facility will include (A) second
out term loans (the "Second Out Term Loans") in an amount to be
determined and (B) a revolving facility that has an initial borrowing
base equal to (i) the lesser of (a) $175 million or (b) the Company's
proved developed producing reserves on a PV-15 basis, plus hedges, on
six-month roll-forward basis minus (ii) the aggregate amount of the
Second Out Term Loans. There must be a minimum of $20 million of
availability under the Exit Facility at emergence.
• Lenders under the Company's RBL Credit Facility will receive, on account
of their prepetition loans, (i) their pro rata share of cash in the
amount of the difference between their outstanding loans as of the
effective date of the Plan and the initial borrowing base under the Exit
Facility and (ii) with respect to lenders who agree to provide revolving
commitments under the Exit Facility, their pro rata share of an
additional amount of cash to be determined based on excess cash as of the
effective date and new first-lien first-out revolving loans on account of
their remaining prepetition loans and, with respect to lenders electing
not to provide revolving commitments under the Exit Facility, new
first-lien second-out term loans on account of their remaining
prepetition loans.
• The Company will fully equitize its approximately
outstanding prepetition Senior Notes, with each holder of Senior Notes
receiving, upon the Company's emergence from bankruptcy, its ratable
share of (i) 100% of the total issued and outstanding shares of new
common stock of the reorganized Company (the "New Common Stock"), subject
to dilution by any New Common Stock issued upon conversion of the
Convertible Notes (as defined below), the issuance of shares of New
Common Stock in an amount up to 7% of the fully diluted New Common Stock
pursuant to any management incentive plan that may be approved by the new
board of directors post-emergence (with anti-dilution protections with
regard to the Convertible Notes), New Common Stock issued in connection
with the "Put Option Premium" payable in the form of New Common Stock to
the Backstop Parties (as defined below), and any New Common Stock issued
upon exercise of the warrants described below and (ii) rights to
participate in the Rights Offering (as defined below) of the Convertible
Notes.
• The Company will raise
rights offering (the "Rights Offering") of second-lien senior notes
convertible into New Common stock (the "Convertible Notes") issued at
par. The Convertible Notes will be convertible into shares of New Common
. . .
Item 1.02 Termination of a Material Definitive Agreement
The information set forth in Item 1.01 relating to the termination of SVP's right to designate individuals for appointment, election or nomination to the Board is hereby incorporated by reference into this Item 1.02.
Item 1.03 Bankruptcy or Receivership.
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The Debtors have filed a motion with the
Additional information about the chapter 11 cases may be obtained at http://www.kccllc.net/chaparral2020.
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Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The filing of the chapter 11 cases described above in Item 1.03 constitutes an event of default that accelerated the Company's obligations under the following debt instruments (the "Debt Instruments"):
• Tenth Restated Credit Agreement, as amended, by and among Chaparral
Energy, Inc. , Royal Bank of Canada as administrative agent and the
lenders thereto.
• Indenture dated June 29, 2018 , among Chaparral Energy, Inc. , the
Guarantors party thereto, and UMB Bank, N.A. , as Trustee, relating to our
8.750% Senior Notes due 2023.
The Debt Instruments provide that, as a result of the chapter 11 cases, the principal and interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the commencement of the chapter 11 cases, and the creditors' rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.
In addition, the information set forth relating to the Forbearance Agreements in Item 1.01 is hereby incorporated by reference into this Item 2.04.
Item 5.02. Departure Of Directors Or Certain Officers; Election Of Directors;
Appointment Of Certain Officers; Compensatory Arrangements Of Certain
Officers.
On
The information set forth in Item 1.01 above regarding the resignation of
The information set forth in Item 1.01 above regarding the Board's rejection of
The description of the Severance Amendments does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Severance Amendments with the Former Executives attached to this Current Report on Form 8-K as Exhibits 99.3, 99.4, 99.5 and 99.6, each of which is hereby incorporated by reference into this Item 5.02.
Item 7.01. Regulation FD Disclosure
Press Release
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Cleansing Material
Prior to the filing of the chapter 11 cases, the Company entered into confidentiality agreements (collectively, the "NDAs") with certain parties. Pursuant to the NDAs, the Company agreed to publicly disclose certain information (the "Cleansing Material") upon the occurrence of certain events set forth in the NDAs. A copy of the Cleansing Material is attached to this Current Report on Form 8-K as Exhibit 99.11. The Cleansing Material was prepared by the Company solely to facilitate a discussion with the parties to the NDAs and was not prepared with a view toward public disclosure and should not be relied upon to make an investment decision with respect to the Company. The Cleansing Material should not be regarded as an indication that the Debtors or any third party considers the Cleansing Material to be a reliable prediction of future events, and the Cleansing Material should not be relied upon as such. The Cleansing Material includes certain values for illustrative purposes only and such values are not the result of, and do not represent, actual valuations, estimates, forecasts or projections of the Debtors or any third party and should not be relied upon as such. The uncertainty in these values may be amplified by the ongoing COVID-19 pandemic, which has caused significant economic uncertainty and volatility in capital markets. Neither the Debtors nor any third party has made or makes any representation to any person regarding the accuracy of any Cleansing Material or undertakes any obligation to publicly update the Cleansing Material to reflect circumstances existing after the date when the Cleansing Material was prepared or conveyed or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Cleansing Material are shown to be in error.
Disclosure Statement
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The information contained in the Disclosure Statement and this Current Report on Form 8-K do not constitute an offer to buy, nor a solicitation of an offer to sell, any securities of the Company, nor do they constitute a solicitation of consent from any persons with respect to the transactions contemplated hereby and thereby. While the Company expects the restructuring will take place in accordance with the Plan, there can be no assurance that the Company will be successful in completing a restructuring. Holders of common stock, holders of Senior Notes and other security holders are urged to read the disclosure materials, including the Disclosure Statement, because they contain important information regarding the restructuring.
The information contained in this Item 7.01, including in Exhibits 99.10, 99.11 and 99.12, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company's filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing. The filing of this Current Report on Form 8-K (including any exhibit hereto or any information included herein or therein) shall not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation FD.
Cautionary Note Regarding the Chapter 11 Cases
The Company cautions that trading in the Company's common stock during the pendency of the chapter 11 cases is highly speculative and poses substantial risks. Trading prices for the Company's common stock may bear little or no relationship to the actual recovery, if any, by holders of the Company's common stock in the chapter 11 cases. The Company expects that holders of the Company's common stock could experience a significant or complete loss on their investment, depending on the outcome of the chapter 11 cases.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The exhibit listed in the following Exhibit Index is filed as part of this Current Report on Form 8-K.
Exhibit No. Description 99.1 Restructuring Support Agreement, dated as ofAugust 15, 2020 , by and amongChaparral Energy, Inc. , certain of its subsidiaries and the Consenting Creditors (as defined therein).* 99.2 Backstop Purchase Agreement, dated as ofAugust 15, 2020 , by and amongChaparral Energy, Inc. , certain of its subsidiaries and the Backstop Parties (as defined therein).*
99.3† Amendment and Release Agreement between the Company, Chaparral
Energy, L.L.C. andJames M. Miller datedAugust 13, 2020 .
99.4† Amendment and Release Agreement between the Company, Chaparral
Energy, L.L.C. andMark Ver Hoeve datedAugust 13, 2020 .
99.5† Amendment and Release Agreement between the Company, Chaparral
Energy, L.L.C. andScott Pittman datedAugust 13, 2020 .
99.6† Amendment to the Separation and Release Agreement between the
Company, Chaparral Energy, L.L.C. and K. Earl Reynolds dated August 13,
2020 .*
99.7 SVP Letter Agreement, dated as of August 14, 2020 , by and among
Strategic Value Partners, LLC , certain investment funds directly and
indirectly managed by Strategic Value Partners, LLC , and Chaparral
Energy, Inc.
99.8 Third Amendment to Limited Forbearance Agreement dated as of August
14, 2020 , by and among the Chaparral Energy, Inc. , the subsidiary
guarantors party thereto, certain Lenders identified therein, and Royal
Bank of Canada, as Administrative Agent and Issuing Bank .*
99.9 Amended and Restated Forbearance and Waiver Agreement dated as of
August 14, 2020 , by and among Chaparral Energy, Inc. , the subsidiary
guarantors party thereto, and certain noteholders identified therein.*
99.10 Press Release, dated as of August 17, 2020 , issued by Chaparral
Energy, Inc.
99.11 Cleansing Material, dated as of August 16, 2020 .
99.12 Disclosure Statement, dated as of August 15, 2020 .
* Certain portions of this exhibit (indicated by "[*****]") have been omitted
pursuant to Item 601(b)(10) of Regulation S-K. Pursuant to Item 6.01(b)(2) of
Regulation S-K exhibits and schedules are omitted.
agrees to furnish supplementally a copy of any omitted schedule or exhibit to
the
† Management contract or compensatory plan or arrangement.
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