CALIFORNIA RESOURCES CORPORATION Item 1.01 Entry into a Material Definitive Agreement. As previously reported, onJuly 15, 2020 (the "Petition Date"),California Resources Corporation ("CRC" or the "Company") and certain of its subsidiaries (collectively, with the Company, the "Debtors") filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases") in theUnited States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court "). The Chapter 11 Cases are being jointly administered under the caption In reCalifornia Resources Corporation , et al., No. 20-33568 (DRJ). OnJuly 24, 2020 , the Debtors filed the Debtors' Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the "Plan") with theBankruptcy Court . On the Petition Date, prior to the commencement of the Chapter 11 Cases, the Company entered into a commitment letter withJPMorgan Chase Bank, N.A . (the "Commitment Letter"), pursuant to which JPMorgan agreed to arrange, syndicate and provide a portion of the funding for a senior superpriority debtor-in-possession credit facility subject to the satisfaction or waiver of conditions described therein. OnJuly 22, 2020 , theBankruptcy Court entered an order (the "Interim Order") granting interim approval of entry into (i) a Senior Secured Superpriority Debtor-in-Possession Credit Agreement (the "Senior DIP Credit Agreement"), by and among the Company, as Borrower, the lenders from time to time party thereto (the "Senior DIP Lenders") andJPMorgan Chase Bank, N.A ., as administrative agent (the "Senior DIP Agent") and (ii) a Junior Secured Superpriority Debtor-in-Possession Credit Agreement (the "Junior DIP Credit Agreement"), by and among the Company, as Borrower, the lenders from time to time party thereto (the "Junior DIP Lenders") andAlter Domus Products Corp. , as administrative agent (the "Junior DIP Agent"). In accordance with the Interim Order, the entire Junior DIP Facility and a portion of the Senior DIP Facility on the closing date were used to refinance and replace the Company's existing revolving credit facility in full. Senior DIP Credit Agreement In accordance with the Interim Order, onJuly 23, 2020 , the Company, as borrower, the Senior DIP Agent and the Senior DIP Lenders entered into the Senior DIP Credit Agreement on the terms described in the Commitment Letter. The Senior DIP Credit Agreement provides for an approximately$483 million senior superpriority debtor-in-possession credit facility (the "Senior DIP Facility") consisting of (i) an approximately$400 million new money subfacility, including$250 million in new money loans and approximately$150 million to deem letters of credit outstanding under the Company's existing revolving credit facility as being issued under the new money subfacility, and (ii) a roll-up of approximately$83 million of commitments under the Company's existing revolving credit facility, which will be deemed term loans under the Senior DIP Facility. As of the closing of the Senior DIP Credit Agreement and in accordance with the Interim Order,$85 million of the new money subfacility and an additional$31 million in the form of letters of credit to backstop specified surety bonds became available to the Company. Upon the date that theBankruptcy Court enters a final non-appealable order in substantially the form of the Interim Order with such changes as the Senior DIP Agent and the Senior DIP Lenders reasonably approve, the full remaining amount of the$250 million new money loans will be available to the Borrower. In connection with the Senior DIP Credit Agreement, certain subsidiaries of the Company became parties to a guarantee agreement as guarantors (collectively, the "Guarantors," and together with the Company, the "DIP Credit Parties"). The Guarantors, which include the other debtors and debtors-in-possession in the Chapter 11 Cases, have guaranteed, on a joint and several basis, all of the obligations under the Senior DIP Facility. To secure the obligations under the Senior DIP Facility, the Company and the Guarantors have granted liens on substantially all of their assets, whether now owned or hereafter acquired. The Senior DIP Credit Agreement contains representations and warranties, affirmative and negative covenants and events of default customary for financings of this type and size. The proceeds of all or a portion of the Senior DIP Facility may be used by the Company to (i) fund working capital needs and capital expenditures during the pendency of the Chapter 11 Cases, (ii) pay certain costs, fees and expenses related to the Chapter 11 Cases and the Senior DIP Facility and (iii) make payments in respect of certain "adequate protection" obligations, in all cases on the terms, and subject to the conditions, set forth in the Senior DIP Credit Agreement and applicable orders of the --------------------------------------------------------------------------------
2
--------------------------------------------------------------------------------
and 100% of the subscription rights offered under the Tranche A Equity Rights
Offering (excluding those subscription rights reserved to the parties
backstopping the equity rights offering); (iii) holders of Deficiency/Unsecured
Debt Claims, which consist of holders of Stipulated 2017 Deficiency Claims, 2016
Term Loan Claims, Second Lien Notes Claims and Unsecured Notes Claims, will
receive 16.4% of the common stock in Reorganized CRC (subject to dilution) and
100% of the subscription rights offered under the Tranche B Equity Rights
Offering (excluding those subscription rights reserved to the parties
backstopping the equity rights offering); (iv) all other general unsecured
claims will be paid or disputed in the ordinary course of business; and (v)
existing equity interests in CRC will receive no distributions.
In the aggregate, the Consenting Parties hold approximately 85% of the 2017 Term
Loan Claims and approximately 68% of the Deficiency/Unsecured Debt Claims.
The foregoing description of the Amended RSA is not complete and is qualified in
its entirety by reference to the Amended RSA, a copy of which is attached to
this Current Report on Form 8-K as Exhibit 10.3 and is hereby incorporated by
reference in this Item 1.03.
Amended and Restated Backstop Commitment Agreement
On July 24, 2020 , the Debtors entered into an Amended and Restated Backstop
Commitment Agreement (the "Amended BCA") that amends and restates in its
entirety the previously disclosed Backstop Commitment Agreement (the "Original
BCA"), dated July 15, 2020 , by and among the Debtors and the backstop parties
thereto (the "Backstop Parties").
Pursuant to the Amended BCA, the Backstop Parties agreed to backstop the Equity
Rights Offering provided for by the Amended RSA, which is discussed above.
Subject to the terms and conditions contained in the Amended BCA, the Backstop
Parties have committed to purchase any common stock that is not duly subscribed
for pursuant to the Equity Rights Offering.
In consideration for the Backstop Parties agreeing to backstop the Equity Rights
Offering, 37.5% of the Tranche A Equity Rights Offering and 50% of the Tranche B
Equity Rights Offering will be reserved solely for the Backstop Parties. In
further consideration for the Backstop Parties agreeing to backstop the Rights
Offering, the Backstop Parties shall be entitled to a premium in an aggregate
amount equal to 10% of the $450 million Rights Offering amount payable in common
stock of reorganized CRC. If the Amended BCA is terminated under certain
circumstances as set forth therein, the Company will instead be required to make
a cash payment of $22.5 million to the Backstop Parties (which is 5% of the
Rights Offering amount).
The transactions contemplated by the Amended BCA are conditioned upon the
satisfaction or waiver of customary conditions for transactions of this nature,
including among other things that (i) the Bankruptcy Court shall have confirmed
the chapter 11 plan and transactions contemplated thereunder and (ii) the Rights
Offering shall have been conducted, in all material respects, in accordance with
the approval of the Bankruptcy Court , the chapter 11 plan and the Amended BCA.
The foregoing description of the Backstop Commitment Agreement is not complete
and is qualified in its entirety by reference to the Backstop Commitment
Agreement, a copy of which is attached to this Current Report on Form 8-K as
Exhibit 10.4 and is hereby incorporated by reference in this Item 1.01.
3
--------------------------------------------------------------------------------
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
10.1 Senior Secured Superpriority Debtor-in-Possession Credit
Agreement dated as of July 23, 2020 , among California Resources
Corporation , as the Borrower, the several lenders from time to
time parties hereto, and JPMorgan Chase Bank, N.A ., as
Administrative Agent and as Sole Lead Arranger and Bookrunner *
10.2 Junior Secured Superpriority Debtor-in-Possession Credit
Agreement dated as of July 23, 2020 , among California Resources
Corporation , as the Borrower, the several lenders from time to
time parties hereto, and Alter Domus Products Corp. , as
Administrative Agent *
10.3 Amended and Restated Restructuring Support Agreement, dated as
of July 24, 2020 , by and among California Resources Corporation ,
certain of its subsidiaries and the Consenting Parties (as
defined therein). *
10.4 Amended and Restated Backstop Commitment Agreement, dated as
of July 24, 2020 , by and among California Resources Corporation ,
certain of its subsidiaries and the Backstop Parties (as defined
therein). *
104 Cover Page Interactive Data File (embedded within the Inline
XBRL document)
__________
* Certain portions of this exhibit (indicated by "[*****]") have been omitted
pursuant to Item 601(b)(10) of Regulation S-K.
4--------------------------------------------------------------------------------
© Edgar Online, source
