Item 7.01 Regulation FD Disclosure.
As previously disclosed, on October 3, 2019, EP Energy Corporation (together
with EP Energy LLC, the "Company"), and certain of its direct and indirect
subsidiaries (collectively with the Company, the "Debtors") filed voluntary
petitions (the "Chapter 11 Cases") in the United States Bankruptcy Court for the
Southern District of Texas (the "Bankruptcy Court") seeking relief under chapter
11 of title 11 of the United States Code. The Chapter 11 Cases are being jointly
administered under the caption "In re: EP Energy Corporation, et al., Case
No. 19-35654." Court filings and other information related to the Chapter 11
Cases are available at the website administered by the claims agent, Prime
Clerk, at https://cases.primeclerk.com/EPEnergy.
Plan of Reorganization
As previously disclosed in a Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 19, 2019, on November 19, 2019,
the Debtors filed a proposed Joint Chapter 11 Plan (as may be amended, restated
or otherwise modified from time to time, the "Plan") and a proposed Disclosure
Statement for Joint Chapter 11 Plan of Reorganization describing the Plan and
the solicitation of votes to approve the same from certain of the Debtors'
creditors with respect to the Chapter 11 Cases.
As previously disclosed in a Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 16, 2019, on December 12, 2019,
the Debtors filed an Amended Joint Chapter 11 Plan of EP Energy Corporation and
a Disclosure Statement for Amended Joint Chapter 11 Plan of Reorganization of EP
Energy Corporation and its Affiliated Debtors describing the Plan and the
solicitation of votes to approve the same from certain of the Debtors' creditors
with respect to the Chapter 11 Cases.
On January 2, 2020, the Debtors filed a Second Amended Joint Chapter 11 Plan of
EP Energy Corporation and a Disclosure Statement for Second Amended Joint
Chapter 11 Plan of Reorganization of EP Energy Corporation and its Affiliated
Debtors describing the Plan and the solicitation of votes to approve the same
from certain of the Debtors' creditors with respect to the Chapter 11 Cases.
On January 8, 2020, the Debtors filed a Third Amended Joint Chapter 11 Plan of
EP Energy Corporation and its Affiliated Debtors and a Disclosure Statement for
Third Amended Joint Chapter 11 Plan of Reorganization of EP Energy Corporation
and its Affiliated Debtors describing the Plan and the solicitation of votes to
approve the same from certain of the Debtors' creditors with respect to the
Chapter 11 Cases.
Also on January 8, 2020, the Debtors filed a Modified Third Amended Joint
Chapter 11 Plan of EP Energy Corporation and its Affiliated Debtors (as may be
further amended from time to time, the "Modified Third Amended Plan") and a
Modified Disclosure Statement for Modified Third Amended Joint Chapter 11 Plan
of Reorganization of EP Energy Corporation and its Affiliated Debtors (as may be
further amended from time to time, the "Disclosure Statement") describing the
Modified Third Amended Plan and the solicitation of votes to approve the same
from certain of the Debtors' creditors with respect to the Chapter 11 Cases.
2
--------------------------------------------------------------------------------
Agreement in Principle
Also on January 8, 2020, the Debtors announced that they had reached an
agreement in principle with the Official Committee of Unsecured Creditors (the
"Creditors' Committee") and the Initial Supporting Noteholders regarding a
settlement of the Creditors' Committee's objections to confirmation of the Plan.
Under the agreement in principle, among other terms, (a) holders of Unsecured
Claims (which will be amended to exclude 1.5L Notes Deficiency Claims) will
receive their Pro Rata share of (i) 1.75% of the New Common Shares, subject to
dilution only by the EIP Shares and (ii)(A) for eligible holders, rights to
participate in a $25 million rights offering and (B) for non-eligible holders,
Cash, New Common Shares, or a combination thereof, not to exceed a value of
$500,000 in the aggregate; and (b) the reasonable and documented fees and
out-of-pocket expenses of the Unsecured Notes Trustees will be paid in full. The
full terms of the agreement in principle remain under negotiation and will be
memorialized in an amended chapter 11 plan and described in a related disclosure
statement, both to be filed with Bankruptcy Court. A hearing to approve such
disclosure statement and solicitation of votes on such amended chapter 11 plan
has been scheduled to be held on January 13, 2020. In connection with the
agreement in principle, the Initial Supporting Noteholders agreed to extend the
milestone date set forth in Section 6(c)(v) of the Backstop Commitment Agreement
to January 15, 2020. Capitalized terms used but not defined in this paragraph
have the meanings assigned to such terms in the Modified Third Amended Joint
Chapter 11 Plan of EP Energy Corporation and its Affiliated Debtors attached
hereto as Exhibit 99.1.
Information contained in the Modified Third Amended Plan and the Disclosure
Statement is subject to change, whether as a result of amendments or supplements
to the Modified Third Amended Plan or Disclosure Statement, third-party actions,
or otherwise, and should not be relied upon by any party. Copies of the Modified
Third Amended Plan and the Disclosure Statement are attached hereto as Exhibits
99.1 and 99.2, respectively.
This Current Report on Form 8-K is not a solicitation to accept or reject the
proposed Modified Third Amended Plan. Any such solicitation will be made
pursuant to and in accordance with the Disclosure Statement, as may be amended
from time to time, and applicable law, including orders of the Bankruptcy Court.
The Disclosure Statement was amended to, among other things, include a
liquidation analysis and financial projections (collectively, "Analysis and
Projections"). The Analysis and Projections were not prepared with a view toward
compliance with the published guidelines of the Securities and Exchange
Commission or the guidelines established by the Public Company Accounting
Oversight Board and should not be relied upon to make an investment decision
with respect to the Company. The Analysis and Projections do not purport to
present the Company's financial condition in accordance with GAAP. The Company's
independent registered public accounting firm has not examined, compiled or
otherwise applied procedures to the Analysis and Projections and, accordingly,
does not express an opinion or any other form of assurance with respect to the
Analysis and Projections. Any financial projections or forecasts therein or as
otherwise in the Disclosure Statement and the exhibits thereto reflect numerous
assumptions with respect to financial condition, business and industry
performance, general economic, market and financial conditions, and other
matters, all of which are difficult to predict, and many of which are beyond the
Company's control. Accordingly, there can be no assurance that the assumptions
made in preparing such financial projections or forecasts will prove to be
accurate. It is expected that there will be differences between actual and
projected results, and the differences may be material, including due to the
occurrence of unforeseen events occurring subsequent to the preparation of any
financial projections or forecasts. The disclosure of the Analysis and
Projections should not be regarded as an indication that the Company or its
affiliates or representatives consider the Analysis and Projections to be a
reliable prediction of future events, and the Analysis and Projections
3
--------------------------------------------------------------------------------
should not be relied upon as such. The Analysis and Projections are only
estimates and actual results may vary considerably from the Analysis and
Projections. The statements in the Analysis and Projections speak only as of the
date such statements were made, or any earlier date indicated therein. The
Company does not undertake any obligation to publicly update the Analysis and
Projections to reflect circumstances existing after the date when the Analysis
and Projections were filed with the Bankruptcy Court or to reflect the
occurrence of future events, even in the event that any or all of the
assumptions underlying the Analysis and Projections are shown to be in error.
The statements provided in the Analysis and Projections are subject to all of
the cautionary statements and limitations described herein, therein and under
the caption "Forward-Looking Statements."
In accordance with General Instruction B.2 of Form 8-K, the information being
furnished under this Item 7.01 pursuant to this Current Report on Form 8-K,
including Exhibit 99.1 and Exhibit 99.2, 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, nor
shall it be deemed incorporated by reference into any registration statement or
other document filed by the Company under the Securities Act of 1933, as amended
(the "Securities Act"), or the Exchange Act, except as expressly set forth by
specific reference in such filing.
Forward-Looking Statements
This Current Report on Form 8-K includes certain forward-looking statements
within the meaning of Section 27A of the Securities Act, and Section 21E of the
Exchange Act. Such statements are subject to risks and uncertainties that could
cause results to differ materially from the Company's expectations, including
the following: risks and uncertainties relating to the Chapter 11 Cases,
including but not limited to, the Company's ability to obtain Bankruptcy Court
approval with respect to motions in the Chapter 11 Cases, the effects of the
Chapter 11 Cases on the Company and on the interests of various constituents,
Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of the Chapter
11 Cases in general, the length of time the Company will operate under the
Chapter 11 Cases, risks associated with third-party motions in the Chapter 11
Cases, the potential adverse effects of the Chapter 11 Cases on the Company's
liquidity or results of operations; the ability of the Company to comply with
the terms of that certain Plan Support Agreement, dated as of October 18, 2019
(as may be amended from time to time, the "PSA"), that certain Backstop
Commitment Agreement, dated as of October 18, 2019 (as may be amended from time
to time), and/or that certain Senior Secured Superpriority Debtor-In-Possession
Credit Agreement, dated as of November 25, 2019, by and among EP Energy LLC,
JPMorgan Chase Bank, N.A. and the lenders under EP Energy LLC's prepetition
reserve based credit facility party thereto as lenders (as may be amended from
time to time); the ability of the Company to obtain requisite support for a plan
of reorganization from various stakeholders; the ability of the Company to
confirm and consummate such plan of reorganization in accordance with the terms
of the PSA; the uncertainty as to when or whether the effective date of such
plan of reorganization will occur; the ability of the Company to finalize the
agreement in principle described herein; the effects of disruption from the
Chapter 11 Cases making it more difficult to maintain business and operational
relationships, to retain key executives and to maintain various licenses and
approvals necessary for the Company to conduct its business; the consequences of
the acceleration of the Company's debt obligations; risks related to the trading
of the Company's securities on the OTC Pink Market; as well as other risk
factors set forth in the Company's Disclosure Statement included as Exhibit 99.2
to this Current Report on Form 8-K, as may be amended from time to time; as well
as the risk factors described in the Company's Annual Report on Form 10-K for
the year ended December 31, 2018, as updated in the Company's subsequently filed
Quarterly Reports on Form 10-Q. While the Company makes these
4
--------------------------------------------------------------------------------
statements in good faith, neither the Company nor its management can guarantee
that anticipated future results will be achieved. The Company assumes no
obligation to publicly update or revise any forward-looking statements made
herein or any other forward-looking statements made by the Company, whether as a
result of new information, future events, or otherwise. All forward-looking
statements attributable to the Company or persons acting on the Company's behalf
are expressly qualified in their entirety by the foregoing cautionary
statements. All such statements speak only as of the date made, and, except as
required by law, the Company undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
See Exhibit Index
5
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses