SUNDANCE ENERGY INC. Item 1.03 Bankruptcy or Receivership.
As previously disclosed, on
Plan of Reorganization
The following is a summary of the material terms of the Plan. This summary highlights only certain substantive provisions of the Plan and is not intended to be a complete description of the Plan. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. This summary is qualified in its entirety by reference to the full text of the Plan, which is attached hereto as Exhibit 2.1 and incorporated herein by
reference.
Pursuant to the Plan:
· Exit Facilities. On the effective date of the Plan, the reorganized Company
shall enter into the following exit facilities:
(a) Exit RBL Facility: The reorganized Company and the lenders under the RBL
Facility shall enter into a new reserve-based revolving credit facility (the
"Exit RBL Facility") having a borrowing base of $107.5 million (inclusive of
a $20.0 million letter of credit subfacility); and
(b) The reorganized Company and the lenders under the RBL Facility shall enter
into a new first lien second out term loan facility (the "Exit Second Out
Term Loan Facility") having a principal amount of $30.0 million .
· Distributions to Holders of Claims and Equity Interests. The Plan provides for
the following distributions to holders of claims and equity interests:
(a) All allowed administrative expense claims, priority tax claims, other
priority claims, and other secured claims shall be paid in full (or will
receive such other treatment rendering such claims unimpaired).
(b) DIP Facility Claims: On the effective date of the Plan, each holder of an
allowed claim under the DIP Facility shall receive its pro rata share of
38.0338% of the shares of common stock of the reorganized Parent authorized
to be issued pursuant to the Plan and the new or amended organizational
documents of the reorganized Parent (the "New Common Equity Interests")
issued on the effective date of the Plan, prior to dilution by the MIP
Equity (as defined below).
(c) RBL Claims: On the effective date of the Plan, with respect to the holders
of claims under the RBL Facility (the "RBL Claims") each holder of an
allowed RBL Claim shall receive: (1) its pro rata share (determined in
accordance with the Plan) of the loans under the Exit RBL Facility; (2)
its pro rata share (determined in accordance with the Plan) of the loans
under the Exit Second Out Term Loan Facility; and (3) its pro rata share
(determined in accordance with the Plan) of an amount equal to the payment
in full in cash of the portion of allowed RBL Claims equal to the difference
between (x) the amount of allowed RBL Claims minus (y) $122.5 million .
(d) Term Loan Claims: On the effective date of the Plan, each holder of an
allowed claim under the Term Loan Facility shall receive its pro rata share
of 61.9662% of the New Common Equity Interests issued on the effective date
of the Plan, prior to dilution by the MIP Equity.
(e) General Unsecured Claims: The legal, equitable, and contractual rights of
holders of general unsecured claims will be unaltered by the Plan. Except to
the extent that a holder of an allowed general unsecured claim has already
been paid during the Cases or such holder agrees to less favorable
treatment, each holder of an allowed general unsecured claim shall receive,
at the option of the Company or the reorganized Company, as applicable, and
with the consent of the Required Consenting Term Lenders: (1) if such
allowed general unsecured claim is due and payable on or before the
effective date of the Plan, payment in full, in cash, of the due and unpaid
portion of such allowed general unsecured claim on the effective date; (2)
if such allowed general unsecured claim is not due and payable before the
effective date of the Plan, payment in the ordinary course of business
consistent with past practices; or (3) such other treatment, as may be
agreed upon in writing by the Company or the reorganized Company (as
applicable), the Required Consenting Term Lenders, and the holder of such
general unsecured claim, such that the allowed general unsecured claim will
be rendered unimpaired in accordance with section 1124 of the Bankruptcy
Code.
(f) Old Parent Interests: On the effective date of the Plan, all existing common
stock in the Parent (the "Old Parent Interests") shall be cancelled, and
each holder of an Old Parent Interest will not receive any distribution or
retain any property on account of such Old Parent Interest. Upon the
cancellation of the Old Parent Interests, the Parent will cease to be a
publicly-traded company.
· Management Incentive Plan: On the effective date of the Plan, the reorganized
Parent shall enter into a management incentive plan, which shall (i) provide
for the grant of 6% of the New Common Equity Interests (which may be in the
form of a combination of options, restricted stock units, and/or other full
value or appreciation awards exercisable, exchangeable, or convertible into
such New Common Equity Interests) on a fully diluted basis (the "MIP Equity")
to certain members of senior management, to be allocated as determined by the
New Board (as defined below) and (ii) otherwise contain terms and conditions
(including the form of awards, allocation of awards, vesting and performance
metrics) that are customary for similar type equity plans and acceptable to
the reorganized Company and the Required Consenting Term Lenders.
· Board Composition. The composition of the board of managers of the Parent (the
"New Board") will consist of four (4) directors in total, which will include
those directors designated by certain Consenting Term Lenders.
The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Plan, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Although the Company intends to pursue the transactions (collectively, the "Transaction") contemplated in the Plan in accordance with the terms set forth therein, there can be no assurance that the Company will be successful in completing the Transaction, whether on the same or different terms.
Any new securities to be issued pursuant to the Plan have not been registered
under the Securities Act or any state securities laws. Therefore, the new
securities may not be offered or sold in
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Such statements reflect management's current expectations based on
currently available information, but are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially from those
anticipated in or implied by the forward-looking statements. Our forward-looking
statements are generally identified with words such as "anticipate," "believe,"
budgeted," "continue," "could," "estimate," "expect," "forecast," "goal,"
"intend," "may," "objective," "plan," "potential," "predict," "projection,"
"scheduled," "should," or other similar words. Risks, uncertainties and
assumptions that could affect our forward-looking statements include, among
other things the risk related to the impact of the COVID-19 pandemic in
geographic regions or markets served by us, or where our operations are located,
including the risk of global recession and the other risk factors that have been
listed from time to time in the Parent's reports filed with the
You should also understand that it is not possible to predict or identify all
such factors and should not consider the risk factors in our reports filed with
the
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description
2.1 Joint Prepackaged Plan of Reorganization forSundance Energy Inc. and Its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code. 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
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