Operations to Continue as Normal
Enters into Restructuring Support Agreement
with Certain Creditors
Secures Approximately $36 Million in
Debtor-in-Possession Financing
Unit Corporation (NYSE- UNT) (“the Company”) today announced
that it has filed voluntary petitions under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of Texas, Houston Division (the “Court”)
to effectuate a pre-negotiated Chapter 11 plan of reorganization
(the “Plan”) that will reduce the Company’s funded debt obligations
by more than $650 million and right-size the Company’s balance
sheet for go-forward operations. The Company expects to continue to
operate in the ordinary course throughout the Chapter 11 process
without material disruption to its vendors, customers, or partners.
Importantly, the Company’s 50%-owned midstream affiliate, Superior
Pipeline Company, L.L.C. and its subsidiaries (“Superior”), is not
a debtor in the Chapter 11 cases and is unaffected by the Company’s
Chapter 11 filing. Additionally, the Company does not anticipate
that payments to vendors and suppliers of its subsidiary Unit
Drilling Company will be impacted.
The Chapter 11 petitions were filed in accordance with a
Restructuring Support Agreement (the “RSA”) between the Company,
the holders of more than 70% of the Company’s 6.625% senior
subordinated notes due 2021 (the “Subordinated Notes”) and all of
the lenders under the Company’s Senior Credit Agreement (the “RBL
Lenders”). The RSA sets forth the principal terms of the
restructuring transaction that will be effectuated by the Plan,
including an equitization of all of the outstanding Subordinated
Notes and the replacement of the existing RBL facility and the DIP
financing with a $180 million exit financing facility. Consummation
of the Plan will be subject to confirmation by the Court and other
conditions in the Plan, the RSA and related transaction
documents.
“Like many companies in the oil and gas industry, we have felt
the impact of the severe downturn in commodity prices, which has
only worsened with the COVID-19 pandemic,” said David T. Merrill,
President and Chief Executive Officer. “While facing this
challenging environment, we have worked diligently to explore a
variety of strategic alternatives to cut costs, improve our
liquidity and address near-term debt maturities. We are pleased to
receive the support of our lenders and noteholders and are
confident that, on emergence from Chapter 11, we will be better
positioned to meet our challenges and realize the potential of our
Company.”
With the filing, and subject to court approval, the Company has
received a commitment from the RBL Lenders that are parties to the
RSA to provide up to $36 million in debtor-in-possession (“DIP”)
financing. The Company anticipates up to $18 million will be
available on an interim basis. This financing, combined with the
Company’s usual operating cash flows, is expected to provide
sufficient liquidity for the Company to continue to operate in the
ordinary course through the restructuring process.
The Company has filed several customary motions with the court
seeking authorization to support its operations while this process
is ongoing, including authority to continue payment of employee
wages, salaries and benefits without interruption, and to continue
paying all vendors and suppliers of Unit Drilling Company in the
ordinary course of business. The Company expects to receive court
approval for these requests.
Additional information about these Chapter 11 cases can be
accessed via PACER at https://www.pacer.gov and, subject to the
Court’s approval, at https://cases.primeclerk.com/UnitCorporation
or by calling (877) 720-6581 (Toll-Free) or (646) 979-4412
(Local).
Vinson & Elkins L.L.P. is serving as legal advisor, Evercore
Group L.L.C. is serving as investment banker, and Opportune LLP is
serving as restructuring advisor to the Company.
Weil, Gotshal & Manges LLP is serving as legal advisor and
Greenhill & Co., LLC is serving as financial advisor to an ad
hoc group of holders of Subordinated Notes.
About the Company
Unit Corporation is a Tulsa-based, publicly held energy company
engaged through its subsidiaries in oil and gas exploration,
production, contract drilling and natural gas gathering and
processing. The Company’s Common Stock is listed on the New York
Stock Exchange under the symbol UNT. For more information about
Unit Corporation, visit its website at http://www.unitcorp.com.
Forward-Looking Statements
This news release contains “forward-looking statements” within
the meaning of the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements are not statements of historical facts and often contain
words such as “may,” “will,” “expect,” “believe,” “anticipate,”
“plan,” “estimate,” “seek,” “could,” “should,” “intend,”
“potential,” or words of similar meaning. Forward-looking
statements are based on management’s expectations, beliefs,
assumptions and estimates regarding the Company, industry, economic
conditions, government regulations and energy policies and other
factors. Forward-looking statements may include, for example,
statements regarding the Chapter 11 cases, the DIP facility, the
Company’s ability to complete the restructuring and its ability to
continue operating in the ordinary course while the Chapter 11
cases are pending. These statements are subject to significant
risks, uncertainties, and assumptions difficult to predict and
could cause actual results to differ materially and adversely from
those expressed or implied in the forward-looking statements,
including risks and uncertainties regarding the Company’s ability
to complete a reorganization process under Chapter 11, including
consummation of the restructuring; potential adverse effects of the
Chapter 11 cases on the Company’s liquidity and results of
operations; the Company’s ability to obtain timely approval by the
bankruptcy court regarding the motions filed in the Chapter 11
cases; objections to the Company’s restructuring process, the DIP
facility, or other pleadings filed that could protract the Chapter
11 cases; employee attrition and the Company’s ability to retain
senior management and other key personnel due to the distractions
and uncertainties, including the Company’s ability to provide
adequate compensation and benefits during the Chapter 11 cases; the
Company’s ability to comply with the restrictions imposed by the
DIP facility and other financing arrangements; the Company’s
ability to maintain relationships with suppliers, customers,
employees and other third parties and regulatory authorities
because of the Chapter 11 filing; the effects of the Chapter 11
cases on the Company and on the interests of various constituents,
including holders of the Company’s common stock; the effects of the
Chapter 11 cases on the market price of the Company’s common stock
and on the Company’s ability to access the capital markets; the
bankruptcy court’s rulings in the Chapter 11 cases, including the
approvals of the terms of the restructuring and the DIP facility,
and the outcome of the Chapter 11 cases generally; the time that
the Company will operate under Chapter 11 protection and the
continued availability of operating capital during the pendency of
the Chapter 11 cases; risks associated with third party motions in
the Chapter 11 cases, which may interfere with the Company’s
ability to consummate the restructuring or an alternative
restructuring; increased administrative and legal costs related to
the Chapter 11 process; potential delays in the Chapter 11 process
due to the effects of the COVID-19 virus; and other litigation and
inherent risks involved in a bankruptcy process. Forward-looking
statements are also subject to the risk factors and cautionary
language described occasionally in the reports and registration
statements the Company files with the Securities and Exchange
Commission, including those in the Company’s most recent Annual
Report on Form 10-K and any updates thereto in the Company’s
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Additional factors, events, or uncertainties that may emerge
occasionally, or those that the Company deems immaterial, could
cause the Company’s actual results to differ, and it is impossible
for the Company to predict them all. The Company makes
forward-looking statements based on currently available
information, and the Company assumes no obligation to, and
expressly disclaim any obligation to, update or revise publicly any
forward-looking statements made in this news release, whether
because of new information, future events or otherwise, except as
required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200522005473/en/
Michael D. Earl Vice President, Investor Relations (918)
493-7700 www.unitcorp.com
Unit (NYSE:UNT)
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