MEMORIAL PRODUCTION PARTNERS LP (NASDAQ:MEMP) Files An 8-K Bankruptcy or Receivership
Item1.03 Bankruptcy or Receivership.
As previously disclosed, on January16, 2017, Memorial Production
Partners LP (the Partnership) and certain of its subsidiaries
(collectively with the Partnership, the Debtors) filed voluntary
petitions (the Bankruptcy Petitions, and the cases commenced
thereby, the Chapter11 Cases) under chapter11 of title 11 of the
United States Code (the Bankruptcy Code) in the United States
Bankruptcy Court for the Southern District of Texas, Houston
Division (the Court) to pursue a Joint Chapter11 Plan of the
Debtors. The Partnerships Chapter11 Case is being administered
under the captionIn re Memorial Production Partners LP, et
al. No trustee was appointed, and the Debtors continue to
operate their businesses as debtors in possession under the
jurisdiction of the Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Court.
Confirmation of Chapter 11 Plan
On April14, 2017, the Court entered an order (the Confirmation
Order) approving the Second Amended Joint Plan of Reorganization
of Memorial Production Partners LP and its affiliated Debtors,
dated April13, 2017 (as amended and supplemented, the Plan). The
Debtors anticipate emerging from Chapter 11 Cases on the date
(the Effective Date) when all remaining conditions to
effectiveness to the Plan are satisfied. The Debtors can make no
assurances as to when or whether the Plan will become effective.
Summary of the Plan
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. This summary is qualified in its entirety by reference to
the full text of the Plan and the Confirmation Order, which are
attached hereto as Exhibits 2.1 and 99.1 respectively, and
incorporated by reference herein. Capitalized terms used but not
defined in this Current Report on Form 8-K have the meanings set
forth in the Plan.
Under the Plan:
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A newly formed corporation, as successor to the Partnership will issue (i)new common shares (the New Common Shares) and (ii)five (5) year warrants (the Warrants) entitling their holders upon exercise thereof, on a pro rata basis, to 8% of the total issued and outstanding New Common Shares, at a per share exercise price equal to the principal and accrued interest on the Unsecured Notes (defined below) as of December31, 2016, divided by the number of issued and outstanding New Common Shares (including New Common Shares issuable upon exercise of the Warrants), which New Common Shares and Warrants will be distributed as set forth below; |
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The Partnerships 7.625% Senior Notes due 2021 (the 2021 Notes) and the Partnerships 6.875% Senior Notes due 2022 (together with the 2021 Notes, the Unsecured Notes) will be cancelled and discharged. In the restructuring, each Unsecured Noteholder will receive (directly or indirectly) its pro rata share of New Common Shares representing, in the aggregate, 98% of the New Common Shares on the Effective Date (subject to dilution by the MIP (as defined below) and the New Common Shares issuable upon exercise of the Warrants); |
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In accordance with the March25, 2017 election of the Requisite Noteholders, each Unsecured Noteholder shall receive its pro rata share of an approximately $24.6million cash distribution; |
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In the restructing, all Memorial Parent Interests will be cancelled, and each Memorial Limited Partner will receive, in accordance with the Plan, its pro rata share of: (i)2% of the New Common Shares, (ii)the Memorial Limited Partner Warrants, and (iii)cash in an aggregate amount of $1,250,000; |
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In the restructuring, the reorganized Debtors shall enter into the Exit Credit Facility by executing and delivering the Exit Credit Agreement and certain other Exit Credit Facility Loan Documents, in each case, containing terms and subject to the conditions substantially similar to those set forth in the Exit Credit Facility Term Sheet; and |
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Holders of administrative expense claims, priority tax claims, other priority claims and general unsecured creditors of the Partnership will receive in exchange for their claims payment in full in cash or otherwise have their rights unimpaired under Title 11 of the United States Code. |
Management Incentive Plan
In connection with the Management Incentive Plan (the MIP)
adopted in connection with the Plan, the Company expects the New
Board to issue initial equity awards under the MIP on the
Effective Date. The MIP will provide for equity or equity-linked
instruments providing for up to 8.5% of New Common Shares in
accordance with the terms of the Plan which will include (i)
2.25% in the form of restricted stock units to be awarded on the
Effective Date, (ii) 2.25% in the form of stock options to be
awarded on the Effective Date and (iii) 4.0% reserved for
issuance in the discretion of the New Board.
Forward-Looking Statements
This Current Report on Form 8-K includes forward-looking
statements. All statements, other than statements of historical
facts, included in this Current Report on Form 8-K that address
activities, events or developments that the Partnership expects,
believes or anticipates will or may occur in the future are
forward-looking statements. Terminology such as will, would,
should, could, expect, anticipate, plan, project, intend,
estimate, believe, target, continue, potential, the negative of
such terms or other comparable terminology are intended to
identify forward-looking statements. These statements include,
but are not limited to, statements about financial restructuring
or strategic alternatives and the Partnerships expectations of
plans, goals, strategies (including measures to implement
strategies), objectives and anticipated results with respect
thereto. These statements are based on certain assumptions made
by the Partnership based on its experience and perception of
historical trends, current conditions, expected future
developments and other factors it believes are appropriate in the
circumstances, but such assumptions may prove to be inaccurate.
Such statements are also subject to a number of risks and
uncertainties, many of which are beyond the control of the
Partnership, which may cause the Partnerships actual results to
differ materially from those implied or expressed by the
forward-looking statements. These include risks and uncertainties
relating to, among other things: the ability to consummate the
Plan; the bankruptcy process, including the effects thereof on
Partnerships business and on the interests of various
constituents, the length of time that the Partnership may be
required to operate in bankruptcy and the continued availability
of operating capital during the pendency of such proceedings;
third party motions in any bankruptcy case, which may interfere
with the ability consummate the Plan; the potential adverse
effects of bankruptcy proceedings on the Partnerships liquidity
or results of operations; increased costs to execute the
financial restructuring; the Partnerships efforts to reduce
leverage; the Partnerships level of indebtedness including its
ability to satisfy its debt obligations; risks related to the
Partnerships ability to generate sufficient cash flow, to make
payments on its obligations and to execute its business plan and
the terms of the Plan; the Partnerships ability to access funds
on acceptable terms, if at all, because of the terms and
conditions governing the Partnerships indebtedness or otherwise;
the uncertainty of the impact that any financial restructuring
implemented will have on the market for the Partnerships publicly
traded securities; tax consequences of business transactions; and
changes in commodity prices and hedge positions and the risk that
the Partnerships hedging strategy may be ineffective or may
reduce its income. Please read the Partnerships filings with the
SEC, including Risk Factors in the Partnerships Annual Report on
Form 10-K, and if applicable, the Partnerships Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, which are available
on the Partnerships Investor Relations website at
http://investor.memorialpp.com/sec.cfm or on the SECs website at
http://www.sec.gov, for a discussion of risks and uncertainties
that could cause actual results to differ from those in such
forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this Current Report on Form 8-K. All
forward-looking statements in this Current Report on Form 8-K are
qualified in their entirety by these cautionary statements.
Except as required by law, the Partnership undertakes no
obligation and does not intend to update or revise any
forward-looking statements, whether as a result of new
information, future results or otherwise.
Item9.01.Financial
Statements and Exhibits.
(d)Exhibits.
| ExhibitNumber | Description | |
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2.1 |
Second Amended Joint Plan of Reorganization of Memorial Production Partners LP and its affiliated Debtors, dated April13, 2017 (incorporated by reference to Exhibit A of the Confirmation Order attached hereto as Exhibit99.1) |
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99.1 |
Findings of Fact, Conclusions of Law and Order Approving the Debtors Second Amended Joint Plan of Reorganization of Memorial Production Partners LP and its affiliated Debtors, dated April14, 2017. |
About MEMORIAL PRODUCTION PARTNERS LP (NASDAQ:MEMP)
Memorial Production Partners LP (the Partnership) owns, acquires and exploits oil and natural gas properties in North America. The Partnership is owned by its limited partners and general partner. Its general partner is responsible for managing all of the Partnership’s operations and activities. The Partnership operates in the acquisition, exploitation, development and production of oil and natural gas properties segment. Its business activities are conducted through Memorial Production Operating LLC (OLLC) and its wholly owned subsidiaries. Its assets consist primarily of producing oil and natural gas properties, and are located in East Texas/Louisiana, Rockies, Offshore Southern California, Permian Basin and South Texas. Most of its oil and natural gas properties are located in oil and natural gas reservoirs with geologic characteristics and production profiles and capital requirements. MEMORIAL PRODUCTION PARTNERS LP (NASDAQ:MEMP) Recent Trading Information
MEMORIAL PRODUCTION PARTNERS LP (NASDAQ:MEMP) closed its last trading session up +0.001 at 0.130 with 1,500,418 shares trading hands.