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Goodrich Petroleum Corporation (OTC Markets: GDPM) (the “Company”) today announced that it has commenced offers to exchange newly issued shares of common stock, par value $0.20 per share (the “Common Stock”), for any and all of its Existing Unsecured Notes (as defined below) (the “Unsecured Notes Exchange Offers”) and for any and all shares of its Existing Preferred Stock (as defined below) (the “Preferred Exchange Offers”). The Company has also announced it intends to offer to exchange its Second Lien Notes (as defined below) (the “Second Lien Notes Exchange Offers”) into new second lien notes with materially identical terms except that interest thereon may be paid either (a) at the Company’s option in cash or in-kind or (b) deferred until maturity. The Second Lien Notes Exchange Offers, together with the Unsecured Notes Exchange Offers and the Preferred Exchange Offers collectively referred to as the “Exchange Offers” and the “Recapitalization Plan”).

Unsecured Notes Exchange Offers

The Company is offering to exchange, upon the terms and subject to the conditions of the Unsecured Notes Exchange Offers, the following minimum consideration in newly issued shares of Common Stock to all holders of its Existing Unsecured Notes, subject to certain pro rata adjustments as described in the Unsecured Notes Exchange Offers:

  • 800.635 shares of Common Stock per $1,000 principal amount of the 8.875% Senior Notes due 2019;
  • 800.635 shares of Common Stock per $1,000 principal amount of the 3.25% Convertible Senior Notes due 2026;
  • 800.635 shares of Common Stock per $1,000 principal amount of the 5.00% Convertible Senior Notes due 2029;
  • 800.635 shares of Common Stock per $1,000 principal amount of the 5.00% Convertible Senior Notes due 2032; and
  • 1601.270 shares of Common Stock per $1,000 principal amount of the 5.00% Convertible Exchange Senior Notes due 2032 (together, the Existing Unsecured Notes”).

The higher exchange ratio for the 5.00% Convertible Exchange Senior Notes due 2032 is due to a previous private exchange where certain holders of the 5.00% Convertible Senior Notes due 2032 exchanged into the 5.00% Convertible Exchange Senior Notes due 2032 at a 50% discount.

Preferred Exchange Offers

The Company is offering to exchange, upon the terms and subject to the conditions of the Preferred Exchange Offers, newly issued shares of Common Stock to all holders of any and all issued and outstanding shares of the Existing Preferred Stock under the following exchange ratios:

  • 8.899 shares of Common Stock per share of the Company’s 5.375% Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”);
  • 4.449 shares of Common Stock per depositary share, each representing 1/1000th share of the Company’s 10.00% Series C Cumulative Preferred Stock (such depositary shares, the “Series C Preferred Stock”);
  • 4.449 shares of Common Stock per depositary share, each representing 1/1000th of a share of the Company’s 9.75% Series D Cumulative Preferred Stock (such depositary shares, the “Series D Preferred Stock”); and
  • 5.188 shares of Common Stock per depositary share, each representing 1/1000th of a share of Series E Preferred Stock (such depositary shares, the “Series E Preferred Stock” and, together with the Series B Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock, the “Existing Preferred Stock”).

The higher exchange ratio applicable to the Series B Preferred Stock reflects the higher liquidation preference for the Series B Preferred Stock relative to the lower liquidation preference of the Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock. The higher exchange ratio applicable to the Series E Preferred Stock relative to the Series C Preferred Stock and Series D Preferred Stock reflects the original liquidation preferences of the Series B Preferred Stock, Series C Preferred Stock and Series D Preferred stock tendered in exchange for the Series E Preferred Stock on December 18, 2015.

Second Lien Notes Exchange

As part of the Recapitalization Plan, the Company intends to offer to exchange any and all of the Company’s 8.00% Second Lien Senior Secured Notes due 2018 and 8.875% Second Lien Senior Secured Notes due 2019 (collectively the “Second Lien Notes”) for new senior secured notes with materially identical terms except that interest thereon may be paid either (a), at the Company’s option, in cash or in-kind or (b) deferred until maturity (the “Second Lien Notes Exchange”).

If successful with the above referenced Existing Unsecured Notes Exchange and Second Lien Notes Exchange, the Company would eliminate between $213 million and $224.2 million in unsecured senior indebtedness with respect to the exchange and cancellation of Existing Unsecured Notes in the Exchange Offers, and $29.8 million to $31.4 million in cash interest payment obligations per year, thereby preserving liquidity in the near term.

Effects of the Recapitalization Plan on the Company’s Capital Structure and Capital Stock.

  • The following table depicts the pro forma impact the Recapitalization Plan would have on our outstanding debt (dollars in thousands) as of January 20, 2016:

Principal

Pro Forma for the Recapitalization Plan Assuming Minimum Conditions Met

Pro Forma for the Recapitalization Plan Assuming Full Exchange Participation

Senior Credit Facility

$    27,000

$     27,000

$     27,000

8.0% Second Lien Senior Secured Notes due 2018

$  100,000

$   100,000

$   100,000

8.875% Second Lien Senior Secured Notes due 2019

$    75,000

$     75,000

$     75,000

8.875% Senior Notes due 2019

$  116,828

$       5,841

$              0

3.25% Convertible Senior Notes due 2026

$          429

$            21

$              0

5.00% Convertible Senior Notes due 2029

$       6,692

$          335

$              0

5.00% Convertible Senior Notes due 2032

$     94,160

$       4,708

$              0

5.00% Convertible Senior Notes due 2032

$       6,117

$          306

$              0

Total Debt

$   426,226

$   213,211

$   202,000

(1)

The table assumes a minimum exchange of 95% of the aggregate principal amount of all the Existing Unsecured Notes for shares of Common Stock based on the aggregate principal amount of all the Existing Unsecured Notes outstanding as of January 20, 2016. Any principal amounts converted into Common Stock pursuant to the terms of the Existing Unsecured Notes on or after January 1, 2016 up to the closing of the Unsecured Notes Exchange Offers will be included for purposes of determining whether the minimum conditions for the Unsecured Notes Exchange Offers have been satisfied. Further, the minimum conditions for the Unsecured Notes Exchange Offers will be satisfied if 95% of the aggregate principal amount of all of the Existing Unsecured Notes is exchanged, even if less than 95% of one series of Existing Unsecured Notes is exchanged.

 

The following table depicts the pro forma impact the Recapitalization Plan would have on our Existing Preferred Stock (dollars in thousands) as of January 20, 2016:

Liquidation Preference

Pro Forma for the Recapitalization Plan Assuming Minimum Conditions Met

Pro Forma for the Recapitalization Plan Assuming Full Exchange Participation

Series B Preferred Stock

$    74,172

$    37,086

$              0

Series C Preferred Stock

$    76,510

$    38,255

$              0

Series D Preferred Stock

$    90,527

$    45,264

$              0

Series E Preferred Stock

$    32,262

$    16,131

$              0

Total

$  273,471

$  136,736

$              0

_____

(1)

The table assumes a minimum exchange of 50% of each series of Existing Preferred Stock for shares of Common Stock based on the aggregate outstanding shares of Existing Preferred Stock as of January 20, 2016. Any shares of Existing Preferred Stock converted into Common Stock pursuant to the terms of the Certificate of Designation of each respective series of Existing Preferred Stock on or after January 1, 2016 up to the closing of the Preferred Exchange Offers will be included for purposes of determining whether the minimum conditions for the Preferred Exchange Offers have been satisfied. Further, the minimum conditions for the Preferred Exchange Offers will be satisfied if a majority of the outstanding shares of all of the Existing Preferred Stock is exchanged, even if less than a majority of the shares of a series of Existing Preferred Stock is exchanged.

 

The Company is conducting the Exchange Offers in response to the current low commodity price environment that has had a significant, adverse impact on the Company. While the Company is not currently in default under its existing debt instruments, its ability to make the March 2016 interest payments on its 8.00% Second Lien Senior Secured Notes due 2018 and 8.875% Senior Notes due 2019 and service its other debt and fund its operations is at significant risk as a result of the sustained continuation of the current commodity price environment. If the Company is unable to complete the Recapitalization Plan, including the Exchange Offers, and address its near-term liquidity needs, it may need to seek relief under the U.S. Bankruptcy Code. This relief may include: (i) seeking bankruptcy court approval for the sale or sales of some, most or substantially all of the Company’s assets pursuant to section 363(b) of the U.S. Bankruptcy Code and a subsequent liquidation of the remaining assets in the bankruptcy case; (ii) pursuing a plan of reorganization (where votes for the plan may be solicited from certain classes of creditors prior to a bankruptcy filing) that the Company would seek to confirm (or “cram down”) despite any classes of creditors who reject or are deemed to have rejected such plan; or (iii) seeking another form of bankruptcy relief, all of which involve uncertainties, potential delays and litigation risks.

Georgeson, Inc. is acting as the Information Agent and American Stock Transfer & Trust Company, LLC is acting as the Exchange Agent for the Exchange Offers.

The Exchange Offers are scheduled to expire at 5:00 p.m., New York City time, on February 24, 2016, unless extended.

The complete terms and conditions of the Exchange Offers are set forth in the offers to exchange and related letters of transmittal that are being sent to holders of the Existing Preferred Stock and Existing Unsecured Notes. Copies of the offers to exchange and letters of transmittal may be found on the Company’s website at www.goodrichpetroleum.com and may be obtained from the Exchange Agent or the Information Agent for the Exchange Offers as follows:

  • Georgeson, Inc., at 888-607-6511 (toll free) or www.georgeson.com
  • American Stock Transfer & Trust Company, LLC, at (877) 248-6417 (toll free) or (718) 921-8317 or www.amstock.com