From the Wall Street Journal
A battle is brewing between Energy XXI Ltd.’s junior bondholders and shareholders.
The junior bondholders, which have agreed to exchange some $1.45 billion in debt for equity in the restructured company, are objecting to a group of shareholders’ request to form an official committee, according to court papers filed in U.S. Bankruptcy Court in Houston.
“The appointment would result in a needless drain of the debtors’ assets—at the expense of the fulcrum security holders, the second lien noteholders,” the bondholders said in court papers.
“Before there is any possibility for recovery by the equity holders, approximately $2.9 billion in claims on account of funded debt, excluding general unsecured claims, must be paid,” the junior bondholders said in court papers. Because of this and Energy XXI’s roughly $675 million enterprise value, the group says it is “wildly improbable” there is any value left for shareholders.
This responses come a few weeks after a group of 16 individual shareholders objected in court papers to being wiped out in a restructuring and calling for the appointment of an official committee ahead of a hearing June 23, when Energy XXI will seek approval from Judge David Jones to put its reorganization plan to a creditor vote.
