Shareholder Coalition, MHR Chapter 11 Equity Group, to Challenge $900M Valuation of Magnum Hunter Resources in Bankruptcy Proceeding

Shareholders are organizing to challenge a purported $900 million enterprise valuation of Magnum Hunter Resources Corporation and certain of its wholly-owned subsidiaries (collectively "Magnum Hunter") in connection with voluntary petitions for reorganization filed on December 15, 2015 by Magnum Hunter under Chapter 11 of the United States Bankruptcy Code. In contrast to the $900 million enterprise valuation, Magnum Hunter repeatedly represented to investors as late as October 2015 a net asset value of between $1.9 billion and $2.9 billion. According to Magnum Hunter, the agreed $900 million in its view is not indicative of its actual enterprise value. Shareholders are contending the purported $900 million enterprise valuation agreed to by Magnum Hunter and its debtors excludes shareholders from receiving any value for their shares.

The valuation was agreed to by Magnum Hunter and its debtors for purposes of determining equity splits and conversion rates for claimants. Magnum Hunter’s goal is to facilitate restructuring of its consolidated balance sheet and transfer all asset value to its creditors while canceling all shares of its common stock, all shares of its series C preferred stock, all shares of its series D preferred stock, and all shares of its series E preferred stock.

Almost two hundred shareholders are involved in the current efforts and represent over 5% of all outstanding common stock, over 5% of all outstanding series C preferred stock, and over 5% of all outstanding series D preferred stock. Discussions regarding representation of shareholders are being held with a leading law firm in bankruptcy law, and an appearance in the proceeding made on behalf of shareholders challenging the valuation is possible by next Friday. Interested shareholders who have yet to join the coalition are encouraged to contact Axel Pantin.

Characterizing the situation, Keith Baker—one of the shareholders—said: “The fact is that this whole situation isn't ‘fair’ for any of us, where a company and its creditors opportunistically use the bankruptcy laws and lowball valuations to rid themselves of the existing equity.” Mr. Baker points out: “We have to keep coming back to the NAV chart in management's own presentations, available on their website until a month and a half before they filed,” and “the disconnect between those estimates and the Company's current lowball valuation under which preferred and commons take nothing.”

The proceeding was filed by Magnum Hunter in the United States Bankruptcy Court for the District of Delaware under the caption In re Magnum Hunter Resources Corporation, et al., Case No. 15-12533. Court filings and other information related to the proceeding is available at a website administered by Magnum Hunter’s claims agent, Prime Clerk, at https://cases.primeclerk.com/magnumhunter, or via telephone at 844-276-3026 (toll free) or 917-962-8497 (international).

Magnum Hunter is an independent energy company engaged in the acquisition, production, exploration, and development of onshore oil and natural gas properties in the United States. Magnum Hunter's current operations are principally located in the Marcellus Shale and Utica Shale regions of the Appalachian Basin, located in Ohio and West Virginia. Magnum Hunter also has interests in acreage and production in Kentucky and has primarily non-operating leasehold working interests in the Williston/Bakken Shale region of North Dakota. More information regarding Magnum Hunter is available at www.mhr.energy.

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