Swift Energy Company Enters Into Comprehensive Restructuring Support Agreement with Majority of Senior Noteholders and Files Chapter 11 to Effectuate Restructuring
Agreed Plan of Reorganization to Reduce Financial Leverage, Improve
Liquidity and Provide for Payment of Unsecured Trade Claims
$75 Million of Debtor-in-Possession Financing to Provide Additional
Liquidity
Swift Energy Company (OTC PINK: SFYW) (“the Company”) announced today
that it has reached an agreement with holders of a majority of its
senior notes to convert all senior notes to equity pursuant to the terms
of a restructuring support agreement signed today. Under the agreement,
existing equity holders are to retain four percent of the Company’s
equity on a fully diluted basis, subject only to dilution as a result of
a proposed new management incentive program. In addition to the retained
equity, existing equity holders are also to receive warrants for up to
30% of the post-petition equity exercisable upon the Company reaching
certain benchmarks pursuant to the terms of proposed new warrants. The
agreement is to be effectuated through a Chapter 11 plan of
reorganization and is subject to bankruptcy court approval. To commence
the process for court approval of the agreement, the Company and eight
of its subsidiaries today filed voluntary petitions for relief
under Chapter 11 of the United States Bankruptcy Code in the U.S.
Bankruptcy Court for the District of Delaware.
“The Company had to take action in response to the significant reduction
in oil and gas prices that the entire industry has been facing. I am
pleased we were able to reach this comprehensive reorganization plan
with senior noteholders holding a majority of those notes. We expect
that Swift will exit bankruptcy with a greatly improved balance sheet
and additional liquidity to realize the full potential of our assets for
all stakeholders, while having sufficient funding to maintain, if not
improve our asset base during the Chapter 11 process,” said Terry E.
Swift President and Chief Executive Officer.
The Company has also arranged up to $75 million of debtor-in-possession
(DIP) financing from a group of senior noteholders to provide additional
liquidity to fund the business through the Chapter 11 process. The
Company expects to restructure, amend or refinance its pre-petition $330
million secured revolving credit facility as part of its plan of
reorganization.
The agreement with the senior noteholders provides for the executive
management team to retain their positions upon the completion of the
Chapter 11 process. Terry Swift is also to retain a director position
upon completion of the Chapter 11. A new non-officer Chairman of the
Board is to be appointed by the new majority equity group, along with
new board members that will comprise a majority of the new Board of
Directors. Pursuant to the RSA, Dean Swick, Managing Director at Alvarez
and Marsal has been appointed to act as Chief Restructuring Officer
(CRO) during the reorganization process.
The agreement further provides for unsecured creditors with lien rights
to be paid in full pursuant to court orders and the plan of
reorganization and includes an agreed timeline for the Chapter 11
process that, if met, would result in the Company emerging from
bankruptcy within 110 days. The Company expects to continue operations
in the normal course during the pendency of the bankruptcy case, and
anticipates making royalty payments and payments to working interest
owners when due. Employees should expect no change in their daily
responsibilities and to be paid in the ordinary course.
“We would like to thank our business partners, capital providers,
vendors, suppliers and employees for their continued support as we move
forward with this process quickly and successfully,” commented Mr. Swift.
Court filings and other information related to the restructuring
proceedings are available at a website administered by the Company's
claims agent, KCC, at www.kccllc.net/swiftenergy,
or via the information call center at (888) 251-2764 (toll free) or
(310) 251-2610 (international). Additional information regarding the
restructuring support agreement, including the conditions of the DIP
financing and the consummation of the restructuring plan, is contained
in a Current Report on Form 8-K to be filed by the Company with the
Securities and Exchange Commission January 4, 2016.
About Swift Energy Company
Swift Energy Company, founded in 1979 and headquartered in Houston,
engages in developing, exploring, acquiring and operating oil and gas
properties, with a focus on the Eagle Ford trend of South Texas and, to
a lesser extent, the onshore and inland waters of Louisiana.
Forward-Looking Statements
This press release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The
statements in this press release that are not historical facts are
forward-looking statements. Forward-looking statements are estimates and
projections reflecting management’s judgment based on currently
available information and involve a number of risks and uncertainties
that could cause actual results to differ materially from those
suggested by the forward-looking statements. Risk factors include the
risks and uncertainties relating to the restructuring of the Company’s
balance sheet and enhancing of its liquidity, including whether or not
the Company will be successful in doing so; the sufficiency of the
Company’s cash flow and access to liquidity and the ability of the
Company to continue as a going concern; whether the bankruptcy court
will approve the DIP financing and the plan of reorganization of the
Company as proposed, including with respect to the latter, the treatment
of the claims of the senior noteholders, trade creditors and equity
holders, among others; the debtors’ ability to obtain court approval
with respect to motions in the Chapter 11 proceeding; court rulings in
the Chapter 11 proceeding and the outcome of the Chapter 11 proceeding
in general; the length of time the debtors will operate under Chapter
11, including whether the Company will be successful in exiting
bankruptcy within 110 days as planned; risks associated with third party
motions in the Chapter 11 proceeding, which may interfere with the
consummation of the plan of reorganization; the potential adverse
effects of the Chapter 11 proceeding on the debtors’ liquidity, results
of operations, or business prospects, the ability of the Company to
execute its business plan; increased legal costs related to the Chapter
11 proceeding and other litigation; and additional risks and
uncertainties that are described in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2014, as well as in other
reports filed from time to time by the Company with the Securities and
Exchange Commission. This report speaks only as of its date, and the
Company disclaims any duty to update the information herein. These
forward-looking statements are based upon assumptions that are subject
to change and to risks in the Company’s business. Although the Company
believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to have been correct.
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