EV Energy Partners, L.P. and its subsidiaries announced that the company entered into a restructuring support agreement (RSA) with certain holders of approximately 70% of its 80% senior notes due 2019 and lenders holding approximately 94% of the principal amount outstanding under the Company’s reserve-based lending facility on March 13, 2018. 

The RSA contemplates a comprehensive restructuring of the Company’s capital structure, to be implemented through a proposed pre-packaged plan of reorganization that will significantly deleverage the Company’s balance sheet. Consistent with the RSA, the Company will commence the solicitation of votes to accept or reject the Plan and commence its prepackaged bankruptcy case in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) on or before April 8, 2018. Neither EnerVest nor EnerVest Operating is seeking Chapter 11 bankruptcy relief.

According to an 8-K filing with the SEC, supporting lenders include JPMorgan Chase Bank, N.A., as administrative agent, BNP Paribas and Wells Fargo, National Association, as co-syndication agents, the guarantors party thereto, and the lenders signatory thereto, constituting approximately 94% of the principal amount outstanding thereunder; (iii) EnerVest, Ltd.; and (iv) EnerVest Operating, L.L.C. and, together with EnerVest. 

More specifically, the Plan, which is subject to confirmation by the Bankruptcy Court, contemplates the equitization of all of the Company’s Senior Notes and the entry into an amended reserve-based lending facility with the Company’s existing lenders. Additionally, the Plan contemplates that suppliers, customers and other holders of general unsecured claims will be paid in full in the ordinary course of business and otherwise be unimpaired. The Company does not plan to reject any of its existing contracts as part of the restructuring.

The Company expects EnerVest Operating to continue as the primary operator for its oil and natural gas properties in the Barnett Shale, San Juan Basin, Appalachian Basin, Michigan, Central Texas, Permian Basin, Monroe Field and Karnes County, TX.

“We believe that this provides the best path forward for our Company to reduce leverage, maintain access to liquidity and maximize value for all of our stakeholders. During the restructuring and upon emergence, we expect to have ample liquidity and do not anticipate the need for debtor-in-possession financing or other additional capital,” said Michael Mercer, President and CEO. 

Upon consummation, the restructuring would, among other things:

• Amend the Company’s reserve-based lending facility;
• Eliminate more than $343 million of principal and accrued interest with respect to the Senior Notes, in exchange for 95% of the reorganized Company’s equity as of the effective date of the Plan (subject to dilution by a management incentive plan and warrants for existing unit holders);
• Pay all supplier, service provider, customer, employee, royalty and working interest obligations in full in the ordinary course; and
• Provide the Company’s existing unitholders with consideration in the form of 5% of the reorganized Company’s equity (subject to dilution by a management incentive plan and warrants for existing unitholders) and 5-year warrants to acquire up to 8% of the equity in the reorganized Company. 

Kirkland & Ellis LLP is acting as legal counsel and Perella Weinberg Partners LP is acting as financial advisor to the Company in connection with its restructuring efforts. Akin Gump Strauss Hauer & Feld LLP is acting as legal counsel, and Intrepid Partners LLC is acting as financial advisor to the noteholders party to the RSA. Simpson Thacher & Bartlett LLP is acting as legal counsel and RPA Advisors, LLC is acting as financial advisor to the lenders party to the RSA.