Rosehill Resources Inc., an independent oil and gas exploration company with assets positioned in the Delaware Basin portion of the Permian Basin, and Rosehill Operating Company, LLC announced that Rosehill has entered into a Restructuring Support Agreement with the lenders under Rosehill’s revolving first lien credit facility, holders of Rosehill’s second lien notes and the Company’s Series B Preferred Stock, and Tema Oil and Gas Company, as the holder of approximately 66.8% and 35.2% of the equity interests in Rosehill Operating and party to the Company’s Tax Receivable Agreement (collectively, the “Consenting Creditors”).
The RSA contemplates that Rosehill will file voluntary cases under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) in order to effect a restructuring through a prepackaged chapter 11 plan of reorganization (the “Plan”) to be filed with the Bankruptcy Court. The filing of the Chapter 11 Cases is expected to be made on or before July 15, 2020 solely for purposes of implementing the Plan.
According to a filing with the SEC, Rosehill expects to enter into a proposed $17.5 million junior convertible debtor in possession delayed draw term loan facility with JPMorgan Chase as Administrative Agent. Pursuant to the RSA, the Company expects to emerge from bankruptcy within 75 days of filing, in order to implement the balance sheet restructuring outlined by the RSA and the Plan. The RSA provides that, following consummation of the Plan, the Company’s equity will be owned solely by the Consenting Creditors and holders of the Company’s preferred stock, and that holders of general unsecured claims, including the Company’s trade creditors and vendors, will pass through the Chapter 11 Cases with their claims unimpaired by the bankruptcy and being satisfied in full.
Additionally, the RSA provides that, pursuant to the Plan, the Company’s Class A Common Stock and other common equity securities will be extinguished. In accordance with the restructuring term sheet attached to the RSA and in light of the closely held nature of the restructured company, the Company intends to terminate the listing of its Class A Common Stock, Class A Common Stock Public Units, and Class A Common Stock Public Warrants on the Nasdaq Capital Market.
David French, Rosehill’s President and Chief Executive Officer, said, “These are extraordinary times in the industry with the pressure on commodity prices driven by the COVID-19 pandemic. After exploring all strategic and financial options available to Rosehill, we are announcing an agreement for a consensual restructuring among the Company’s major creditors. We believe that the restructuring will result in a significantly deleveraged company that will provide us with the liquidity to more effectively navigate the macro oil and gas environment. Significantly, if consummated, the restructuring of the Company’s capital structure articulated in the RSA will not impact the Company’s ability to pay its vendors and other trade creditors. We plan to move through the restructuring process expeditiously with minimal operational disruptions.”
Gibson, Dunn & Crutcher LLP and Haynes and Boone LLP are acting as legal counsel, and Jefferies LLC and Opportune LLP are acting as financial advisors to Rosehill in connection with the Plan.