Swift Energy Company 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. 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.

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.