Stone Energy Corp.’s pre-packaged restructuring plan to wipe out $1.2 billion in debt was approved this week by the U.S. Bankruptcy Court for the Southern District of Texas, bringing the company one step closer to being turned over to its noteholders.
Pending the consent of its creditors, Stone said it expects the restructuring plan to become effective on Feb. 28 once all conditions have been met.
Under the plan, noteholders would receive their share of $100 million in cash, $225 million of 7.5% senior second lien notes due 2022 and 95% of the common stock in the reorganized company. Lenders would receive a proportionate share of commitments under a new $200 million revolving credit facility and a cash payment, while existing stockholders would receive their share of just 5% of the common stock and rights to purchase more.
Included in the approved plan is an Appalachia sale agreement in which EQT Corp. has agreed to pay $527 million for about 85,000 net acres in the Marcellus and Utica shales of West Virginia and Pennsylvania. Once that sale closes — which is scheduled for Feb. 27 — Stone would be left with offshore assets in the Gulf of Mexico.
Early last year, Stone’s credit facility was reduced, which resulted in a borrowing base deficiency and the possibility of default. Low commodity prices in Appalachia squeezed the company as well and it began negotiating the sale of those assets before it filed for Chapter 11 bankruptcy last December.
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