Swift Energy Launches Bankruptcy Turnaround Bid
The oil-and-gas company has a deal to sell some assets and an agreement with some bondholders
The oil price collapse put Swift Energy Co. into bankruptcy in the last hours of 2015, with a deal to sell some assets and an agreement with some bondholders, but no guarantees either will be enough to see the company through tough times.
The Dec. 31 filing capped months of struggles to address a debt load that tops $1.2 billion in a climate that has lenders retreating from energy companies. It came as the grace period expired on a missed Dec. 1 interest payment with bondholders that had been engaged in talks with Swift, one of dozens of oil industry players trying to survive the oil price crush.
With prices for oil at near-historic lows, independent exploration and production companies like Swift have lined up in bankruptcy, unable to attract interest from buyers or sources of financing. As the company counts on revenues from sales of oil and gas, the impact of the commodity price drop was “severe,” court papers say.
Just before the bankruptcy filing, Swift reached a deal to sell some of its Louisiana holdings to Texegy LLC at a “favorable price,” but the money won’t be enough to get the company through, court papers say.
As for the bankruptcy turnaround plan, it has backing from a committee representing holders of about half its bond debt, court papers say. Those papers reveal Swift and the bondholders still have to come to terms on how to pay off $330 million in top-ranking bank debt, court papers say.
In broad strokes, if the chapter 11 plan works out, Swift will swap $905 million in bond debt for most of the equity in its Houston-based operation.
Bank debt from a syndicate led by J.P. Morgan Chase & Co., will have to be amended, refinanced or otherwise resolved in a way satisfactory to bondholders, and to bank lenders, who hold liens on most of Swift’s assets, according to papers filed in the U.S. Bankruptcy Court in Wilmington, Del.
Swift has lined up $75 million in bankruptcy financing from bondholders and intends to seek early court orders that will allow it to operate as it moves ahead on its balance sheet restructuring. Some $45 million of the bankruptcy loan, however, is contingent on reaching an agreement on how to deal with the bank debt.
Swift’s proposed chapter 11 plan allocates 4% of the equity in the postbankruptcy company to existing shareholders. The New York Stock Exchange suspended trading in the stock Dec. 18, due to “abnormally low” trading price levels, and announced it would commence proceedings to delist the shares. Swift won't appeal the delisting. It’s trading on the over-the-counter market.
Swift’s core operations are in the Eagle Ford play in south Texas, and the company generally operates wells in which it holds a “significant economic interest.” The company designs and manages the wells, but subcontracts the drilling and other oil field services. Swift estimates it has $50 million in trade debt.
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