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Halcon Resources Corp announced yesterday that it is filing for Chapter 11 bankruptcy protection as part of a restructuring agreement with creditors—a move that could wipe out $1.8 billion, or 65 percent, of its debt and $222 million of preferred stock equity.
The agreement would also reduce Halcon’s ongoing annual interest burden by more than $200 million. The shareholders affected by the restructuring include those holding 3rd Lien Notes due 2022, Senior Notes due 2020, Senior Notes due 2021, Senior Notes due 2022, Convertible Notes due 2020, and Perpetual Convertible Preferred Stock.
The affected stakeholder would then receive shares of common stock, warrants, and/or cash.
Halcon hopes that the restructuring agreement will be finalized soon, which will be executed as part of an “accelerated prepackaged Chapter 11 bankruptcy filing”.
Halcon is expected to operate as usual during the restructuring process, and pay all suppliers and vendors in full for goods and services provided.
The news of the bankruptcy comes after four other oil-related companies filed for protection in the past two weeks, including Midstates Petroleum Company, Ultra Petroleum, Linn Energy and Penn Virginia.
These cases followed a string of roughly 70 other bankruptcies in this sector since the beginning of 2015. According to data from Haynes and Boone, total secured and unsecured defaults rising to $34 billion, double the $17 billion total for all of 2015.
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