Magnum Hunter Resources Files for Bankruptcy

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A press release from Magnum Hunter Resources:
Magnum Hunter Resources Corporation Files Voluntary Chapter 11 Petitions to Facilitate Balance Sheet Restructuring With the Overwhelming United Support of Funded Debt Holders
Company Maintaining All Existing Operations During Restructuring Process
IRVING, TX--(Marketwired - Dec 15, 2015) -  Magnum Hunter Resources Corporation (OTC PINK: MHRC) and certain of its wholly-owned subsidiaries (collectively, the "Company" or "Magnum Hunter") today announced that they have filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware to facilitate the restructuring of their consolidated balance sheet through a prearranged restructuring plan. The Company also announced its entry into a restructuring support agreement with lenders that hold, in the aggregate, approximately 75% in principal amount of the Company's funded debt claims. Specifically, the parties to the restructuring support agreement hold substantially all of the Company's first lien debt, approximately 66.5% in principal amount of the Company's second lien debt, and approximately 79% in principal amount of the Company's senior unsecured notes. The restructuring support agreement contemplates the debt-to-equity conversion of (i) substantially all of the Company's prepetition funded indebtedness and (ii) 100% of the Company's contemplated postpetition debtor-in-possession financing (described below), resulting in a significantly deleveraged balance sheet upon the Company's anticipated emergence from the chapter 11 bankruptcy process in April 2016. In addition, the restructuring support agreement contemplates a significant cash recovery to vendors and trade claimants.
Notably, the restructuring support agreement provides for debtor-in-possession ("DIP") financing in the form of a $200 million senior secured multi-draw term loan that will be backstopped by lenders who are parties to the restructuring support agreement -- further evidencing the lenders' overwhelming support for the Company's chapter 11 process. The Company anticipates that the DIP financing will provide sufficient liquidity to stabilize the Company's operations and satisfy key vendor, employee, and other key stakeholder commitments for the duration of the restructuring process, and, as noted, the DIP financing is expected to be converted to equity on the Company's exit from the chapter 11 process. The restructuring support agreement represents a significant achievement for the Company in the face of historic commodity price declines in both oil and natural gas and an increasingly depressed operating environment.
Gary C. Evans, Chairman and Chief Executive Officer of Magnum Hunter, said: "With the unified support of our various lenders, we anticipate this restructuring will be a success and unprecedented in our industry. I believe this restructuring will position Magnum Hunter as a market leader in the upstream sector with an ideal capital structure to capitalize on the large number of opportunities anticipated in our industry due to the precipitous commodity cycle downturn affecting the industry as a whole." 
Mr. Evans continued: "At a very challenging time for the entire energy industry, when many of our competitors have been forced to either file for bankruptcy without a plan to emerge in place or continue to attempt to restructure with creditors without an 'end game,' our global restructuring accomplishment is definitely an outlier. We expect the entire process to be efficient, cost effective, and quick. We also anticipate emerging from bankruptcy financially stronger than ever before."
Like many other exploration and production companies, Magnum Hunter's operations have been significantly impacted by the recent and continued dramatic decline in both oil and natural gas prices, as well as natural gas liquids prices, and general uncertainty in the overall energy markets. These macro-economic factors, coupled with Magnum Hunter's substantial debt obligations, resulted in the Company's decision to explore all strategic restructuring alternatives to reduce its overall debt and achieve a sustainable reconstituted capital structure. Magnum Hunter believes that its in-court financial restructuring as contemplated by the terms of the restructuring support agreement will position the Company for long-term success and ultimate profitability. Magnum Hunter also owns an approximately 45% equity ownership interest in Eureka Hunter Holdings, LLC. Eureka Hunter Holdings, LLC and its subsidiaries are not part of the Company's chapter 11 bankruptcy proceedings.
Court filings and other information related to the restructuring proceedings are available at a website administered by the Company's claims agent, Prime Clerk, at https://cases.primeclerk.com/magnumhunter, or via telephone at 844-276-3026 (toll free) or 917-962-8497 (international). Additional information regarding the restructuring support agreement, including the conditions to the DIP financing and to the consummation of the restructuring plan, is contained in a Current Report on Form 8-K to be filed by the Company with the Securities and Exchange Commission later today. 
PJT Partners LP is serving as financial advisor to Magnum Hunter, Kirkland & Ellis LLP is serving as legal counsel, and Alvarez & Marsal North America, LLC is serving as restructuring advisor. Weil, Gotshal & Manges LLP and Houlihan Lokey are serving as legal counsel and financial advisors, respectively, to an ad hoc group of holders of the Company's first lien debt and second lien debt, in their capacity as prepetition lenders and postpetition DIP lenders. Akin Gump Strauss Hauer & Feld LLP and Centerview Partners are serving as legal counsel and financial advisors, respectively, to an ad hoc group of holders of the Company's first lien debt and senior unsecured notes, in their capacity as prepetition lenders and postpetition DIP lenders.
About Magnum Hunter Resources Corporation
Magnum Hunter Resources Corporation is an independent energy company engaged in the acquisition, production, exploration, and development of onshore oil and natural gas properties in the United States. The Company's current operations are principally located in the Marcellus Shale and Utica Shale regions of the Appalachian Basin, located in in Ohio and West Virginia. The Company also has interests in acreage and production in Kentucky and has primarily non-operating leasehold working interests in the Williston/Bakken Shale region of North Dakota. For more information about Magnum Hunter, please visit www.mhr.energy.
Forward-Looking Statements
This press release includes "forward-looking statements." All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. Although Magnum Hunter believes that the expectations reflected in the forward-looking statements are reasonable, Magnum Hunter can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings made by Magnum Hunter with the Securities and Exchange Commission (SEC). Among the factors that could cause results to differ materially are those risks discussed in the periodic reports filed by Magnum Hunter with the SEC, including Magnum Hunter's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and its Quarterly Reports on Form 10-Q for the fiscal quarters ended after such fiscal year. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading "Risk Factors." Forward-looking statements speak only as of the date of the document in which they are contained, and Magnum Hunter does not undertake any duty to update any forward-looking statements except as may be required by law.


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