GSO and Centerbridge Said to Resume Talks With KKR’s Samson

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Samson Resources Corp. is reviving talks with its unsecured bondholders on a restructuring plan that would enable it to stay out of bankruptcy court and preserve some value for shareholders, according to three people with knowledge of the matter.

The negotiations are pitting the unsecured bondholders -- led by Blackstone LP’s credit unit GSO Capital Partners LP, Oaktree Capital Group LP and Centerbridge Capital Partners -- against a group of more senior creditors, said the people, who asked not to be named because the matter is private.

Samson, a Tulsa, Oklahoma-based natural gas producer owned by KKR & Co., is running a dual-track negotiating process with the two creditor groups, said the people.

The proposal by the unsecured bondholders calls for Samson to convert its debt into a combination of senior notes and equity, the people said. The new debt will be senior to the second-lien term loan, the people said. The group also is considering investing fresh capital into the company, said one of the people.

The senior lenders, meanwhile, have been working on an alternative that would hand them control of the company in a court restructuring while leaving little for lower-ranking investors. Under their plan, the lenders would swap debt for equity, which would leave junior creditors without much to recover.

Preserve Value

Samson’s $2.25 billion of 9.75 percent senior unsecured bonds maturing February 2020 dropped 1.5 cents to trade at 4.5 cents on the dollar at 1:12 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. They have fallen 34 cents this year.

The company’s $1 billion term loan due in 2018 is quoted at 40.3 cents, according to prices compiled by Bloomberg. That’s down from 78.6 cents at the start of the year.

The competing offers are designed to preserve the most value in each group’s investments. The unsecured holders were the first to start negotiating, but those talks stalled, the people said. Both sides resumed the discussions in recent weeks after the senior lender group made an alternate proposal last month, the people said.

The unsecured bondholders signed confidentiality agreements within the last few weeks that allowed them to negotiate directly with the company, the people said.

Jefferies Group LLC and Wachtell Lipton Rosen & Katz have been hired to advise the unsecured lender group, which holds Samson’s $2.25 billion of 9.75 percent senior unsecured notes that mature in February 2020, said the people.

Representatives of Samson, Blackstone, Oaktree and Jefferies declined to comment. Representatives for Centerbridge and Wachtell Lipton didn’t respond to e-mails and phone calls seeking comment.

Samson produces oil and natural gas from shale formations. Its ability to service debt has plunged with the slump in energy prices that began a year ago. The company was bought by KKR in 2011 in a $7.2 billion leveraged buyout. It’s being advised by Kirkland & Ellis and Blackstone’s advisory unit.

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