Samson Resources Corp. is close to entering an agreement with its lenders that will put the energy company into bankruptcy court as soon as Aug. 15, according to two people with knowledge of the matter.
The company is talking with loan holders led by Silver Point Capital LP and Cerberus Capital Management LP to iron out details on a proposal that would give the company a loan of about $300 million to fund operations during Chapter 11 proceedings, said one of the people, who asked not to be identified because the negotiations are private. Lenders would gain control of the gas producer from investors led by KKR & Co., that person said.
If a restructuring plan isn’t complete by Aug. 15, when a $110 million interest payment comes due on its bonds, the company will skip the payment and continue talks during a 30-day grace period, the person said.
Samson will join a number of energy producers to file for bankruptcy as the industry struggles with plunging crude and natural gas prices. Sabine Oil & Gas Corp., Quicksilver Resources Inc. and Endeavour International Corp. are among companies that filed for Chapter 11 in the past 10 months, according to data compiled by Bloomberg.
In Samson’s case, the holders of $1 billion of second-lien term loans are beating out a competing proposal by owners of $2.25 billion of 9.75 percent senior unsecured notes due February 2020. That plan, led by Blackstone Group LP’s credit unit GSO Capital Partners, Oaktree Capital Group LP and Centerbridge Partners, would keep the company out of court, the people said earlier.
Under the senior lenders’ plan, the junior bondholders will have little recovery on the investments, the people said. KKR and other equity holders would have much or all of their holding wiped out.
Representatives of KKR, Cerberus, Silver Point, Blackstone and Oaktree declined to comment. A spokesman for Centerbridge, didn’t respond to calls and e-mailed messages seeking comment.
Samson’s $2.25 billion of 9.75 percent senior unsecured bonds maturing February 2020 last traded at 0.25 cents on the dollar on July 29 in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes have plunged 41 cents this year.
KKR led a group that bought Tulsa, Oklahoma-based Samson in a 2011 leveraged buyout valued at close to $7.9 billion including fees and reimbursed capital expenses. The sponsors, which included Crestview Partners and NGP Energy Capital Management, invested $4.1 billion of equity in the deal, according to company filings.
Blackstone’s advisory unit is counseling Samson on the restructuring talks. That business is being spun off to avoid conflicts of interest with Blackstone’s money-management business.