- Bondholders would get 96% of equity, cancel millions in notes
- Driller is seeking $75 million to continue funding operations
Swift Energy Co., the last major U.S. oil and gas driller to file for bankruptcy in 2015, is seeking quick approval for financing so it can keep operating while it completes a debt-for-equity swap.
A victim of the energy slump, Swift sought court protection in Delaware Dec. 31 with a proposal to give bondholders 96 percent of the reorganized company in exchange for eliminating $905 million in senior notes.
The deal requires Houston-based Swift to win interim court approval of an emergency loan by Jan. 5 to keep operating. A hearing is scheduled for Tuesday in Wilmington to decide whether the company can borrow $15 million immediately. It would need to return to court again for final approval of the full, $75 million, loan.
More than half its bondholders have signed onto the deal, according to court documents. The company is still negotiating with senior lenders, who are owed about $330 million and have collateral rights on almost all Swift’s assets.
If the lenders and enough holdout bondholders accept the deal, Swift could exit bankruptcy in April, the deadline set by the proposal.
“We expect that Swift will exit bankruptcy with a greatly improved balance sheet and additional liquidity to realize the full potential of our assets for all stakeholders,” Chief Executive Officer Terry E. Swift said in a statement.
$1.4 Billion Owed
Swift’s oil and gas holdings and other assets were worth about $1 billion as of Sept. 30. The company owed creditors about $1.4 billion, according to the bankruptcy petition.
Like the many similar businesses that filed for bankruptcy last year, Swift blamed its demise on the continuing slump in energy prices. The drop, a boon for motorists at the gas pump, pushed at least 10 oil and gas companies that owe a billion dollars or more into bankruptcy in 2015, according to data compiled by Bloomberg.
In 2014, Swift tried cutting costs and selling assets. It fired 20 percent of its employees in early 2015.
Under the bondholder deal, the current owners would keep 4 percent of Swift and get warrants to buy more under certain circumstances.
The deal requires court approval of a related reorganization plan that must be sent to creditors for a vote.
The case is In re Swift Energy Co., 15-12670, U.S. Bankruptcy Court, District of Delaware (Wilmington).