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American Gilsonite Company Chapter 11 Petition, Plan Filed

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American Gilsonite Company and four affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 16-12316. The Company, which engages in mining, processing and supplying uintaite, is represented by Mark D. Collins of Richards, Layton & Finger and Matthew S. Barr of Weil, Gotshal & Manges.

Concurrent with the Chapter 11 petition, the Company also filed a Joint Prepackaged Chapter 11 Plan of Reorganization and related Disclosure Statement. American Gilsonite Company announced an agreement with holders of more than 67% of its second lien notes and its current equity sponsor on the terms of a reorganization that will eliminate substantial indebtedness, significantly reduce debt service and provide financing to restructure its balance sheet.

David G. Gallagher, Company C.E.O., comments, “American Gilsonite has positive operating cash flow, a highly differentiated product offering, more than 100 years of mineral reserves, and a broadly diversified customer base. With the implementation of this prepackaged reorganization plan, we will significantly strengthen the company’s balance sheet and create a capital structure that is more sustainable over the long term.”

In accordance with the Plan, holders of general unsecured claims, including trade vendors, employees, and lease counterparties, will receive payment in full on account of existing obligations in the ordinary course of business. The Company’s revolving lenders will also be paid out in full. Supporting noteholders have agreed to provide the Company a $30 million credit facility. This debtor-in-possession financing will help support the Company’s reorganization plans and normal post-petition operation of its business, including timely payment of operational expenses (purchased goods and services), employee wages, benefits and other obligations on an uninterrupted basis. The principal amounts extended to the Company under the D.I.P. financing will convert in full to an exit facility upon the Company’s emergence from the restructuring process.

Supporting noteholders have agreed to vote in favor of the Company’s Plan and exchange their loans for reorganized equity and subordinated debt. The Plan, which will transition ownership to the American Gilsonite Company’s second lien noteholders, is also supported by the Company’s current shareholders.

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