Breitburn Energy Partners’ second lien group filed with the U.S. Bankruptcy Court an objection to the motion of the statutory committee of equity holders to reopen the record of the confirmation hearing to include limited new evidence.
The objection explains, “In reality, pursuing a plan of reorganization structured around the transaction contemplated by the Lime Rock Letter would strip unsecured creditors and equity holders of the recoveries and protections they are currently afforded under the Plan. Unsecured creditors will lose the benefit of $775 million in proceeds that would otherwise have been made available through a fully-backstopped Rights Offering, replaced instead with a $38.75 million break-up fee obligation.”
In addition, “All the while, the Second Lien Group’s claim will continue to grow. At the confirmation hearing, the Second Lien Group submitted uncontroverted evidence regarding its secured claim, which includes: (1) $650,000,000, consisting of the principal amount for the 9.25% Senior Secured Second Lien notes, as set forth in the Amended and Restated Purchase Agreement, dated April 8, 2015; (2) the Make-Whole Amount, as that term is defined in Section 6.02 of the Indenture Agreement, dated April 8, 2015, which became due and payable immediately as of the Petition Date; and (3) post-petition interest under 11 U.S.C. section 502(b)(6), compounding quarterly at 11.25% on the principal and Make-Whole Amount as set forth in Section 4.01(b) of the Indenture Agreement. The Second Lien Group’s claim was $963 million as of January 22, 2018, the final day of the confirmation hearing, and it will grow to nearly $1 billion dollars as of the proposed June 2018 closing of the Lime Rock acquisition. By June, the $1.8 billion purchase price will not be sufficient to repay the Second Lien Group in full even at the conservative midpoint ($924 million) of the Debtors’ estimated range of the potential size of the Second Lien Group’s claim ($851 to $998 million).”
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