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July 2, 2019 – Further to its bidding procedures order [Docket No. 319] and a hearing held on July 2, 2019, the Court hearing the Weatherly Oil & Gas case has approved the sale of the Debtors’ Shelby Assets and Boswell Assets (together, “the Group 2 Assets”) to Angelo Gordon Energy Servicer, LLC ("AG," the Debtors' prepetition lender and stalking horse bidder) [Docket Nos. 432 and 433, respectively].
The Shelby Assets sale order attaches a copy of the relevant asset purchase agreement. The Boswell Assets sale order, although it references an attached APA, for the time being does not.
Notwithstanding considerable last-minute action in respect of the Boswell Assets (see below), the results are pretty much as anticipated based on the Debtor's May 29, 2019 emergency motion [Docket No. 306] requesting authority for bidding procedures and an auction timetable in respect of a $36.0mn sale(s) of the Debtor's Group 2 Assets to AG. Now as then, credit-bidding AG will be paying $26.0mn for the Shelby Assets and $10.0mn for the Boswell Assets.
The Debtors motion stated, “The Debtor’s Prepetition Collateral Agent, Angelo Gordon Energy Servicer, LLC (the ‘Stalking Horse Bidder’), as collateral agent and on behalf of Cargill, Incorporated, as party to that certain ISDA Master Agreement dated July 15, 2014 with Weatherly Oil & Gas, LLC, and on behalf of AG Energy Funding, LLC and AB Energy Opportunity Fund, L.P., as lenders under that certain Senior Secured Term Loan Agreement dated September 18, 2017 with Weatherly Oil & Gas, LLC, will serve as stalking horse pursuant to negotiated asset purchase agreements (the ‘Stalking Horse Agreements’) for the Shelby Assets, and as consideration for the sale, the Stalking Horse Bidder will credit bid in the amount of $26 million (the ‘Shelby Credit Bid’); and the Boswell Unit, and as consideration for the sale the Stalking Horse Bidder will credit bid in the amount of $10 million (the ‘Boswell Credit Bid,’ together with the Shelby Credit Bid, the ‘Stalking Horse Bids’)."
The end result is somewhat anti-climactic given a last minute scramble at the end of last week that carried over to the July 2nd hearing.
On June 26, 2019, just hours before a scheduled 2pm auction, the Debtor designated a further qualified bidder ("Five Jab") in respect of the Boswell Assets (specifically a portion thereof referred to as the "Robertson/Leon Assets"); a last minute development to which AG vigorously objected [Docket No. 380], arguing that the new bid included assets not otherwise included in respect of its own bid. That objection carried particular weight given AG's role as administrative agent and its ability in that role to "reasonably" withhold consent as to the Debtor's designation of a qualified bidder. Further to negotiations in the court house foyer, the parties came to an interim agreement (announcing a stipulation on the record, further to which the Debtor conceded AG's right to withhold consent and Five Jab was given an opportunity to amend its bid) and the auction/dispute resolution hearing was adjourned until June 28th and then again until July 2nd.
On June 28, 2019, Five Jab improved its offer by $175k [Docket No. 414] but still failed to win AG's consent, the Debtor stating: "after considering the Amended Five Jab Bid, on June 29, 2019, AG advised counsel for the Debtor that the Amended Five Jab Bid, while slightly improved, falls short of what AG advised would be required to obtain its consent. Accordingly, it is the Debtor’s understanding that AG does not consent to the Amended Five Jab Bid, and, as announced on June 26, 2019, the Debtor acknowledges that AG’s consent is required. As announced, absent AG’s consent, the Boswell Credit Bid [ie AG's bid] would be the only Qualified Bid, and therefore, the Winning Bid…"
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