KKR & Co.'s Samson Resources Corp. plans to file for chapter
11 bankruptcy protection by mid-September after finalizing a
restructuring plan with key creditors Friday, according to people
familiar with the matter.
The Tulsa, Okla.-based oil and gas producer agreed to hand
ownership to its lenders in bankruptcy, a move that would wipe out
the roughly $4.1 billion investment of KKR and its partners in the
buyout, the people said. The private-equity firm led a $7.2 billion
leveraged buyout of Samson in 2011, the biggest-ever such deal for
an oil and gas producer.
Samson's board approved the restructuring agreement Friday
afternoon, one of the people said.
Samson is the latest big, bad energy bet for KKR. In the biggest
leveraged buyout ever, KKR with TPG in 2007 led a $32 billion deal
for Texas utility TXU Corp., now known as Energy Future Holdings
Corp. After years of shuffling its finances to stay afloat, Energy
Future filed for bankruptcy protection last year.
Samson's bankruptcy planning comes as energy companies across
the U.S. are trying to shore up their finances. A main
product—crude oil—is fetching less than half of what it did a year
ago, and natural gas prices remain in a prolonged slump. So far,
most others that ended up filing for bankruptcy protection in the
last year have been smaller companies.
Samson, which is primarily a natural gas producer, ran into
trouble shortly after the buyout closed, when gas prices tumbled to
their lowest level in a decade. The company has lost more than $4.5
billion since the buyout, including a $490.3 million loss during
the first three months of this year, the most recent period for
which it has reported results.
Under the restructuring deal finalized Friday, Samson's
second-lien lenders are in line to take control of the company and
receive $125 million in new loans, according to people familiar
with the agreement. They would put in as much as $485 million in
new cash, an infusion meant to shore up Samson's finances and pay
down $250 million in senior loans, the people said.
Bondholders owed $2.25 billion could get a small stake in the
new company, they added.
About 43% of Samson's second-lien lenders have agreed to support
the deal, and the company plans to seek broader creditor support in
the coming days and weeks, the people said. Samson intends to file
for chapter 11 no later than Sept. 16, when it faces the final
payment deadline on some bond debt, they said.
Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com and Ryan
Dezember at ryan.dezember@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires