Houston-based Goodrich Petroleum Corp. told stakeholders during a Tuesday conference call their recapitalization plans represent an attempt to voluntarily restructure the balance sheet and avoid bankruptcy, according to documents filed with the U.S. Securities and Exchange Commission.
“For the plan to work we will need very high rates of participation from all stakeholders,” CEO Gil Goodrich said on the call.
The plan requires authorization from a majority of common shareholders, and at least 95 percent of the debt and a majority of preferred shareholders participate. Goodrich said all participating stakeholders would receive common shares with only secured debt and minimal interest expense, as opposed to “little to no recovery in a potential bankruptcy scenario.”
The company is current on its existing debt, but March interest payments on unsecured loans and second lien notes is in jeopardy based on record-low commodity prices.
“A voluntary restructuring such as our proposed recapitalization plan can be done quickly and for a fraction of the cost of a restructuring through the bankruptcy courts,” Goodrich said. “We are expecting this transaction to cost approximately $1 million versus an estimate of $15 million, or more, if we are forced to seek relief under the bankruptcy code.”
Combining their current exchange offers would reduce debt and preferred liquidation value by $498 million, equating to $1.38 per share for the new common shareholders.
“As compared to little or no expected recovery in the event of a bankruptcy, which we are being advised is the likely scenario, successful exchange offers coupled with a recovery in commodity prices should allow our stock price to improve, which would give the participating stakeholders an opportunity to recover a significant portion if not all of the original principal or liquidation preferences,” Goodrich said.
Goodrich shares, the New York Stock Exchange dropped from its rolls in January after prices held below $1 for more than a month, were trading up almost 15 percent early afternoon Tuesday.
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