Management at Linn Energy LLC say they believe by filing for Chapter 11 reorganization last week like they did will enable the company to continue to operate normally without lining up new bankruptcy financing.
With debt of $8.3 billion, the company leaders reached agreement with lenders to obtain 2.2 billion in financing. the debt restructuring was agreed to by lenders who hold 66% of the credit facility. In addition to Linn Energy filing bankruptcy, so did LinnCo LLC, the company helping Linn Energy raise additional capital for common stock.
Like many other troubled energy companies that filed for bankruptcy, what Linn Energy did was not surprising. Its leaders suggested in March that the Chapter 11 move might be best for the company.
And as in most reorganization bankruptcies, it is the unit holders who will have to pay huge taxes on debt that the partnership will remove. But Linn took the steps of trying to ease the tax burden by completing an exchange offer last month that allowed holders to swap their units for common stock.
Linn Energy still has extensive holdings in Oklahoma, even after selling its position in the Granite Wash and Cleveland plays last year in western Oklahoma and the Texas Panhandle for $1.95 billion. At last word, the company still held 35,000 net acres in the Tuttle area with Woodford and Mississippian formation. It also held 85,000 net acres in the Major County area.
