Tulsa’s Unit Corporation became the latest bankruptcy victim of the coronavirus pandemic and the oil crisis, as the company announced it has filed Chapter 11 bankruptcy in the federal bankruptcy court in Houston, Texas, citing debts of more than $1 billion.
The company stated it filed the Chapter 11 reorganization, a move that will reduce Unit’s funded debt obligations by more than $650 million “and right-size the company’s balance sheet for go-forward operations.”
As of Dec. 31, 2019, Unit had debts totaling $1,034,417,000 while assets were $2,090,052,000. Its Friday filing in federal bankruptcy court showed creditors totaled anywhere from 200 to 999.
In announcing the action, Unit said it expects to continue to operate in the ordinary course throughout the Chapter 11 process “without material disruption to its vendors, customers, or partners.”
Unit also explained that its 50%-owned midstream affiliate, Superior Pipeline Company, LLC and its subsidiaries is not a debtor in the Chapter 11 cases and is unaffected by the filing. The Tulsa firm also said it does not anticipate that payments to vendors and suppliers of its subsidiary Unit Drilling Company will be impacted.
The petitions were filed as part of a Restructuring Support Agreement between the company, the holders of more than 70% of Unit’s 6.625% senior subordinated notes due 2021 and all of the leaders under the firm’s Senior Credit Agreement.
“Like many companies in the oil and gas industry, we have felt the impact of the severe downturn in commodity prices, which has only worsened with the COVID-19 pandemic,” said David T. Merrill, President and Chief Executive Officer. “While facing this challenging environment, we have worked diligently to explore a variety of strategic alternatives to cut costs, improve our liquidity and address near-term debt maturities. We are pleased to receive the support of our lenders and noteholders and are confident that, on emergence from Chapter 11, we will be better positioned to meet our challenges and realize the potential of our Company.”
With the filing, and subject to court approval, the Company has received a commitment from the RBL Lenders that are parties to the RSA to provide up to $36 million in debtor-in-possession financing. The Company anticipates up to $18 million will be available on an interim basis. This financing, combined with the Company’s usual operating cash flows, is expected to provide sufficient liquidity for the Company to continue to operate in the ordinary course through the restructuring process.
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Source: Business Wire