Chaparral avoids interest payment on notes and loans

Oklahoma City’s Chaparral Energy has entered into a limited forebearance agreement with some of its lenders and at the same time chose not to make a more than $13 million interest payment on its notes.
In a filing with the Securities Exchange Commission, the company made the agreement under its Tenth Restated Credit Agreement dated Dec. 21, 2017. The agreement means the creditors agreed they would not exercise any remedies should Chaparral default on its interest payments that were due July 15, 2020 on the company’s 8.75% senior notes due 2023.
The forebearance continues from July 15 to July 29 of this year.  Chaparral was required to propose a process and timeline for “unwinding the company’s hedges and using all or a portion of the net cash proceeds from the hedge unwind to pay down its Credit Agreement loans.”
The SEC filing shows that if the total net cash proceeds from the hedge unwinding was less or equal to $33 million, then the required loan repayment would be $24 million or the total amount of the proceeds.
If the total net cash proceeds were greater than $33 million, the required loan repayment would be equal to the amount by which the proceeds exceed $9 million.
Under the agreement, Chaparral had until 5 p.m. on July 22 for a deadline to complete the hedge unwind.
The filing also indicated Chaparral chose not to make the nearly $13.1 million interest payment with respect to the notes. It stated that Chaparral, under the indenture governing the notes, had a 30-day grace period to make the payments and the grace period ends Aug. 14, 2020.
“The company is engaged in discussions with its lenders and noteholders regarding the terms of a potential comprehensive restructuring of its indebtedness,” stated the SEC filing.
Click here for the SEC filing by Chaparral Energy.