Tapstone finishes restructuring and looks toward expansion


Tapstone Energy, LLC announced it has concluded its financial restructuring plan which included a reduction of debt by $450 million, $50 million in new investment from one company and a new four-year loan of $145 million. And it’s looking with an eye toward expansion.

The company said the restructuring was a move to recapitalize its balance sheet and at the same time, fortify its liquidity by reducing long-term debt and interest expense. As a result, company leaders say they are ready to begin an expansion of the firm’s production base by following through with mergers and acquisitions.

“The outcome of this process establishes Tapstone as an entity ready to consolidate assets in the Mid-Continent. We are eager to turn our focus on acquiring producing properties and evaluating merger candidates,” said Steve C. Dixon, Tapstone Energy Chief Executive Officer.

By extinguishing approximately $450 million of principle debt, the transaction leaves Tapstone with over $60 million in liquidity, a current mark-to-market hedge book of approximately $55 million, a significantly deleveraged balance sheet, a dedicated team of investors and the flexibility to pursue growth through acquisitions.

The firm also announced that 100% of its existing traditional credit facility lenders agreed to exchange their outstanding secured indebtedness into a new four-year secured term loan of nearly $145 million and common equity in Tapstone.

In addition, 99.5% of the company’s existing holders of the 9.75% 2022 senior notes agreed to exchange them into a new four-year unsecured term loan of nearly $5 million and common equity in the company.

Further, Kennedy Lewis Investment Management, LLC is investing $50 million in new capital in the form of preferred equity in the company to pursue asset acquisitions in the Mid-Continent region, a move that will allow Tapestone to further its goal of expansion.

“We greatly appreciate the collaboration of all stakeholders to reach this resolution. When including the new investment from Kennedy Lewis and the extinguishment of debt through the restructuring, our net debt has improved by approximately $500 million from start to finish in this process,” commented John J. Kilgallon, Tapstone Energy’s Chief Financial Officer.


Darren L. Richman, Kennedy Lewis Founder and Co-Portfolio Manager, commented, “We are excited to partner with the Tapstone team and view the timing of this investment as the perfect opportunity to be acquiring assets as other operators need to raise capital. Very proud we were able to accomplish this transaction out of court, which was enabled by the support and leadership of the agent bank and its steering committee.”

Kirkland & Ellis LLP served as legal counsel, Evercore acted as financial advisor and Alvarez & Marsal North America, LLC acted as restructuring advisor to Tapstone. Haynes and Boone, L.L.P. served as legal advisors and FTI Consulting, Inc. served as financial advisor for the credit facility lenders. Akin Gump acted as legal advisors and Houlihan Lokey Capital, Inc. acted as financial advisors for the unsecured noteholders.



Source: Tapstone Energy