Gulfport Energy Corporation (NASDAQ:GPOR) (“Gulfport”) today announced that the United States Bankruptcy Court for the Southern District of Texas (the “Court”) granted approval of all Gulfport’s “first day” motions, authorizing, among other things, Gulfport to continue paying royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course of business for goods and services provided, and to enter into new hedging arrangements in accordance with an agreement with certain prepetition lenders.
The Court also authorized Gulfport to borrow up to $90 million in debtor-in-possession (“DIP”) financing. The DIP, combined with cash generated by Gulfport, will support ongoing operations in the ordinary course of business during the restructuring.
Gulfport intends to use the bankruptcy proceedings to strengthen its balance sheet, restructure certain debt obligations, significantly reduce its midstream cost structure, and achieve a more sustainable capital structure. Gulfport intends to continue to operate in the ordinary course of business during the restructuring process.
As previously announced, on November 14, 2020, Gulfport and all of its wholly-owned subsidiaries filed petitions for voluntary relief under chapter 11 of the United States Bankruptcy Code. In connection with the filing, Gulfport also entered into a Restructuring Support Agreement (“RSA”) with over 95% of its revolving credit facility lenders and certain noteholders holding over two-thirds of the outstanding aggregate principal amount of its senior unsecured notes. Attached to the RSA is a “pre-negotiated” restructuring plan, pursuant to which Gulfport will eliminate approximately $1.25 billion in funded debt and significantly reduce its annual cash interest going forward. Gulfport will also issue $550 million of new senior unsecured notes under the plan to existing unsecured creditors of certain Gulfport subsidiaries. Certain senior secured noteholders have committed to backstop a minimum new money investment of $50 million in the form of convertible preferred stock.
Gulfport expects to exit the chapter 11 process with leverage below two times and rapidly delever thereafter due to a much-improved cost structure driven by reduced legacy firm transport commitments and costs. Gulfport has also received a commitment from its existing lenders to provide $580 million in exit financing upon emergence from chapter 11.
Additional information regarding Gulfport’s chapter 11 filing will be available at www.gulfportenergy.com/restructuring. Court filings and information about the claims process are available at https://dm.epiq11.com/Gulfport. Questions should be directed to Gulfport’s claims agent by email to GulfportInfo@epiqglobal.com or by phone at (888) 905-0409 (toll free) or +1 (503) 597-7687 (international).
Kirkland & Ellis LLP and Jackson Walker L.L.P. are serving as legal co-counsel, Perella Weinberg Partners and its affiliate, Tudor Pickering Holt & Co. are serving as financial advisors, and Alvarez & Marsal is serving as restructuring advisor to Gulfport.