Two More Energy Companies Go Bankrupt: Linn Energy, Penn Virgina File Chapter 11
by Tyler Durden
ZeroHedge.com
05/12/2016
We can now add two more major names succumbing to the Saudi onslaught against marginal shale producers when overnight first Linn Energy announced a prepackaged Chapter 11 deal, followed by Penn Virginia defaulting just hours later.
In the first case, oil and gas producer Linn Energy LLC filed for chapter 11 bankruptcy after reaching a deal with lenders to restructure its $8.3 billion debt load and obtain $2.2 billion in fresh financing. In its bankruptcy filing press release, Linn announced that the holders of more than 66% of its credit facility have agreed to the “broad terms” of a debt restructuring but didn’t provide further details. The lenders also agreed to let Linn Energy spend the cash securing their debt, known as cash collateral, and to help fund a new $2.2 billion term loan.
LinnCo LLC, a publicly traded affiliate, filed for bankruptcy alongside Linn Energy Wednesday. LinnCo was created to help Linn Energy raise additional equity capital and is taxed as a corporation, rather than as a master limited partnership like Linn Energy.
For those wondering if the bankrtupcy would prevent the company from pumping more oil, bad news: Linn Energy said access to the cash will allow it to continue normal operations without lining up new bankruptcy financing. However, the company still requires permission from the U.S. Bankruptcy Court in Victoria, Texas, to begin spending.
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