GSO, Silver Point to provide $400m in energy financing

The loans to C&J will help the company restructure.

 A bevy of debt funds has agreed to bankroll a multijurisdictional restructuring of C&J Energy, a plan that will cut $1.4 billion in debt from the Houston-based oil well constructor.

According to a Monday (11 July) regulatory filing with the US Securities and Exchange Commission, GSO Capital Partners, Silver Point Capital and other secured lenders have agreed to provide C&J with $400 million in fresh capital to facilitate a restructuring. C&J’s reorganisation—which would be accomplished under bankruptcy cases in the US, Canada and Bermuda—would hand control of the company to its lenders.

Alongside GSO and Silver Point, Ascribe Capital, Blue Mountain Capital Management, Solus Alternative Asset Management and Symphony Asset Management will lend $100 million in bankruptcy financing, or a debtor-in-possession (DIP) loan, and another $100 million to fund the company’s exit from court protection. In addition to the DIP and exit facilities, the prepetition lenders will backstop a $200 million offering of new common shares.

The bankruptcy financing is scheduled to mature 31 March and accrues interest at either a base rate plus 8 percent or Libor + 9 percent, with a Libor floor of 1 percent. The money will be used to bolster operating liquidity. No terms were available for the $100 million loan that would finance C&J’s emergence from Chapter 11 bankruptcy.

GSO, Silver Point and the other lenders reached a forbearance agreement on 1 June with the oil and gas company after it defaulted on its loan agreement by breaching a covenant. GSO and its cohorts had agreed to refrain from taking any action against C&J on its default through 30 June. The lenders, however, extended that deadline to 17 July when C&J announced a restructuring agreement in principle at the end of June.