Samson Resources’ junior creditors in equity swap

Silver Point, Cerberus and Anschutz Investment Company will see their $1 billion junior debt stake in the bankrupt oil company convert to equity, while unsecured bondholders are still in negotiations over repayment with the KKR-backed company.  

Tulsa, Oklahoma-based Samson Resources, which is going through bankruptcy, is set to hand equity stakes to its junior lenders, which include Silver Point Capital Management, Cerberus Capital Management and Anschutz Investment Company. The total junior debt held by the three firms’ amounts to $1 billion, according to The Wall Street Journal. The oil and gas company filed for Chapter 11 bankruptcy protection last week, amid a continuing oil price slump.

The company is controlled by KKR’s private equity unit. The New York-headquartered alternative investment firm led a $7.2 billion leveraged buyout of the company in 2011. The swap will erode KKR’s current $4.1 billion investment in the company, the WSJ estimates.

The secured junior debt holders have also agreed to recapitalize the company with $485 million in new loans and to back a rights offering. Cerberus and Silver Point both manage hedge funds and private equity vehicles focused on distressed and special situations investments. Cerberus is based in New York and Silver Point in Connecticut. Anschutz is a Denver, Colorado-based venture capital investor that targets a broad range of industries.

Samson is still in talks with its unsecured bondholders about restructuring, though the $2.25 billion owed to them is expected to also all but disappear, according to recent reports. The bondholders include California-based Oaktree Capital Management and Blackstone-owned GSO Capital Partners. The agreement currently under discussion offers unsecured creditors a 1 percent equity payout, though that number could still drop to 0.5 percent, the Wall Street Journal reported. The company said in court documents that it still expects to face opposition from the unsecured bondholders. Oaktree and GSO have so far declined comment.