Each one in plain English, with the numbers worked through for a shareholder.
31 Jan 2017bankruptcy or receivership▼ BadMajor
On January 27, 2017 the bankruptcy court confirmed the Chapter 11 plan covering Berry and Linn Acquisition Company, resolving the plan question left open since the May 2016 filing. Berry lenders get a full recovery (a share of an exit facility of up to $550 million plus a paydown, or non-conforming term notes), Berry unsecured noteholders get 82.3% of the new equity (after reservations for an employee incentive plan) or a cash pool share, and general unsecured creditors get 17.7% of the equity or a share of a $35 million cash pool. All existing equity, which was 100% held by Linn Acquisition as of January 23, 2017, is cancelled when the plan takes effect. The company targets the effective date within 30 days but gives no assurance it will happen.
On October 14, 2016 the debtors and the administrative agents under the Linn and Berry credit agreements signed a fourth amendment to the restructuring support agreement, moving the plan filing deadline from 156 to 163 days after the May 11 petition date. This uses the 163-day extension allowed under the third amendment; the filing states no change to plan terms.
On October 7, 2016 the debtors and some consenting creditors signed a third amendment to the restructuring support agreement, moving the deadline for filing the plan, solicitation materials and disclosure statement motion from 149 to 156 days after the May 11 petition date. The administrative agent and the debtors may agree to push it to 163 days without the consent of the required consenting creditors. It continues the string of schedule extensions; the filing states no change to plan terms.
On September 23, 2016 the debtors and some consenting creditors signed a second amendment to the restructuring support agreement, pushing the deadline for filing the plan, solicitation materials and disclosure statement motion from 135 to 149 days after the May 11 petition date. It is a further delay to the schedule; the filing states no change to plan terms.
On September 8, 2016 the debtors and some consenting creditors amended the restructuring support agreement to move the deadline for filing the plan, solicitation materials and disclosure statement motion from 120 to 135 days after the May 11 petition date. This is a schedule extension; the plan terms are unchanged in this filing.
On May 11, 2016 Berry filed for Chapter 11 in Texas together with Linn Energy, LinnCo and Linn subsidiaries, after signing a restructuring support agreement on May 10 with lenders holding at least 66.67% of the Berry and Linn credit facilities. The filing accelerated Berry's credit agreement and its 6.75% notes due 2020 and 6.375% notes due 2022, and enforcement is stayed. Under the plan Berry would separate from Linn; its lenders and unsecured creditors would get new Berry equity in amounts still to be set, and all existing equity interests in Linn, LinnCo and Berry would be extinguished without recovery.
This amendment continues the auditor change: on March 25, 2014 Berry engaged KPMG LLP to audit its financial statements as of December 31, 2013 and for December 17 through December 31, 2013, with Linn's audit committee approving. It replaces PwC, which is to audit the periods before the acquisition.
On March 17, 2014 Berry (now a Linn subsidiary) dismissed PricewaterhouseCoopers as auditor, effective once PwC finishes the 2013 audit and the related 10-K is filed. Linn's audit committee approved it, and the filing reports no disagreements with PwC and no adverse opinions in 2011 and 2012. The company's address is now Houston, Texas.
The Linn merger closed on December 16, 2013 after Berry stockholders approved it (42,151,040 votes for, 3,670,065 against). Each Berry share was cancelled and converted into 1.68 LinnCo shares, and Berry converted into Berry Petroleum Company, LLC, now a wholly owned subsidiary of Linn. Its stock was to be delisted from the NYSE before trading on December 17, 2013, it intends to file Form 15 to deregister, and its directors and executive officers ceased serving. This resolves the pending merger thread.
On December 6, 2013 Berry agreed in principle to settle a Delaware stockholder class action (filed April 12, 2013) alleging the board ran an inadequate sale process and failed to disclose material information about the Linn/LinnCo merger. As part of the settlement Berry, Linn and LinnCo added disclosures to the merger proxy (including an updated table showing the deal worth about $52.35 per Berry share at December 6, versus $53.10 at November 12, and more detail on negotiation of the exchange ratio). The defendants deny wrongdoing, the settlement needs Delaware court approval, and it does not change the December 16 meeting dates or the consideration.
Berry filed its final proxy statement for the Linn merger, with a special stockholder vote set for December 16, 2013 (record date November 14). The deal was amended again on November 13, 2013, and gives 1.68 LinnCo shares per Berry share, a fixed ratio, about 93.6 million LinnCo shares in total. At LinnCo's $31.61 close on November 12, that was about $53.10 per Berry share, versus about $55.79 at the November 1 price. Berry's board recommends voting for the merger; the vote is not yet held, so the outcome is open.
On November 3, 2013 Berry amended the Linn merger agreement, raising the exchange ratio from 1.25 to 1.68 LinnCo shares per Berry share and extending the date either side may terminate from October 31, 2013 to January 31, 2014. Berry's board unanimously approved the amendment and still recommends the deal. This improves the terms offered to Berry shareholders in the pending merger.
On February 20, 2013 Berry agreed to be acquired by LinnCo, with Linn Energy as the eventual owner, in an all-stock deal where each Berry share converts into 1.25 LinnCo shares. Closing requires approval from Berry's stockholders, LinnCo shareholders and Linn unitholders, plus tax opinions and antitrust clearance. Berry's board unanimously approved it. If completed, Berry shareholders would hold LinnCo shares rather than Berry stock, and Berry would become an indirect subsidiary of Linn.
On July 30, 2012 Berry amended its crude oil sales contract with ExxonMobil Oil Corporation, extending it to August 31, 2014. It covers California production other than Placerita and Poso Creek. This extends the ExxonMobil arrangement noted earlier; pricing is redacted and not given.
Effective April 13, 2012, Berry signed a fourth amendment to its credit agreement that raises the borrowing base to $1,400 million and amends the oil hedging contracts covenant. This restores the base that the March notes issuance had reduced; the filing does not give details of the covenant change. (Inference: the base increase follows the March notes offering and tender, but the filing does not say so.)
Effective April 1, 2012, Berry signed a 39-month power sale agreement with Pacific Gas and Electric for electricity from its 38 megawatt cogeneration facility on the South Midway-Sunset properties. It replaces the 1984 agreement with PG&E that expired March 31, 2012, and Berry can end it early if it signs a long-term deal through a competitive solicitation. The filing gives no prices or financial effect.
On March 9, 2012 Berry closed the $600 million 6⅜% senior notes due 2022 offering announced earlier in the week, receiving about $589 million after discounts and expenses. It plans to use the money to redeem the $200 million 8¼% 2016 notes, fund the tender offer for up to $150 million of 10¼% 2014 notes, and pay down the revolver. The filing also says the new notes automatically cut the credit facility's borrowing base by 25 cents per dollar issued, a net cut of $112.5 million to about $1,287.5 million if the full $150 million tender is completed.
On March 6, 2012 Berry signed an underwriting agreement with Wells Fargo Securities for a $600 million public offering of 6⅜% senior notes due 2022. The company announced it would use the proceeds to redeem all $200 million of its 8¼% 2016 subordinated notes, fund a tender offer for up to $150 million of its 10¼% 2014 notes (about $355 million outstanding), and pay down the revolver. It also agreed not to sell other debt over one year for 90 days without Wells Fargo's consent. This continues the effort to replace the higher-rate notes.
On October 26, 2011 Berry amended its credit agreement again, raising lender commitments to $1,200 million with the borrowing base unchanged at $1,400 million. The accompanying third-quarter release reports net earnings of $134 million ($2.42 per diluted share), including a roughly $90 million net boost from non-cash hedge gains and debt-retirement charges. It also says Berry bought back $95 million of its 10.25% 2014 notes for $106 million using the credit line, cut its 2011 production forecast to about 10% growth because California regulation slowed its diatomite drilling, and now expects capital spending of over $500 million for 2011.
On April 13, 2011 Berry amended its November 2010 bank credit agreement: maturity extended to May 13, 2016, borrowing base raised from $875 million to $1,400 million, while lender commitments stay at $875 million. Interest margins and the unused-line fee were cut, and Berry may now also refinance or retire its 8¼% 2016 subordinated notes, in addition to the 10¼% 2014 notes, if leverage and liquidity tests are met.
On February 25, 2011 Berry concluded that its financial statements for 2007-2009 and certain 2009 and 2010 quarterly reports should no longer be relied on, after talks with the SEC. Gains on hedges tied to the Denver-Julesburg assets sold in 2009 should have been shown under discontinued operations, which lowers earnings from continuing operations by $12.7 million for 2009 and $1.2 million for 2008. Net earnings and the balance sheets are unchanged. The same release reports 2010 net earnings of $83 million ($1.52 per diluted share), proved reserves of 271 million BOE and production of 32,666 BOE/D, and mentions the October 2010 Permian (Wolfberry) acquisition, which appears to be the pending purchase from the prior context.
On November 15, 2010, Berry replaced its bank revolver with a new agreement with Wells Fargo and other lenders, extending maturity to November 13, 2015 (from July 2012) with a borrowing base and lender commitments of $875 million, in line with the borrowing base left after the November 1 notes. The old debt-to-earnings test was replaced by a minimum interest coverage ratio of 2.75 and a current ratio of at least 1.0, and Berry gained the right to refinance or retire its 10¼% 2014 notes if leverage and liquidity tests are met. Berry expects about $8.0 million in fees. Separately, the board approved a revised form of restricted stock unit award for officers.
On November 1, 2010 Berry issued the $300 million of 6¾% senior unsecured notes due November 1, 2020, raising about $294 million net, and cut the revolver borrowing base by about $75 million to about $863 million. About $175 million is intended to fund a pending purchase of producing properties mainly in the Wolfberry trend in West Texas, expected to close in December 2010 with no assurance. The rest is meant to pay down the revolver; if the purchase fails or is partial, all proceeds go to the revolver and general purposes.
On October 27, 2010 Berry signed an underwriting agreement with Wells Fargo Securities for a public offering of $300 million of 6¾% senior notes due 2020, and agreed not to sell other debt over one year for 90 days without Wells Fargo's consent. The 6¾% rate is below the 10¼% on the 2009 notes.
On September 29, 2010 Berry signed a new contract to sell all its Midway Sunset crude (about 12,000 barrels a day) to ExxonMobil, effective October 1, 2010 through November 30, 2011. It extends the ExxonMobil arrangement that was due to end September 30, 2010.
On June 15, 2010 Berry and bankrupt Flying J agreed that Flying J owes Berry $60.5 million: $11,827,697.23 as an administrative claim and $48,672,302.77 as a general unsecured claim. The amounts need Bankruptcy Court approval at a July 6, 2010 hearing alongside Flying J's plan confirmation, which, if approved and fully performed, would allegedly pay approved claims in full in cash. Nothing is received yet.
