History
EP Energy listed in 2014, spent years refinancing heavy debt and selling assets, then filed for Chapter 11 in October 2019; its confirmed plan was torn up in March 2020.
2014-2016: Listing and a first round of debt management
EP Energy Corp's securities were cleared to begin trading on the New York Stock Exchange in January 2014. The record then goes quiet until 2015, when the company's main subsidiary, EP Energy LLC, sold $800.0 million of 6.375% senior unsecured notes due 2023. It used part of the money to retire its 6.875% secured notes due 2019, swapping shorter-dated secured debt for longer-dated unsecured debt.
In 2016 the company began selling assets. Subsidiaries agreed in March to sell substantially all of their Haynesville and Bossier shale assets to Covey Park Gas LLC for $420 million in cash. The sale closed on May 3, 2016, with net proceeds of about $395 million. At the same time the bank facility's borrowing base (the limit on what lenders would lend against its assets) was cut from $2.75 billion to $1.65 billion, interest rates rose by 1.00%, and tighter limits applied. In August, the company exchanged about $582 million of its term loans for new ones costing LIBOR plus 8.75%, due 2021, and paid lenders a 3.0% fee. In November it added $500.0 million of 8.00% senior secured notes due 2024.
2017-2018: Partners and a big debt exchange
In January 2017 EP Energy signed a drilling joint venture with Wolfcamp DrillCo, an investor affiliated with Apollo, which owned about 44.8% of EP Energy's stock. The investor would fund 60% of EP Energy's share of costs on a first 75-well program in Crockett, Reagan and Irion Counties, Texas, to earn half of EP Energy's working interest in each well. The deal was approved by directors not affiliated with the investor.
In February 2017 the company sold $1.0 billion of 8.00% senior secured notes due 2025. It used the proceeds and cash to repay the $580 million of expensive term loans, buy back $250 million of its 9.375% notes due 2020, and repay $111 million of its bank facility.
A larger exchange followed. In January 2018 the company issued about $1.09 billion of new 9.375% senior secured notes due 2024 and paid about $47.7 million in cash. Holders tendered about $954 million (79.50%) of the 2020 notes, $53.6 million of the 2022 notes and $139.3 million of the 2023 notes. In May 2018 the joint venture's second tranche was moved to the Eagle Ford instead of the Permian, on the same terms, with about $215 million of first-tranche costs already recovered from the investor. Also in May, the bank facility was extended to November 2021, with commitments cut to $629.4 million, and the company issued $1.0 billion of 7.750% senior secured notes due 2026.
2019: Delisting and Chapter 11
On January 3, 2019 the NYSE warned that the stock's 30-day average price had fallen below the $1.00 minimum. On May 23 it suspended trading and began delisting proceedings, citing abnormally low trading prices. The stock moved to the OTC Pink market under the symbol EPEG, a more limited market.
The company did not make a roughly $40.0 million interest payment due August 15 on its 2025 notes, creating a default that also counted under the bank credit agreement. Creditors agreed to hold off enforcement while talks continued. On October 3, 2019, EP Energy Corporation, EP Energy LLC and certain subsidiaries filed for Chapter 11 in the Southern District of Texas, accelerating all the debt, including $629 million under the credit facility and several billion dollars of notes.
On October 18 the company signed a Plan Support Agreement with noteholders. It provided for a rights offering of up to $475 million and an exit facility of about $629 million. Holders of the 9.375% 2024 and 8.000% 2025 notes would receive 99.0% of the new shares, unsecured creditors 1.0%, and existing shareholders only a pro rata share of $500,000 in cash. In November the court allowed a $314,710,456 debtor-in-possession loan (financing for a company in bankruptcy) from JPMorgan and the existing bank lenders.
2020: The plan unravels
The court said on March 6, 2020 that it would confirm the Fourth Amended Plan and entered the confirmation order on March 12. On March 18, however, the company and the supporting noteholders agreed to terminate the Plan Support Agreement and the backstop agreement behind it. No $26 million termination fee was payable, and the company would reimburse the noteholders' fees and expenses. The noteholders agreed, through November 25, 2020, not to interfere with a further restructuring that treats their claims no less favorably than similar claims. The stipulation needed court approval.
As of March 19, 2020, the company was still in Chapter 11 and exploring alternatives, the terms for shareholders were in doubt, and the debtor-in-possession loan matured no later than November 25, 2020. In April 2020 the company terminated the registration of a class of its securities, ending its reporting obligation for them.
Written from the 21 story beats below (2014 to 24 Apr 2020), which come from the company's own announcements and filings.