Legacy Reserves Inc.

Legacy Reserves Inc. terminated the registration of a class of securities, ending its reporting obligation for them.

listing compliance notice

The bankruptcy court confirmed Legacy's Chapter 11 plan on November 15, 2019, as foreseen in the June support agreement. Existing common stock (114,810,671 shares outstanding) will be cancelled and receive no recovery on the plan's effective date. Term loan lenders get about 52.25% of the new stock and noteholders about 2.46% plus rights to buy more. The plan relies on a $500.0 million exit facility, a $189.8 million equity investment backstopped by GSO Capital Partners and a $66.5 million rights offering, and the plan is not yet effective.

bankruptcy or receivership

Legacy Reserves Inc.'s exchange filed to remove a class of its securities from listing.

listing compliance notice

Legacy Reserves Inc. and certain subsidiaries filed voluntary Chapter 11 cases on June 18, 2019 in the Southern District of Texas, as the June 14 support agreement contemplated. The court approved interim debtor-in-possession financing, giving access to up to $35.0 million, and the filing accelerated the term loan ($340.3 million), 2020 notes ($208.9 million), 2021 notes ($129.5 million) and 2023 convertible notes ($107.5 million). Nasdaq notified Legacy on June 19 that its stock will be delisted, with trading suspended from June 28, 2019, and Legacy does not plan to appeal. Legacy states it expects no recovery for any equity holder.

bankruptcy or receivership

Following the forbearance period, Legacy signed a restructuring support agreement on June 10, 2019 (amended June 13) with its term loan lenders, revolver lenders and some holders of its 2020, 2021 and 2023 notes. It plans to file Chapter 11 in the Southern District of Texas on a pre-negotiated plan, with up to $350.0 million of debtor-in-possession financing and a new exit credit facility of up to $500.0 million. Under both versions of the plan described, existing shareholders get no recovery and their shares are extinguished; term loan lenders get most of the new stock (51.40% or 98.00% depending on the version). This confirms the bankruptcy hinted at in the forbearance filing; the plan still needs court and board approval.

material agreement

Lenders under the revolving credit facility and term loan agreed to hold off enforcing remedies, first extending to June 12 and then to June 18, 2019. The defaults cover the revolver's May 31, 2019 maturity, unpaid June 3 interest on the 2020, 2021 and 2023 notes, and (for the term loan) missing audited statements without a going-concern qualification. This shows the company in default on its debt and relying on short-term lender patience; the filing refers to the credit agreements as 'Prepetition', which hints at a possible bankruptcy filing (inference), and earlier forbearance agreements are mentioned but not detailed.

material agreement

Nasdaq told the company on April 26, 2019 that its stock had closed below the $1.00 minimum bid price for 30 consecutive business days. Trading is unaffected for now, and the company has until October 23, 2019 to get back above $1.00 for 10 straight business days. (The filing's cover page had errors, corrected in the next filing.)

listing compliance notice

The company says the corporate reorganization (merger plus the $3.0 million purchase of the general partner) was completed on September 20, 2018, resolving the open merger thread. Pro forma figures assume 106,276,784 shares outstanding, a 2017 loss of $53.9 million ($0.51 per share) and first-half 2018 income of $13.7 million ($0.13 per share); it expects about $30 million of revolver borrowing plus roughly 0.2 million shares to cover accelerated incentive-plan payouts. The filing was made ahead of an expected S-3 registration statement.

business combination

With the conversion into a corporation apparently done (the filing is by Legacy Reserves Inc.), the company swapped $21.004 million of 2020 notes and $109 million of 2021 notes for new 8% convertible notes due 2023, plus 105,020 shares for the 2020 note holders. The new notes convert at $6.00 a share, so they could add shares later, and holders converting early get a cash payment ($80 per $1,000 through Nov 30, 2018). Lenders on the revolving credit facility and term loan also agreed to amendments allowing senior notes to be redeemed with refinancing debt, equity sale proceeds or equity exchanges.

capital raising announcement

Amendment No. 3 keeps the amended merger terms and now sets the unitholder vote for September 19, 2018 at 10:30 a.m. at Midland Country Club in Midland, Texas. Unitholders will vote on the merger, the board classification, the 2018 Omnibus Incentive Plan, an advisory vote on executive compensation tied to the deal, and a possible adjournment. The board unanimously recommends voting for all of them.

business combination

Amendment No. 2 refers to an 'Amended and Restated' merger agreement, so the deal terms were reworked after the first draft, and adds a new vote on how the new company's board of directors would be classified. The maximum number of shares to be registered rises to 106,096,736 (from 95,331,756), now also counting phantom units that vest on completion, with a further $26,650 fee paid; the filing does not itself explain the other changes to the exchange terms. The meeting date is still blank.

business combination

Legacy Reserves Inc., a new Delaware corporation, filed to register up to 95,331,756 shares of common stock for a plan to convert Legacy Reserves LP from a master limited partnership into a corporation. Holders of the LP's common units and its 8% Series A and Series B preferred units would receive the new company's shares in a merger, and the new company would also buy the general partner from Lion GP Interests, LLC for $3.0 million in cash. The filing says the board wants the change to remove the general partner members' negative control rights and widen the pool of investors; the new shares are expected to list on Nasdaq as LGCY, and a unitholder vote is still to be scheduled.

business combination