SARATOGA RESOURCES INC /TX

The bankruptcy court confirmed the Chapter 11 plan on August 30, 2016, and the plan became effective on November 2, 2016. Under it, the first and second lien note liens are cancelled, a Litigation Trust takes the debtors' assets other than retained Gulf of Mexico federal leases and St. Bernard and St. Mary Parish leases (with related bonds and trust accounts), and a $100,000 Convenience Fund is set up. Contrary to the earlier warning that stock could be cancelled, existing shareholders keep their shares unchanged (30,986,601 outstanding as of August 31, 2016). The filing reports total assets of $6.7 million against liabilities of $223.8 million at July 31, 2016. Directors Rhea, Smith and Nevins left; Cooke, Clifford and White remain.

bankruptcy or receivership

SARATOGA RESOURCES INC /TX's exchange filed to remove a class of its securities from listing.

listing compliance notice

On June 19, 2015, the day after the Chapter 11 filing, NYSE Regulation told the company it would begin proceedings to delist its stock from NYSE MKT, and trading was suspended that day. The exchange cited the bankruptcy and uncertainty over its outcome and its effect on the stock's value; the company does not expect to appeal. The company repeated its warning that a plan could leave shareholders with little or no distribution and cancel their stock.

listing compliance notice

On June 18, 2015 Saratoga and its four subsidiaries (Harvest Oil & Gas, The Harvest Group, Lobo Operating, Lobo Resources) filed for Chapter 11 in the Western District of Louisiana, after the forbearance extensions ended without a deal. This accelerated the $54.6 million 10.0% first lien notes and $125.2 million of 12.5% notes. The company warns that shareholders may receive little or no distribution and that their stock could be cancelled, but no plan has been filed yet. This is the company's second Chapter 11 after its 2010 emergence.

bankruptcy or receivership

On January 30, 2015 the company signed forbearance agreements with its first lien and second lien noteholders after missing a $1.3 million first lien interest payment due December 31, 2014 and a $7.9 million second lien payment due January 1, 2015. Lenders agreed to hold off on remedies until the earlier of March 16, 2015 or a further default, while the company seeks a restructuring or refinancing. The company must pay the first lien interest with default interest ($1,378,650) by February 2, hire a financial advisor by March 2, and deliver a budget and business plan. This is the first sign of debt distress, following the short-dated 2015 notes issued in November 2013.

material agreement

On November 22, 2013 the company sold $54.6 million of new 10.0% Senior Secured Notes due December 31, 2015 (first lien) to two institutional investors at par. The company received about $25.4 million net cash, and the investors handed back $27.3 million of the 12.5% notes, which were retired. The new notes rank ahead of the remaining 12.5% notes, now called second lien and stated at $152.5 million, under an intercreditor agreement. The new notes mature sooner (2015, versus 2016 for the 12.5% notes), and total secured debt rises net of the retirement; the filing does not say why the company did this.

debt financing

The $25.0 million add-on sale of 12.5% Senior Secured Notes due 2016 closed on December 4, 2012, under a First Supplemental Indenture, with net proceeds of about $23.3 million (a bit below the $23.445 million expected). The company and its four subsidiary guarantors must file to exchange these unregistered notes for registered ones, aiming for effectiveness within 120 days, or pay additional interest. This completes the November 29 agreement and adds to the debt carried from the 2011 issue.

debt financing

On November 29, 2012 the company agreed to sell $25.0 million more of its 12.5% Senior Notes due 2016 to Imperial Capital, priced at 98.58% of par plus interest from July 1, 2012, for about $23.445 million net. Proceeds are for general corporate purposes including capital spending. These are add-on notes under the July 2011 indenture, which previously covered $127.5 million, so total debt under it rises.

material agreement

The private placement closed on May 24, 2012 with 3,089,360 shares issued (more than the 2,969,360 first announced), raising $19,308,500 gross and about $18.5 million net. The company must file a resale registration statement within 30 days of closing, with 1% of the purchase price per 30 days in damages if it misses registration deadlines. Separately, on May 22 holders exercised 213,996 of the $5.00 warrants (from the 2011 placements) for $1,069,980, and received new 3-year warrants over 106,997 shares at $8.00.

capital raising announcement

On May 14, 2012 the company agreed to sell 2,969,360 new shares at $6.25 each in a private placement to institutional and accredited investors, expecting about $17.7 million net after commissions and expenses. The money is to fund faster drilling and development and working capital, with closing expected around May 17, 2012; this adds new shares (dilution) and the buyers will get resale registration rights. C. K. Cooper & Company and Ladenburg Thalmann were co-placement agents.

material agreement

the New York Stock Exchange certified SARATOGA RESOURCES INC /TX's securities for listing, clearing them to begin trading.

listing compliance notice

The company closed a $127.5 million issue of 12.5% Senior Secured Notes due July 1, 2016 (sold at 98.221% of par, guaranteed by its subsidiaries) and a sale of 5,650,000 shares at $5.00 for about $27.3 million net. It used the proceeds, among other things, to repay Wayzata in full on July 12, 2011, ending the credit agreements from the 2010 bankruptcy exit and cancelling Wayzata's 2,000,000-share warrant. This replaces the 11.25% Wayzata debt due 2012 with longer-dated, higher-rate notes; the new shares dilute existing holders, and two Blackstone funds get board observer rights while holding 1,000,000+ shares.

capital raising announcement

On July 7, 2011 the company announced the pricing of a private placement of $127.5 million of 12.5% notes due 2016. The filing only furnishes the press release and gives no further terms or use of proceeds.

capital raising announcement

The April 2011 private placement closed on April 29, 2011 with a final tranche of 545,313 shares and warrants for 272,657 shares. In total the company issued 2,481,316 shares and warrants for 1,240,658 shares (exercisable at $5.00 for two years) for $7,443,948, plus 84,600 shares and 42,300 warrants to the placement agent for non-U.S. investors. No cash commissions were paid; this completes the offering and dilutes existing holders.

capital raising announcement

Between April 21 and April 27, 2011 the company agreed to sell 1,240,658 units, each of two common shares plus one warrant at $5.00 for two years, to accredited investors for $7,443,948. Existing shareholders are diluted by the new shares; the filing states Prosdocimi Limited was placement agent for non-U.S. investors, though the unit count given for it (845,990) was later corrected.

capital raising announcement

The plan took effect on May 14, 2010 and the company emerged from Chapter 11, resolving the bankruptcy that began March 31, 2009. The restated debt terms were signed: the Wayzata term loan fixed at $127.5 million at 11.25% and the revolver fixed at $18 million (including letters of credit), both maturing April 30, 2012. The revolver was assigned from Macquarie to Wayzata funds on February 11, 2010. Wayzata received warrants for up to 2,000,000 shares at $0.01, vesting over time, and 483,310 new shares went to creditors. Shareholders keep their holdings, but the restated certificate bars dividends or distributions until all allowed claims are paid in full.

capital raising announcement

On April 19, 2010 the court confirmed a Third Amended Plan, replacing the December 2009 plan, with different debt terms. Wayzata's term claim is allowed at $127.5 million at 11.25% maturing April 30, 2012, and Macquarie's revolver claim at $23.5 million, with $5.5 million paid on the effective date. Creditors will receive 483,310 new shares and Wayzata a warrant for up to 2,000,000 shares at $0.01, so existing holders are diluted; about 17,173,602 shares would be outstanding. Shareholders otherwise keep their interests, with no distributions until all allowed claims are paid in full. The plan was not yet effective, with an effective date expected by May 15, 2010.

bankruptcy or receivership

On December 2, 2009 the bankruptcy court confirmed the Second Amended Plan of Reorganization, but it takes effect only once Macquarie and Wayzata sign definitive loan documents, which the filing says is not assured. Under the plan Wayzata's claim is set at $116 million: $14 million paid in cash on the effective date, the rest as a $70 million secured note at 15% and a $32 million unsecured note at 22.5%, plus a new 805,515-share warrant. Macquarie's revolver stays in place with its borrowing base raised from $25 million to $45 million. Other creditors are to be paid 100%. Shareholders keep identical interests, but no dividends or distributions are allowed until all allowed claims are paid in full in cash. About 16,690,292 shares will be outstanding. This resolves the bankruptcy outcome for equity, pending the effective date.

bankruptcy or receivership

On May 19, 2009, management concluded the 2008 financial statements can no longer be relied on because of errors in accounting for the Harvest acquisition (tax basis, deferred taxes, and the purchase price allocation). Restated 2008 net income for July 15 to December 31, 2008 rises from $12,591,716 to $17,787,262, and total stockholders' equity from $28,244,221 to $33,439,767. The company will file an amended 10-K, and the filing says Malone & Bailey was told of the matter.

financial restatement

On March 31, 2009, Saratoga, Harvest Oil & Gas, The Harvest Group, Lobo Operating and Lobo Resources filed voluntary Chapter 11 petitions in the Western District of Louisiana, less than nine months after the Harvest acquisitions closed. The filing accelerated the $97.5 million owed to Wayzata and the $12.5 million owed to Macquarie, though the company believes enforcement is stayed. The company will keep operating as debtor in possession and says it will be late with its 2008 annual report. The filing does not say what happens to shareholders' stock.

bankruptcy or receivership

On July 14, 2008 the company closed the Harvest Oil and Harvest Group acquisitions after a fourth amendment reinstated the agreements and reset the price to cash plus 4.9 million shares. It paid $105,683,000 in cash and issued 4.9 million shares (3.3 million to Macquarie), for about 33,000 gross acres across 11 fields in Louisiana state waters. It was funded by a $97.5 million Wayzata second-lien loan at 20% interest due July 14, 2011 (plus a warrant for 805,515 shares at $0.01) and a Macquarie first-lien revolver of up to $25 million, with $12,528,878 drawn. The deal resolves the pending purchases but adds substantial debt and new shares for existing holders.

asset acquisition disposition

On October 24, 2007 the company agreed to buy The Harvest Group, LLC, a companion to the Harvest Oil deal with overlapping owners, for $29 million: $22,000,009 in cash and the balance in an 8% subordinated note on the same terms. Closing is subject to diligence and release of Macquarie debt, and is not assured.

material agreement

On October 18, 2007 the company agreed to buy all of Harvest Oil & Gas, LLC (South Louisiana onshore and state-waters Gulf of Mexico) for $116 million less an amount to release a Macquarie net profits interest. About $88 million less that amount is payable in cash and the rest in an 8% subordinated note due in 36 months, with a 12% annualized equity participation bonus. Closing depends on due diligence, release of Macquarie debt and other conditions.

material agreement

This amendment corrects the October 8 auditor-change report: Robnett's 2006 and 2005 audit reports were in fact modified for uncertainty about the company's ability to continue as a going concern. The original filing had left that out. The auditor change itself is unchanged.

auditor change