Arsenal Resources Development announces $100 Million Recapitalization and Deleveraging transaction to be implemented through a pre-packaged Chapter 11 case

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Arsenal Resources Development LLC (“ARD”), a natural gas operator in the Appalachian Basin, today announced that it and certain of its affiliates (collectively, the “Company”) have commenced chapter 11 cases in the Bankruptcy Court for the District of Delaware on November 8, 2019 to implement a pre-packaged plan of reorganization (the “Plan”), pursuant to which the Company will pursue a recapitalization transaction that includes a $100 million new equity investment made by certain funds affiliated with Chambers Energy Capital as well as by Mercuria Energy Company, two of the Company’s most significant lenders, and a substantial deleveraging of the Company’s balance sheet.

The Plan has the support of 100% of the Company’s existing lenders and an overwhelming majority of the Company’s equity holders, all of whom signed a restructuring support agreement prior to the Company’s commencement of the chapter 11 cases. Upon consummation of the Plan, the recapitalized Company will be majority-owned by certain funds affiliated with Chambers Energy Capital as well as by Mercuria Energy Company (or one of its affiliates). In addition to the foregoing $100 million equity investment, syndicated lenders to the Company have agreed to equitize more than $360 million of long-term debt. Upon completion of the transaction, the recapitalized Company is projected to have a new $130 million RBL facility, and no other funded debt.

Importantly, the Plan provides that employees, customers, and vendors of ARD’s operating subsidiaries will be paid in full in the ordinary course of business.

“We are pleased that our principal lenders have demonstrated their confidence in the Company. The lenders voted unanimously in favor of the Plan, and will recapitalize the Company with $100 million of new equity capital. Implementing the Plan will provide the Company with the needed capital to execute on its long-term business plan and pursue growth opportunities, and allow it to continue to operate seamlessly for our customers, vendors, employees and stakeholders,” said Jonathan Farmer, the Company’s Chief Executive Officer.

The Company is represented by Simpson Thacher & Bartlett LLP and Young Conaway Stargatt & Taylor LLP, as legal counsel, PJT Partners LP, as investment banker and Alvarez & Marsal North America, LLC, as restructuring advisor

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