Halcón Resources Emerges from Chapter 11

Halcón Resources Corporation has completed its financial restructuring and has emerged from its pre-packaged chapter 11 bankruptcy cases.  All of the conditions under its Plan of Reorganization, which was confirmed by the US Bankruptcy Court for the District of Delaware on September 8, 2016, have been satisfied or otherwise waived in accordance with the terms of the Restructuring Plan.

Approximately $1.8 billion of the Company’s debt has been eliminated under the Restructuring Plan along with more than $200 million of annual interest expense going forward.  The table below summarizes Halcón’s pro forma capital structure as of June 30, 2016.

Capitalization – INCLUDES FEES & EXPENSES
Face Value Actual   Pro Forma
Pro Forma Capitalization ($MM) 6/30/2016  Restructuring  6/30/2016
Cash & Cash Equivalents (Including HKTMS Restricted Cash) $   24 $   – $   24
Senior Secured Revolving Credit Facility   101   203   304
8.625% Senior Secured Second Lien Notes due 2020   700   –   700
12.000% Senior Secured Second Lien Notes due 2022   113   –   113
13.000% Senior Secured Third Lien Notes due 2022   1,018   (1,018 )   –
Total Secured Debt $    1,932 $    (815 ) $    1,117
9.750% Senior Notes due 2020   316   (316 )   –
8.875% Senior Notes due 2021   297   (297 )   –
9.250% Senior Notes due 2022   37   (37 )   –
8.000% Senior Convertible Notes due 2020   290   (290 )   –
Total Debt $    2,871 $    (1,755 ) $    1,117
Redeemable Noncontrolling Interest   213   –   213
Preferred Stockholders’ Equity   222   (222 )   –
Stockholders’ Equity   (1,108 )   1,977   870
Total Capitalization $    2,223 $      $    2,223
Borrowing Base $   700 $   (100 ) $   600
Less: Borrowings   (101 )   (203 )   (304 )
Less: Letters of Credit   (5 )   (5 )
Plus: Cash   24   24
Total Liquidity $    618 $    (303 ) $    315
Note: Includes ~$48 MM of anticipated transaction fees and expenses.

As previously disclosed, pre-petition holders of Halcón common stock are receiving 4.0% of the common stock of the reorganized Company and the remaining 96.0% of common stock is being allocated to pre-petition debt holders in the Company, subject to dilution by new common shares issued or reserved for issuance in connection with the management incentive program (the “MIP”) and warrants issued to certain debtholders pursuant to the Restructuring Plan (the “New Warrants”).  The Company has determined that it will have 90 million new common shares outstanding before an allocation of shares for the MIP and the New Warrants.  This results in pre-petition Halcón equity holders receiving 3.6 million new common shares in the Company, or the effective equivalent of a 1 for 34 reverse stock split considering Halcón had 122.2 million common shares outstanding on September 8, 2016.  The new common shares are scheduled to begin trading on the New York Stock Exchange at the open of trading hours on September 12, 2016.  The table below summarizes the new ownership structure of Halcón.

Pro Forma Shares Outstanding
Pro Forma Ownership Summary                  
 Shares Excluding    Including MIP
Holder MIP & Warrants % Ownership   Excluding Warrants % Ownership
New Shares issued to Current HK Shareholders 3,600,000 4.0 % 3,600,000 3.6 %
New Shares Issued Under MIP (1 ) 0.0 % 10,000,000 10.0 %
New Shares Issued to 3L Holders 68,850,000 76.5 % 68,850,000 68.9 %
New Shares Issued to Unsecured Holders 13,950,000 15.5 % 13,950,000 14.0 %
New Shares Issued to Convert Holders 3,600,000 4.0 % 3,600,000 3.6 %
New Warrants Issued to Unsecured Holders (2 ) 0.0 % 0.0 %
New Warrants Issued to Convert Holders (2 ) 0.0 % 0.0 %
Total 90,000,000 100.0 %   100,000,000   100.0 %
             
Note:  Final share allocations may vary slightly from the amounts seen above due to rounding.        
(1) Shares underlying the MIP include 7.5 million which are expected to be awarded on September 12, 2016 and 2.5 million to be
awarded in the future.  The shares already awarded under the MIP consist of 1.25 million vested shares of common stock, 1.25
million shares of restricted stock that vest in 12 months and options to purchase 5.0 million shares with an exercise price to be
determined (which vest ratably over 3 years).            
(2) The warrants have a strike price of $14.04 and a term of 4 years.

As part of the emergence, Halcón’s $600 million debtor-in-possession credit facility was converted into a $600 million reserve-based senior revolving credit facility.  The first borrowing base redetermination is scheduled for May of 2017.

In accordance with the Restructuring Plan, the terms of the Company’s previous Board of Directors expired and a new Board of Directors was appointed.  The new Board of Directors consists of nine members including: Floyd Wilson, Jim Christmas, Tom Fuller, Nate Walton, Darryl Schall, Eric Takaha, Michael Clark, Ronald Scott and William Campbell.  Background information on the new directors is available on the Company’s website.

The Company has also posted a new investor presentation to the investor relations section of its website.

PJT Partners served as Halcón’s financial advisor and Weil, Gotshal & Manges, LLP acted as legal advisor to the Company in relation to the Restructuring Plan and the chapter 11 cases.

About Halcón Resources

Halcón Resources Corporation is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.


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