American Energy - Permian Basin, LLC Enters into an Agreement with Noteholders to Implement a Comprehensive Financial Restructuring

HOUSTON, Aug. 29, 2019 /PRNewswire/ -- American Energy – Permian Basin, LLC (the "Company") announced today that it has entered into an agreement to implement a comprehensive financial restructuring plan (the "Out-of-Court Restructuring") pursuant to a restructuring support agreement (the "RSA") with a group of noteholders (the "Consenting Noteholders") who collectively hold, as of August 28, 2019, approximately (i) $374.37 million (approximately 81% of the outstanding principal amount) aggregate principal amount of the 13.000% Senior Secured First Lien Notes due 2020 (the "First Lien Notes"), (ii) $250.99 million (approximately 86% of the outstanding principal amount) aggregate principal amount of the 8.000% Senior Secured Second Lien Notes due 2020 (the "Second Lien Notes" and, together with the First Lien Notes, the "Secured Notes") and (iii) $1.19 billion (approximately 88% of the outstanding principal amount) aggregate principal amount of the Floating Rate Senior Notes Due 2019 (the "2019 Notes"), 7.125% Senior Notes Due 2020 (the "2020 Notes") and 7.375% Senior Notes Due 2021 (the "2021 Notes" and, together with the 2019 Notes and the 2020 Notes, the "Unsecured Notes" and the Unsecured Notes together with the Secured Notes, the "Notes"), each issued by the Company and its wholly-owned subsidiary, AEPB Finance Corporation, as co-issuer ("AEPB Finance" and, together with the Company, the "Issuers"). Pursuant to the RSA, the Consenting Noteholders have agreed to support the Out-of-Court Restructuring, and in the alternative, the transactions contemplated under the Prepackaged Plan (as defined herein).

Pursuant to the terms of the RSA, each of the Consenting Noteholders has, among other things, agreed (so long as the RSA remains in effect) to (i) tender all of its Unsecured Notes in the Unsecured Notes Tender Offers (as hereinafter defined); (ii) tender all of its First Lien Notes and Second Lien Notes in the Secured Notes Tender Offers (as hereinafter defined); (iii) consent to the Proposed Amendments (as defined herein and as more fully described in the Offering Memorandum (as hereinafter defined)) in the Consent Solicitations (as hereinafter defined) and not withdraw or revoke its Consent (as hereinafter defined); (iv) vote its respective Notes to accept the Prepackaged Plan (as hereinafter defined) and not withdraw or revoke its vote; and (v) support the confirmation and consummation of the Prepackaged Plan.

The Out-of-Court Restructuring, if implemented, will result in a consensual refinancing or elimination of the Company's debt that will, among other things, increase liquidity and significantly reduce the Company's debt obligations and interest expense by extinguishing up to approximately $2.1 billion principal amount of the Company's debt by repurchasing such debt for a combination of cash and Warrants.

Prior to the settlement of the Tender Offers, the  Issuers shall consummate a private placement (the "Private Placement") of new senior secured notes (the "New Secured Notes") in aggregate principal amount of approximately $681 million for cash consideration of at least 89.25% of the principal amount thereof, with such cash proceeds to be used, along with borrowings under the New AcqCo RBL Facility, the Cash Contribution (each as defined below) and existing cash, to consummate the restructuring transactions contemplated in the Offering Memorandum and pay related fees and expenses. Certain parties have committed to purchase up to $681 million in aggregate principal amount of New Secured Notes, which commitment will survive until December 27, 2019.

Pursuant to the Out-of-Court Restructuring, the Company is offering (the "Unsecured Notes Tender Offers") to Eligible Noteholders (as hereinafter defined) that tender their Unsecured Notes prior to 5:00 p.m., New York City time, on September 20, 2019 (the "Early Participation Deadline"), upon the terms and subject to the conditions set forth in the offering memorandum (the "Offering Memorandum") and the accompanying consent and letter of transmittal (the "Offer Documents"), the Unsecured Notes Tender Offer Consideration (as defined herein), and Sable Permian Resources, LLC ("SPR") is offering to fund the Unsecured Early Participation Payment (as defined herein), equal to (i) warrants entitling the holders to purchase, in aggregate (assuming all Unsecured Notes outstanding on the date of the Offering Memorandum are validly tendered and not validly withdrawn), up to 8.5% of the Company's common units pro forma for the Out-of-Court Restructuring representing limited liability company interests in the Company (the "Common Units") at an exercise price equal to $0.0001 (subject to adjustment as described in the Offer Documents) (the "Warrants") and $100.00 in cash from the Company, for each $1,000.00 principal amount of any and all validly tendered and not validly withdrawn Unsecured Notes accepted for purchase (the "Unsecured Notes Tender Offer Consideration"), and (ii) $50.00 in cash funded by SPR for each $1,000.00 principal amount of any and all validly tendered and not validly withdrawn Unsecured Notes accepted for purchase (the "Unsecured Early Participation Payment" and, together with the Unsecured Notes Tender Offer Consideration, the "Unsecured Notes Total Consideration") on the Settlement Date (as hereinafter defined).

No public market currently exists for our Common Units. Assuming all Unsecured Notes outstanding on the date of the Offer Documents are validly tendered (and not validly withdrawn) in the Unsecured Notes Tender Offers together with Consents on or prior to the Expiration Time (each as defined herein), which tenders and Consents are subsequently accepted by the Company, holders of the Warrants will have in the aggregate the right to purchase Common Units constituting, in the aggregate, 8.5% of the common equity in the Company after giving effect to a Restructuring (as defined herein). Eligible Noteholders that tender their Unsecured Notes after the Early Participation Deadline and prior to 5:00 p.m., New York City time, on September 27, 2019 (the "Expiration Time") will not be eligible to receive the Unsecured Early Participation Payment funded by SPR and will only receive the Unsecured Notes Tender Offer Consideration promptly following the Expiration Time (such date, the "Settlement Date"). No consideration is being paid in respect of accrued and unpaid interest to the holders of the Unsecured Notes. Holders tendering Unsecured Notes in the Unsecured Notes Tender Offers must also provide Consents in the applicable Consent Solicitation.

The Company is offering (the "Secured Notes Tender Offers" and, together with the Unsecured Notes Tender Offers, the "Tender Offers") to Eligible Noteholders that tender their Secured Notes prior to the Early Participation Deadline, upon the terms and subject to the conditions set forth in the Offer Documents, the Secured Notes Tender Offer Consideration (as defined herein), and SPR is offering to fund the Secured Early Participation Payment (as defined herein), equal to (i) $950.00 in cash from the Company, for each $1,000.00 principal amount of any and all validly tendered and not validly withdrawn First Lien Notes or Second Lien Notes accepted for purchase (the "Secured Notes Tender Offer Consideration"), plus 100% of accrued and unpaid interest to, but not including, the Settlement Date, and (ii) $50.00 in cash funded by SPR for each $1,000.00 principal amount of any and all validly tendered and not validly withdrawn First Lien Notes or Second Lien Notes accepted for purchase (the "Secured Early Participation Payment" and, together with the Secured Notes Tender Offer Consideration, the "Secured Notes Total Consideration") on the Settlement Date. Eligible Noteholders that tender their First Lien Notes or Second Lien Notes after the Early Participation Deadline and prior to the Expiration Time will not be eligible to receive the Secured Early Participation Payment funded by SPR and will only receive the Secured Notes Tender Offer Consideration on the Settlement Date, plus 100% of accrued and unpaid interest to, but not including, the Settlement Date. Holders tendering First Lien Notes or Second Lien Notes in the Secured Notes Tender Offers must also provide Consents in the applicable Consent Solicitation.

Completion of the Out-of-Court Restructuring is subject to a number of conditions, including that (i) at least 95% of the aggregate principal amount of each series of Notes are validly tendered and not validly withdrawn in the Tender Offers (the "Minimum Tender Condition"), (ii) the Issuers consummate the Private Placement, and (iii) the borrowing base under the New AcqCo RBL Facility is at least $700 million on the Settlement Date.

The Company and certain of its affiliates are also soliciting votes on a prepackaged plan of reorganization (the "Prepackaged Plan") under Chapter 11 of the United States Bankruptcy Code from holders of the Notes ("Noteholders"). In the event the Minimum Tender Condition is not satisfied or waived, or if the Out-of-Court Restructuring otherwise is not consummated, but, (i) with respect to each class of Notes, holders of Notes (x) constituting more than one-half in number of the holders of Notes of such class that, on or as of the Expiration Time, have validly voted on the Plan, and (y) holding at least two-thirds of the aggregate principal amount of the outstanding Notes in such class, have voted to accept the Prepackaged Plan by validly executing and submitting the ballots provided contemporaneously with the Offering Memorandum on or before the Expiration Time, which is also the voting deadline with respect to such solicitation of votes, and (ii) SPR has received sufficient funding to make the Cash Contribution (as defined herein) and Early Participation Payments (as defined herein), the Company will seek to confirm the Prepackaged Plan and consummate the transactions contemplated therein on terms and conditions consistent in all material respects with the Offer Documents (the "In-Court Reorganization" and, together with the Out-of-Court Restructuring, the "Restructurings," and each, a "Restructuring").

Regardless of whether the Company consummates the Out-of-Court Restructuring or the In-Court Reorganization, all Noteholders that validly tender (and do not validly withdraw) their Notes pursuant to the Tender Offers prior to the Early Participation Deadline and thereby consent to the Proposed Amendments will receive from SPR the Unsecured Early Participation Payment or the Secured Early Participation Payment (collectively, the "Early Participation Payments"), as applicable, upon consummation of a Restructuring. Noteholders providing tenders and consents after the Early Participation Deadline will not be entitled to the Early Participation Payments, and the Prepackaged Plan does not provide for any consideration to such Noteholders beside the Secured Notes Tender Offer Consideration or Unsecured Notes Tender Offer Consideration, as applicable. Therefore, upon consummation of either Restructuring, Noteholders that do not tender their Notes prior to the Early Participation Deadline will receive less consideration than they would have if they tendered by the Early Participation Deadline.

The Company will not offer or pay any consideration in respect of any accrued interest on the Unsecured Notes tendered in the Unsecured Notes Tender Offers. Accordingly, if the Unsecured Notes Tender Offers are consummated, Noteholders whose Unsecured Notes are purchased in the Unsecured Notes Tender Offers will be deemed to have waived payment of an amount equal to the accrued and unpaid interest on the purchased Unsecured Notes to the date such tendered Unsecured Notes are purchased.

Holders of First Lien Notes accepted by the Company will not receive the optional redemption premium that they would otherwise be entitled to receive under the First Lien Indenture in connection with a redemption of First Lien Notes. Accordingly, if the Secured Notes Tender Offers are consummated, Noteholders whose First Lien Notes are purchased in the Secured Notes Tender Offers will be deemed to have waived payment of an amount equal to such redemption premium.

The table set forth below summarizes the consideration to be paid in connection with each Tender Offer.

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In connection with the Tender Offers, the Issuers are soliciting (the "Consent Solicitations") consents (the "Consents"), upon the terms and subject to the conditions set forth in the Offering Memorandum, to certain proposed amendments (the "Proposed Amendments") to the indentures governing the Notes. The Proposed Amendments would eliminate substantially all restrictive covenants, certain events of default applicable to the Notes and certain other provisions contained in the indentures governing the Notes. The Proposed Amendments will also release the liens on all of the collateral securing the First Lien Notes and Second Lien Notes. The Proposed Amendments will be set forth in Supplemental Indentures with respect to each indenture governing the Notes. Upon the Proposed Amendments becoming effective and operative with respect to a series of Notes, all Noteholders of such series of Notes would be bound by the terms thereof, even if they did not deliver Consents to the applicable Proposed Amendments.

Subject to the substantially concurrent satisfaction or waiver of all conditions of the Out-of-Court Restructuring or In-Court Reorganization, as applicable (in each case, other than occurrence of the SPR Contributions (as defined below)), in accordance with the applicable terms set forth in the Offering Memorandum and in the Prepackaged Plan, substantially concurrently with the consummation of the Tender Offers or the Effective Date (as defined in the Prepackaged Plan), respectively, SPR will contribute the SPR Assets (as defined in the Offering Memorandum) to the Company (the "SPR Dropdown") and, the Company will contribute the SPR Assets and all of its oil and gas properties to AEPB Acquisition Company, LLC (f/k/a Sable Acquisition Company, LLC) ("AcqCo") (the "Company Dropdown" and, together with the SPR Dropdown, the "Asset Contributions") and SPR will contribute $375 million in cash (net of any amounts it has paid directly to holders of Notes on account of Early Participation Payments) in exchange for common equity in the Company (the "Cash Contribution" and together with the Asset Contributions, the "SPR Contributions")).

Contemporaneously with the consummation of a Restructuring, and as a condition of either Restructuring, AcqCo will enter into a new senior secured reserve based lending facility with commercial lenders engaged in lending in the oil and gas industry (the "New AcqCo RBL Facility") and will terminate the existing revolving credit facilities at SPR and AcqCo with JPMorgan Chase Bank, N.A. ("JPM"), as administrative agent, and the lenders party thereto. JPM has agreed pursuant to a commitment letter provided to SPR to provide 100% of the New AcqCo RBL Facility, and the commitment provided thereunder. In connection with the consummation of a Restructuring, the Issuers expect to borrow under the New AcqCo RBL Facility and, along with proceeds of the Cash Contribution, repay all outstanding borrowings under and terminate SPR's existing revolving credit facility and AcqCo's existing revolving credit facility and to fund a portion of the cash consideration paid in the Tender Offers.

The Company intends to continue to operate its business in the normal course without material disruption to its vendors, partners or employees until the effective date of a Restructuring. The implementation of the transactions contemplated by the RSA is dependent on a number of factors and approvals, and there can be no assurance that the treatment of creditors outlined above will not change significantly.

General

The Warrants and the Common Units underlying the Warrants will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. The Warrants are being offered and issued only (1) to "qualified institutional buyers" as defined in Rule 144A under the Securities Act, (2) outside the United States to persons other than "U.S. persons" as defined in Rule 902 under the Securities Act that will receive Warrants in offshore transactions in compliance with Regulation S under the Securities Act who are "non-U.S. qualified offerees" (as defined in the Offering Memorandum) and (3) "accredited investors" as such term is defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act. Any issuance or distribution of Warrants or other securities under or in connection with the Prepackaged Plan will be made pursuant to Section 1145 of the Bankruptcy Code or other exemptions from registration. The holders of Unsecured Notes who have certified to the Company that they are eligible to participate in the Tender Offers pursuant to one of the foregoing conditions, as well as all holders of Secured Notes, are referred to as "Eligible Noteholders." Accordingly, the Warrants will be subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and other applicable securities laws, pursuant to registration or exemption therefrom.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. Prime Clerk LLC is acting as the tender agent and information agent for the Tender Offers and voting agent for the solicitation of votes on the Prepackaged Plan. Requests for the offering documents may be directed to Prime Clerk at (844) 627-8453 (toll free within the U.S. and Canada), +1 (929) 602-1722 (toll outside the U.S. and Canada), or by email to [email protected].

Neither the Issuers, their respective governing boards nor any other person makes any recommendation as to whether the holders of the Notes should tender their Notes, and no one has been authorized to make such a recommendation. Holders of the Notes must make their own decisions as to whether to tender their Notes, and if they decide to do so, the principal amount of the Notes to tender.

About American Energy – Permian Basin, LLC

American Energy – Permian Basin, LLC is an independent oil and natural gas company focused on the acquisition, development and production of unconventional oil and natural gas reserves in the Wolfcamp Shale play in the Southern Midland Basin within the Permian Basin of West Texas.

About Sable Permian Resources, LLC

Sable Permian Resources, LLC is an independent oil and natural gas company focused on the acquisition, development and production of unconventional oil and natural gas reserves in the Wolfcamp Shale play in the Southern Midland Basin within the Permian Basin of West Texas. Sable Permian Resources, LLC is the parent entity of American Energy – Permian Basin, LLC and operates on its behalf.

Forward-Looking Statements

The information in this press release includes "forward-looking statements." All statements, other than statements of historical fact included in this press release, regarding the Company's strategy, future operations, financial position, estimated revenues and losses, projected production, projected costs, prospects, plans and objectives of management, are forward-looking statements. When used in this press release, the words "could," "believe," "anticipate," "intend," "estimate," "expect," "guidance," "forecast" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on the Company's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. These forward-looking statements are based on management's current beliefs, based on currently available information, as to the outcome and timing of future events, which may differ from actual outcomes. While the Company makes these statements and projections in good faith, neither the Company nor the Company's management can guarantee that anticipated future results will be achieved. The Company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the Company, whether as a result of new information, future events, or otherwise.

SOURCE American Energy - Permian Basin, LLC