SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
Exhibit 99.2
Chaparral Energy, Inc.
Restructuring Term Sheet
May [ ● ], 2016
THIS TERM SHEET IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCE OR REJECTION OF A CHAPTER 11 PLAN OF REORGANIZATION PURSUANT TO THE BANKRUPTCY CODE. ANY SUCH OFFER OR SOLICITATION WILL BE MADE ONLY IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS AND PROVISIONS OF THE BANKRUPTCY CODE. THIS TERM SHEET IS BEING PROVIDED IN FURTHERANCE OF SETTLEMENT DISCUSSIONS AND IS ENTITLED TO PROTECTION PURSUANT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY SIMILAR FEDERAL OR STATE RULE OF EVIDENCE. THE TRANSACTIONS DESCRIBED IN THIS TERM SHEET ARE SUBJECT IN ALL RESPECTS TO, AMONG OTHER THINGS, EXECUTION AND DELIVERY OF DEFINITIVE DOCUMENTATION AND SATISFACTION OR WAIVER OF THE CONDITIONS PRECEDENT SET FORTH THEREIN.
NOTHING IN THIS TERM SHEET SHALL CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, A STIPULATION OR A WAIVER, AND EACH STATEMENT CONTAINED HEREIN IS MADE WITHOUT PREJUDICE, WITH A FULL RESERVATION OF ALL RIGHTS, REMEDIES, CLAIMS AND DEFENSES OF THE LENDERS, DEBTORS, AND ANY CREDITOR PARTY. THIS TERM SHEET DOES NOT INCLUDE A DESCRIPTION OF ALL OF THE TERMS, CONDITIONS, AND OTHER PROVISIONS THAT ARE TO BE CONTAINED IN THE DEFINITIVE DOCUMENTS, WHICH REMAIN SUBJECT TO DISCUSSION, NEGOTIATION AND EXECUTION. EXCEPT AS PROVIDED IN THE SUPPORT AGREEMENT, THIS TERM SHEET, AND THE TERMS CONTAINED HEREIN, ARE CONFIDENTIAL.
Summary Of Principal Terms
Of Proposed Restructuring Transaction
This term sheet (the “Term Sheet”) sets forth certain key terms of a proposed restructuring transaction (the “Transaction”) with respect to the existing debt and other obligations of Chaparral Energy, Inc. (“Parent”) and each direct and indirect subsidiary of Parent (each, a “Chaparral Party”, and collectively, the “Chaparral Parties” or the “Company”). This Term Sheet is the “Term Sheet” referenced as Exhibit A in that certain Restructuring Support Agreement, dated as of May [ ● ], 2016 (as the same may be amended, modified or supplemented, the “Support Agreement”), by and among the Company and the Consenting Noteholders party thereto. Capitalized terms used but not otherwise defined in this Term Sheet have the meanings given to such terms in the Support Agreement. This Term Sheet supersedes any proposed summary of terms or conditions regarding the subject matter hereof and dated prior to the date hereof. Subject to the Support Agreement, the Transaction will be implemented by the Plan.
Reference is made to the following documents and obligations:
| (i) | that certain Eighth Restated Credit Agreement, dated as of April 12, 2010 (as the same may be amended, modified or supplemented, the “Revolving Loan Agreement”), among Parent, certain subsidiaries of Parent party thereto, the lenders party thereto from time to time (the “Revolving Lenders”), JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, together with any successor agent, the “Revolving Agent”), and the other agents and parties party thereto (and all claims and obligations arising under or in connection with the Revolving Loan Agreement, the “Revolving Loan Claims”); |
Page 1
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
| (iii) | those certain 8.25% Secured Notes due 2021 of not less than $[400.0] million in principal amount outstanding as of the Petition Date (collectively, the “2021 Notes” and the holders thereof, the “2021 Noteholders”) issued by Parent, pursuant to that certain Indenture, dated February 22, 2011 (as the same may be amended, modified or supplemented, the “2011 Indenture”), among Parent, the guarantors named therein or party thereto and Wilmington Savings Fund Society, FSB (as successor to Wells Fargo Bank, National Association), as trustee (in such capacity, together with any successor trustee, the “2011 Indenture Trustee”, and all claims and obligations arising under or in connection with the 2011 Indenture, the “2011 Indenture Claims”); |
| (iv) | those certain 7.625% Senior Notes due 2022 of not less than $[554.3] million in principal amount outstanding as of the Petition Date (collectively, the “2022 Notes” and the holders thereof, the “2022 Noteholders” and, together with the 2020 Noteholders and the 2021 Noteholders, the “Noteholders”; the 2022 Notes, together with the 2020 Notes and the 2021 Notes, the “Notes”) issued by Parent, pursuant to that certain Indenture, dated May 2, 2012 (as the same may be amended, modified or supplemented, the “2012 Indenture” and, together with the 2020 Indenture and the 2021 Indenture, the “Indentures”), among Parent, the guarantors named therein or party thereto and Wilmington Savings Fund Society, FSB (as successor to Wells Fargo Bank, National Association), as trustee (in such capacity, together with any successor trustee, the “2012 Indenture Trustee”, and together with the 2010 Indenture Trustee and the 2011 Indenture Trustee, the “Indenture Trustees”, and all claims and obligations arising under or in connection with the 2022 Indenture, the “2012 Indenture Claims” and, together with the 2010 Indenture Claims and the 2011 Indenture Claims, the “Indenture Claims”); and |
| (v) | Each “Swap Agreement” (as such term is defined in the Revolving Loan Agreement) (collectively, the “Swap Agreements”, and all claims and obligations arising under or in connection with the Swap Agreements against the Chaparral Parties, the “Swap Claims”). |
Treatment of Claims and Interests
The below summarizes the treatment to be received on or as soon as practicable after the Plan Effective Date (as defined below) by holders of claims against, and interests in, the Company pursuant to the Plan.
Administrative, Priority, and Tax Claims | Allowed administrative, priority, and tax claims will be satisfied in full, in cash, or otherwise receive treatment consistent with the provisions of section 1129(a)(9) of the Bankruptcy Code.
|
Page 2
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
Page 3
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
Other Terms of The Transaction
Corporate Governance | The terms and conditions of the new corporate governance documents of the reorganized Company (including the bylaws and certificates of incorporation or similar documents, among other governance documents) shall be acceptable to the Required Consenting Noteholders. |
The New Equity Interests will be subject to a stockholders agreement (the “New Stockholders Agreement”) containing terms and conditions that are acceptable to the Required Consenting Noteholders. The New Stockholders Agreement will govern the composition of the board or other governing body of the reorganized Parent (the “New Board”) and will include customary approval rights for major shareholders and customary minority protections, including, but not limited to, transfer restrictions for the New Equity Interests, tag-along rights, drag along rights, preemptive rights, information rights, and other customary protections for transactions of this type.
All holders of the New Equity Interests and their successors and assigns will be subject to the terms of the New Stockholders Agreement, regardless of whether such holder executes or delivers such New Stockholders Agreement.
|
Page 4
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
|
1 | For illustrative purposes, based on a hypothetical mid-point equity value on the Plan Effective Date of $200 million. |
Page 5
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
Page 6
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
Page 7
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
The Company shall provide written notice and publication notice of the bar date and plan confirmation hearing to actual and potential holders of claims in a manner acceptable to the Required Consenting Noteholders. | |
|
|
Plan Effective Date | The effective date of the Plan, on which the Transaction shall be fully consummated in accordance with the terms and conditions of the Definitive Documents (the “Plan Effective Date”).
|
Conditions to Plan Effectiveness | The Plan shall contain customary conditions precedent to confirmation of the Plan and occurrence of the Plan Effective Date, some of which may be waived in writing by agreement of the Company and the Required Consenting Noteholders, in each case, subject to the consent rights provided for in the Support Agreement, including, among others: (i)the Plan and Disclosure Statement and the other Definitive Documents (as applicable) shall be in form and substance consistent in all material respects with this Term Sheet and the Support Agreement and be otherwise approved consistent with the terms of section 3(b) of the Support Agreement; (ii)the Bankruptcy Court shall have entered an order confirming the Plan in form and substance consistent in all material respects with this Term Sheet and the Support Agreement and otherwise be approved consistent with the terms of section 3(b) of the Support Agreement, and such order shall not have been stayed, modified or vacated; (iii)all of the schedules, documents, supplements, and exhibits to the Plan and Disclosure Statement shall be in form and substance consistent in all material respects with this Term Sheet and the Support Agreement and otherwise be approved consistent with the terms of section 3(b) of the Support Agreement; (iv)the Support Agreement shall have been assumed and shall be in full force and effect; (v)all governmental approvals and consents, including Bankruptcy Court approval, that are legally required for the consummation of the Plan shall have been obtained, not be subject to unfulfilled conditions and be in full force and effect, and all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have expired; and (vi)all Swap Agreements shall have been terminated or subject to other disposition (including with respect to the amount of cash proceeds resulting therefrom) as acceptable to the Company and the Required Consenting Noteholders.
|
|
|
Page 8
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
Warrant Term Sheet
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
Exhibit 2
[Amended and Restated Employment Agreements]
SUBJECT TO FRE 408
CONFIDENTIAL
MilbankLatham Draft: 5/1/165/3/16
preliminary & non-binding proposal
Schedule A