Delphi Energy (formerly trading as DEE, and with a second-lien secured note trading as DEE.NT) went belly-up into CCAA on April 14, 2020.
The last trade on DEE.NT was at 55 cents on the dollar before the company was delisted.
Today, we have the following proposed recapitalization plan:
The claims of creditors in respect of:
approximately $13.5 million outstanding under the Company’s debtor-in-possession interim loan financing secured by a Court-ordered priority security interest,
approximately $13.0 million outstanding under the Company’s senior credit facility secured by a first lien security interest, and
approximately $119.7 million outstanding under the Second Lien Notes secured by a second lien security interest,
will be settled in exchange for approximately 14.7%, 14.2% and 36.5% of the issued and outstanding voting common shares of a newly created class of shares of the Company (the “New Shares”), respectively, subject, in the case of the Second Lien Notes, to the Second Lien Opt-Out Election (as defined below);
Assuming a 100% recovery on the DIP financing, this works out to an equity valuation of $92 million. The second lien notes thus are looking at 28 cents on the dollar in the proposal, with the following alternate option:
Subject to the terms and limits set out in the Plan, beneficial holders of Second Lien Notes holding an aggregate principal amount of Second Lien Notes equal to or less than $200,000 will have the opportunity to elect (the “Second Lien Opt-Out Election”) to receive cash in the amount of $0.25 per dollar of outstanding principal amount of Second Lien Notes in lieu of the New Shares that they would otherwise be entitled to receive pursuant to the Plan; provided that, in the event that the aggregate of all payments pursuant to the Second Lien Opt-Out Election would exceed the aggregate amount of $1 million, such payment will be reduced on a pro rata basis so that total payments pursuant to the Second Lien Opt-Out Election do not exceed $1 million;
So their options are either 28 cents on the dollar (implied value) of equity, or a 25 cent on the dollar cash-out, or roughly half of the last trading price of the notes. It doesn’t look like there will be a Twin Butte Energy here!
Owners of Hertz stock should be aware that in the instance of Delphi Energy the proposal, if agreed upon, will rendered the common shares worthless.