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Bankruptcy: American Eagle Energy Files Chapter 11 In Denver

American Eagle Energy filed for Chapter 11 on May 8 in bankruptcy court in Denver, according to court records.

The company listed total assets of $211.9 million and total debts of $215.2 million.

The petition listed three shareholders with equity stakes above 5%, namely, Power Energy Partners with 7.39%, Wellington Management with 7.41%, and Blackrock, with 5.9%.

Additional information was not immediately available from the Chapter 11 filing.

As reported, on March 2 the company skipped the first coupon payment due on a $175 million issue of 11% first-lien notes due 2019 (the March 1 payment of $9.8 million was due a day later than designated due to the weekend). The company said at the time it would utilize the typical 30-day grace as it explored "options to strengthen its balance sheet."

In early April, the company entered into a forbearance agreement under which lenders agreed not to call defaults on the missed coupon payment after the company made a partial interest payment of $4 million, leaving $5.8 million unpaid.

The agreement, which was put in place by four holders who collectively own more than 50% of the notes, gave American Eagle Energy until May 15 to assess its liquidity situation regarding the remaining partial interest payment, or to “negotiate and effectuate a restructuring,” the company said in an April 7 statement.

American Eagle debuted in market about eight months ago with the first-lien notes via GMP Securities. Proceeds were used to refinance an existing credit facility and fund general corporate purposes.

Issuance was 99.06 at offer, to yield 11.25%, which was wide of the 11%-area guidance. The debt edged higher on the break, but soon succumbed to the bear market in the oil patch, with trades last seen in the 30s earlier this year, according to Trace data.

Ratings were CCC/Caa1 at issuance, but have since been lowered to D, from CCC+, by S&P, and Ca by Moody’s.

Denver-based American Eagle is an independent exploration-and-production operator focused on the Bakken and Three Forks shale-oil formations in the Williston Basin of North Dakota and Montana. 

For more bankruptcy and high yield bond analysis check out www.highyieldbond.com, a free site powered by S&P Capital IQ/LCD to promote the asset class.

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