From a Wednesday press release:






Warren Resources Names Chief Restructuring Officer and Provides Update on Restructuring




DENVER, April 06, 2016 (GLOBE NEWSWIRE) --

Debt Restructuring Update



Warren Resources, Inc. (Nasdaq:WRES) (“Warren”) continues to engage in discussions with its first lien lender, second lien lender and an ad hoc group of unsecured noteholders, regarding a restructuring of its debt obligations, which may occur as an out-of-court restructuring or pursuant to a bankruptcy court proceeding.  In either event, Warren has focused such discussions on its preference for a consensual restructuring with these stakeholders.  The lender under Warren’s first lien credit facility has made a proposal for a viable post-restructuring capital structure that would be acceptable to Warren because it would result in deleveraging the company by converting a substantial amount of its debt to equity.  Warren has presented this proposal to the lender under its second lien credit facility and to the holders of more than 95% in principal amount of its unsecured notes.  However, an agreement among all three categories of creditors has not been reached.  Consequently, Warren is evaluating strategies to expedite achievement of a comprehensive restructuring of its capital structure, including the possibility and features of a voluntary bankruptcy proceeding.



Dominick D’Alleva, Chairman of Warren’s board of directors, commented, “We are hopeful that Mr. Watt will be able to bring all parties together to complete an out-of-court restructuring or a prepackaged or pre-negotiated bankruptcy filing, but if our creditors fail to reach a timely agreement, we look to Jim’s leadership and extensive restructuring background to guide us through a bankruptcy proceeding on terms that are acceptable to our first lien lender and that preserve and maximize value available for our stakeholders.”



As of March 31, 2016, Warren’s first lien creditors held debt of approximately $235 million in principal amount, second lien creditors held debt of approximately $52 million in principal amount, and investors held approximately $167 million principal amount of Warren’s unsecured senior notes.  On March 31, 2016, Warren’s cash position was $16.85 million, of which $10.04 million is in a restricted account under the control of the lender under its first lien credit facility.



Warren elected to not make the approximately $7.5 million interest payment due February 1, 2016 on its unsecured senior notes.  The applicable 30-day grace period for such interest payment has expired, and consequently an event of default under the indenture governing such notes has occurred and is continuing.  This status gives the indenture trustee and the holders of not less than 25% in aggregate principal amount of the unsecured notes the right declare the entire principal amount of the notes plus accrued and unpaid interest due and payable.  In addition, this status has resulted in events of default under Warren’s first lien credit facility and its second lien credit facility, entitling the administrative agents and lead lenders thereunder to declare all obligations under those credit facilities to be immediately due and payable.  However, thus far, no such acceleration of Warren's debt obligations has occurred.



Warren’s advisors with respect to its debt restructuring are Andrews Kurth LLP (as restructuring counsel) and Jefferies LLC (as financial advisor).



Chief Restructuring Officer



In light of the possible necessity of a bankruptcy proceeding, Warren’s board of directors recently named James A. Watt as Warren’s Chief Restructuring Officer, to serve in that position in addition to his other positions as the company’s President and Chief Executive Officer.



Mr. Watt stated, “We will continue working with all parties in the hope of accomplishing an out-of-court restructuring.  However, we must make a determination in the very near future as to whether this path is achievable, and if not, we will prepare to complete the restructuring process through a bankruptcy.  In my estimation, a bankruptcy proceeding without the consent of both our lenders under our secured credit facilities, and the investors in our unsecured notes, will likely result in holders of our unsecured notes, and even our second lien lender, having their claims completely wiped out.  Nevertheless, we remain hopeful that negotiations among our creditors can result in an expeditious solution that maximizes preservation of value for all our stakeholders.”



About Warren Resources



Warren Resources, Inc. is an independent energy company engaged in the acquisition, exploration, development and production of domestic oil and natural gas reserves. Warren’s activities are primarily focused on oil in the Wilmington field in the Los Angeles Basin in California, natural gas in the Marcellus Shale in Pennsylvania, and the Washakie Basin of Wyoming.