Jones Energy’s Restructuring

Milbank successfully represented an ad hoc group of holders of first lien notes (the “Ad Hoc Group”) issued by Austin, Texas-based oil and gas producer Jones Energy, Inc. in connection with a comprehensive restructuring supported by the Ad Hoc Group and implemented through a prepackaged chapter 11 plan of reorganization (the “Prepack Plan”).

The Prepack Plan, which equitizes over $1.1 billion in funded indebtedness, was confirmed by the US Bankruptcy Court for the Southern District of Texas on May 6, 2019, just three weeks after the filing of Jones Energy’s chapter 11 cases – record-breaking timing for a debt equitization of this size involving an exploration and development company.

Jones Energy has operations in the Anadarko basin of Oklahoma and Texas. After several years of distress in the oil and gas industry and with the company facing a looming liquidity shortfall, in late 2018, the Ad Hoc Group retained Milbank to represent it in restructuring negotiations with the company and its other key stakeholders.

Following several months of negotiations, on April 3, 2019, the Ad HocGroup (represented by Milbank), the company, and the majority of the company’s unsecured noteholders reached an agreement on the terms of a comprehensive restructuring transaction premised on the conversion of approximately $450 million in first lien notes claims into 96% of the equity interests in a reorganized Jones Energy and the cancellation of over $500 million in unsecured notes of indebtedness in exchange for the remaining 4% of the equity and certain warrants. Importantly, the agreement required the transaction to be implemented through the Prepack Plan, which was structured to achieve dramatic deleveraging without interrupting operations, while minimizing process costs.

On April 14, 2019, Jones Energy commenced its chapter 11 cases, and on May 6, 2019, the Prepack Plan was confirmed with overwhelming support across the company’s creditor classes. Jones Energy is expected to emerge from chapter 11 as a private company on May 17, 2019.

The Milbank team was led by Financial Restructuring partners Dennis Dunne (Picture), Evan Fleck and Michael Price, and included Financial Restructuring associates Melanie Miller and Jesse Yoder.

Involved fees earner: Dennis Dunne – Milbank; Evan Fleck – Milbank; Melanie Miller – Milbank; Michael Price – Milbank; Jesse Yoder – Milbank;

Law Firms: Milbank;

Clients: ad hoc group of holders of Jones Energy;


Author: Ambrogio Visconti