LONESTAR RESOURCES U

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LONESTAR RESOURCES US INC. : Bankruptcy or Receivership, Financial Statements and Exhibits (form 8-K)

11/13/2020 | 05:38pm

Item 1.03 Bankruptcy or Receivership.



As previously disclosed, on September 30, 2020 (the "Petition Date"), Lonestar
Resources US Inc.
, a Delaware corporation (the "Company" or "we"), and certain
of its direct and indirect wholly-owned subsidiaries (collectively with the
Company, the "Debtors"), filed voluntary petitions for relief (collectively, the
"Petitions" and, the cases commenced thereby, the "Cases") under chapter 11 of
title 11 of the United States Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Southern District of Texas
(Houston) (the "Bankruptcy
Court
"). The Debtors also filed with the Bankruptcy Court the proposed Joint
Prepackaged Plan of Reorganization for Lonestar Resources US Inc. and its
Affiliate Debtors under Chapter 11 of the Bankruptcy Code, as described below
(as amended, modified or supplemented from time to time, the "Plan"), as
contemplated by that certain Restructuring Support Agreement, dated as of
September 14, 2020 (as amended, modified or supplemented from time to time, the
"RSA") among the Debtors and Citibank, N.A., as administrative agent under the
Company's revolving credit facility, certain lenders (the "Consenting RBL
Lenders") under the Company's revolving credit facility and certain holders (the
"Consenting Noteholders" and, together with the Consenting RBL Lenders, the
"Consenting Creditors") of the Company's outstanding 11.25% senior notes due
2023 (the "Notes"). On November 12, 2020, the Bankruptcy Court entered an order
confirming and approving the Plan.



Plan of Reorganization



The following is a summary of the material terms of the Plan. This summary
highlights only certain substantive provisions of the Plan and is not intended
to be a complete description of the Plan. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Plan. This summary is
qualified in its entirety by reference to the full text of the Plan, which is
attached hereto as Exhibit 2.1 and incorporated herein by




reference.

Pursuant to the Plan:



• Exit Facilities. On the effective date of the Plan (the "Effective
Date"), the reorganized Debtors shall enter into (a) a first-out
senior secured revolving credit facility in an amount equal to 80% of
the aggregate outstanding principal amount of loans and letters of
credit under the Company's existing revolving credit facility of the
Consenting RBL Lenders and any other lender under the existing
revolving credit facility that agrees to accept the Plan (the
"Accepting Lenders"); provided that, on the Effective Date, the
aggregate principal amount of the new revolving credit facility shall
not be less than $152 million (the "Exit RBL Facility"), (b) a
second-out-senior-secured term loan credit facility in an amount equal
to 20% of the aggregate outstanding principal amount of loans and
letters of credit under the Company's existing revolving credit
facility of the Consenting RBL Lenders and the Accepting Lenders (the
"Second-Out Exit Term Facility"), and (c) if necessary, a
last-out-senior-secured term loan credit facility in an amount equal
to 100% of the aggregate outstanding principal amount of loans and
letters of credit of any lenders under the existing revolving credit
facility that are not Consenting RBL Lenders or Accepting Lenders (the
"Last-Out Exit Term Facility").




• Distributions to Creditors and Equityholders. The Plan provides for
the following distributions to creditors and equityholders:




• RBL Lenders. On the Effective Date, each holder of an allowed
claim under the prepetition revolving credit facility that agreed
to accept the Plan will receive its pro rata share of: (i) cash in
an amount equal to all accrued and unpaid interest (at the
non-default rate so long as the RSA has not been terminated),
fees, and other amounts (excluding amounts owed for principal,
undrawn letters of credit and contingent reimbursement and
indemnification obligations) owing under the prepetition revolving
credit facility through the Effective Date, to the extent not
previously paid (the "RBL Cash Distribution"), (ii) revolving
loans under the Exit RBL Facility, (iii) warrants (the "New
Warrants") to purchase up to 10% of the new equity interests (the
"New Equity Interests") to be issued by the reorganized Company
pursuant to the Plan (subject to dilution only by the MIP Equity
(as defined herein)), and (iv) term loans under the Second-Out
Exit Term Facility. Each holder of an allowed claim under the
prepetition revolving credit facility that does not vote on the
Plan or votes to reject the Plan shall receive its pro rata share
of: (x) the RBL Cash Distribution and (y) term loans under the
Last-Out Exit Term Facility.



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• Noteholders. On the Effective Date, each holder of an allowed
Notes claim will receive its pro rata share of 96% of the New
Equity Interests (subject to dilution by the MIP Equity and the
New Warrants).




• General Unsecured Creditors. On or as soon as practicable after
the earliest to occur of the Effective Date and the date a general
unsecured claim becomes due in the ordinary course of business,
except to the extent that a holder agrees to less favorable
treatment, each holder of a general unsecured claim will receive
payment in full in cash on account of its allowed general
unsecured claim or such other treatment as would render such claim
unimpaired.




• Preferred Equity Interests. All existing Series A-1 Preferred
Stock (the "Preferred Stock") of the Company shall be cancelled,
and each holder of such Preferred Stock shall receive on account
of such Preferred Stock, its pro rata share of 3% of the New
Equity Interests (subject to dilution by the MIP Equity and the
New Warrants).




• Common Equity Interests. All existing Class A Common Stock (the
"Common Stock") in the Company shall be cancelled, and each holder
of the Common Stock shall receive on account of such Common Stock,
its pro rata share of 1% of the New Equity Interests (subject to
dilution by the MIP Equity and the New Warrants).




• Management Incentive Plan. On or before the 60th day following the
Effective Date or as soon as reasonably practicable thereafter, the
reorganized Company shall enter into a management incentive plan (the
"Management Incentive Plan"), which shall (a) reserve 8% of the New
Equity Interests (or restricted stock units, options, or other rights
exercisable, exchangeable, or convertible into such New Equity
Interests) on a fully diluted basis (the "MIP Equity") to certain
members of senior management to be determined by the directors of the
initial board or other governing body of the reorganized Company (the
"New Board") and (b) otherwise contain terms and conditions (including
the form of awards, allocation of awards, vesting and performance
metrics) to be determined by the New Board.




• Board Composition. The composition of the New Board will consist of
five (5) directors in total, which will include the Chief Executive
Officer of the reorganized Company and other directors designated by
certain holders of the Notes.



The foregoing description of the Plan does not purport to be complete and is
qualified in its entirety by reference to the full text of the Plan, a copy of
which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is
incorporated herein by reference.



Although the Debtors intend to pursue the transactions (collectively, the
"Transaction") contemplated in the Plan in accordance with the terms set forth
therein, there can be no assurance that the Debtors will be successful in
completing the Transaction, whether on the same or different terms.



Any new securities to be issued pursuant to the Plan have not been registered
under the Securities Act or any state securities laws. Therefore, the new
securities may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements of the Securities
Act and any applicable state securities laws. This Current Report on Form 8-K
does not constitute an offer to sell or buy, nor the solicitation of an offer to
sell or buy, any securities referred to herein, nor is this Current Report on
Form 8-K a solicitation of consents to or votes to accept any chapter 11 plan.
Any solicitation or offer will only be made pursuant to a confidential offering
memorandum and disclosure statement and only to such persons and in such
jurisdictions as is permitted under applicable law.



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Forward-Looking Statements



This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Such statements reflect management's current expectations based on
currently available information, but are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially from those
anticipated in or implied by the forward-looking statements. Our forward-looking
statements are generally identified with words such as "anticipate," "believe,"
budgeted," "continue," "could," "estimate," "expect," "forecast," "goal,"
"intend," "may," "objective," "plan," "potential," "predict," "projection,"
"scheduled," "should," or other similar words. Risks, uncertainties and
assumptions that could affect our forward-looking statements include, among
other things the risk related to the impact of the COVID-19 pandemic in
geographic regions or markets served by us, or where our operations are located,
including the risk of global recession and the other risk factors that have been
listed from time to time in the Company's reports filed with the Securities and
Exchange Commission
("SEC"), including but not limited to the Company's Annual
Report on Form 10-K for the year ended December 31, 2019 and any subsequently
filed Form 10-Q or Form 8-K.



You should also understand that it is not possible to predict or identify all
such factors and should not consider the risk factors in our reports filed with
the SEC or the following list to be a complete statement of all potential risks
and uncertainties. Factors that could cause our actual results to differ
materially from the results contemplated by such forward-looking statements
include, but are not limited to: the ability to consummate a plan of
reorganization in accordance with the terms of the RSA; risks attendant to the
bankruptcy process, including our ability to obtain court approvals with respect
to motions filed in the Cases, the outcomes of court rulings and the Cases in
general and the length of time that we may be required to operate in bankruptcy;
the effectiveness of the overall restructuring activities pursuant to the Cases
and any additional strategies that we may employ to address our liquidity and
capital resources; the actions and decisions of creditors, regulators and other
third parties that have an interest in the Cases, which may interfere with the
ability to consummate a plan of reorganization; restrictions on us due to the
terms of any debtor-in-possession credit facility that we will enter into in
connection with the Cases and restrictions imposed by the applicable courts; and
the other factors listed in our reports filed with the SEC from time to time.
All forward-looking statements included in this notification should be
considered in the context of these risks. Except as required by law, we
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Investors and prospective investors are cautioned not to place undue reliance on
such forward-looking statements.



Item 9.01 Financial Statements and Exhibits.







(d) Exhibits




Exhibit No. Description

2.1 Joint Prepackaged Plan of Reorganization for Lonestar Resources
US Inc.
and Its Affiliate Debtors Under Chapter 11 of the
Bankruptcy Code.



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