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Breitburn lays out bankruptcy exit plan, creditors want an auction

Breitburn lays out bankruptcy exit plan, creditors want an auction
From Reuters - October 12, 2017

WILMINGTON, Del. (Reuters) - Breitburn Energy Partners LP (BBEPQ.PK) detailed plans at a Thursday court hearing to exit bankruptcy by transferring the oil-and-gas producers assets to creditors, but opponents pressed for an auction of main reserves to generate more money.

Breitburn filed for Chapter 11 bankruptcy in May 2016, one of more than 100 energy companies that sought court protection from creditors after oil prices crashed from more than $100 a barrel in 2014.

On Thursday, it proposed splitting into two companies, with one owning its prized assets in the Permian Basin in Texas and the other owning its reserves in California, the Rocky Mountains, U.S. Midwest and U.S. Southeast.

Holders of Breitburns unsecured bonds would be given the opportunity to buy their share of the Permian companys stock, valued at $775 million, in what is known as a rights offering.

The stock sale would be guaranteed or backstopped by a group of creditors led by the investment firms Elliott Management Corp and W.L. Ross & Co, founded by U.S. Commerce Secretary Wilbur Ross. The bondholders guaranteeing the stock sale would receive the opportunity to buy at least 40 percent of the stock and would receive additional stock as a fee.

Unsecured creditors and holders of the companys common units, similar to shares, have said the best way to determine the value of the Permian assets is through an auction.

They argued at Thursdays hearing that the rights offering amounted to a sale, but one that benefited a few large bondholders without generating a market-tested price.

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