Samson Resources Weighing Debt Restructuring Options

Struggling oil-and-gas producer Samson Resources Corp. is weighing whether to slash its $4.2 billion debt load through a bankruptcy restructuring or take a rescue loan from a group of junior creditors, according to people familiar with the matter.

Samson, based in Tulsa, Okla., said in March that a chapter 11 filing might offer the best route to restructure its heavy debt load, a legacy of a its 2011 leveraged buyout led by private-equity firm KKR & Co.

The company is now in talks with a pair of creditor groups on different debt-restructuring options, including one that would at least temporarily keep it out of bankruptcy court.

The New York Post earlier reported on the restructuring options Samson is exploring.

The rescue financing talks reflect investor appetite for potentially high-reward energy investments, fueled in part by the chance that volatile commodity prices will lead to a rebound in energy firms' prospects.

Junior bondholders including GSO Capital Partners LP and Centerbridge Partners LP have offered to exchange their notes at a discount for higher-ranking debt, according to people familiar with the talks. The deal would allow the company to stave off bankruptcy while it waits for a rebound in natural gas prices.

Meanwhile, a group of Samson lenders including Cerberus Capital Management LP has offered to exchange its debt for ownership in the company through a chapter 11 restructuring, according to people familiar with the talks. That plan would wipe out Samson shareholders, including KKR, and junior creditors, the people said.

The rescue financing plan could face resistance, as it could allow the junior bondholders to leapfrog the Cerberus-backed group in the repayment line if Samson ultimately files for bankruptcy.

Samson has posted losses of more than $4 billion since the 2011 buyout. The company earlier this year said its lenders trimmed how much it can borrow in exchange for more leniency on how much debt it can carry.

Write to Matt Jarzemsky at [e-mail]

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