Exhibit 13 Creditors Committee Solicitation Letter

Transcription

1 Case rfn11 Doc Filed 03/18/16 Entered 03/18/16 15:54:23 Page 1 of 6 Exhibit 13 Creditors Committee Solicitation Letter

2 Case rfn11 Doc Filed 03/18/16 Entered 03/18/16 15:54:23 Page 2 of 6 Arent Fox LLP / Attorneys at Law Los Angeles, CA / New York, NY / San Francisco, CA / Washington, DC Draft - Subject to Bankruptcy Court Approval FROM: THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF ENERGY & EXPLORATION PARTNERS, INC., ET AL. TO: ALL HOLDERS OF CLASS 4 CONVERTIBLE NOTE CLAIMS, CLASS 5 GENERAL UNSECURED CLAIMS, AND CLASS 6 CONVENIENCE CLAIMS AGAINST ENERGY & EXPLORATION PARTNERS, INC., ET AL. The Official Committee of Unsecured Creditors (the Committee ) of Energy & Exploration Partners, Inc. et al. (the Debtors or the Company ) was appointed on December 17, The Committee acts as a fiduciary body representing the interests of all unsecured creditors in the Debtors chapter 11 cases. The Debtors have filed, and are seeking your votes regarding, the Debtors First Amended Joint Plan of Reorganization (the Plan ). 1 The Plan represents the culmination of extensive and protracted negotiations amongst the Debtors, the Committee, the Consenting Secured Lenders, and certain other parties in interest, and which contains compromises and settles anticipated disputes to achieve an economic settlement of Claims against the Debtors in a prompt and reasonable manner given the circumstances of these Chapter 11 Cases. The Committee submits this letter recommending that unsecured creditors vote in favor of the Plan. Enclosed with the solicitation materials, you will find a Ballot. As an unsecured creditor, you are provided with several choices to make on your Ballot. FIRST: Choose whether to ACCEPT or REJECT the Plan, by checking the appropriate box on your Ballot. The Committee recommends you vote to ACCEPT the Plan. If you are a holder of a General Unsecured Claim equal to or less than $1,000 you will automatically receive the Convenience Claim Distribution (defined below) and shall be deemed to accept the Plan. SECOND: This second choice is available only to holders of Class 5 General Unsecured Claims with claims in excess of $1,000. Holders of Class 5 General Unsecured Claims with claims in excess of $1,000 may elect to receive their distribution in the form of either: 1) A pro rata share of Class A Interests in the Creditor Trust, which Creditor Trust will be funded from $2.25 million in Cash and the proceeds, if any, of the Assigned Estate Claims (the Trust Interest Distribution ); or 2) Receive $1,000 on account of its Convenience Claim, if such holder of a Class 5 General Unsecured Claim elects to reduce its Claim to an amount equal to $1,000 (the Convenience Claim Distribution ). Holders of Allowed General Unsecured Claims in excess of $1,000, may, on a properly cast Ballot, make the Convenience Class election (i.e., affirmatively elect to receive the Convenience Class Distribution 1 Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Plan. 555 West Fifth Street, 48th Floor Los Angeles, CA T F Broadway New York, NY T F Second Street, 21 st Floor San Francisco, CA T F K Street, NW Washington, DC T F

3 Case rfn11 Doc Filed 03/18/16 Entered 03/18/16 15:54:23 Page 3 of 6 Page 2 instead of the receipt of a beneficial interest in the Creditor Trust). Based on current projected recoveries in the Disclosure Statement, the Committee recommends that holders of General Unsecured Claims in the amount of $20,000 or less opt to reduce their claims and holders in the amount of up to $30,000 also consider opting to reduce their claims to $1,000 and participate in the Convenience Class Distribution. The range of recovery for creditors receiving the Convenience Class Distribution will range from 100% for a creditor with an Allowed Claim of $1,000 or less, 5.0% for a creditor holding an Allowed Claim of $20,000, or 3.3% for a creditor holding an Allowed Claim of $30,000. Holders that elect to write-down their claim and participate in the Convenience Class Distribution will not be entitled to participate in Trust Interest Distribution. Holders of General Unsecured Claims that do not elect to participate in the Convenience Class Distribution will be treated as a Class 5 General Unsecured Claim and receive the Trust Interest Distribution. The Disclosure Statement estimates a recovery of approximately 4.6% 2 for holders of Class 5 General Unsecured Claims participating in the Trust Interest Distribution. Each of these options is subject to unknown and currently unknowable variables and risks, making the ultimate value of the distributions uncertain. The details and risks of these recovery options are discussed in detail in the Disclosure Statement. Holders of Class 4 Convertible Notes Claims will receive distributions in the form of Noteholder Warrants (as defined herein) and may not elect to participate in the Convenience Class Distribution or the Trust Interest Distribution. If you hold Class 5 General Unsecured Claim in an amount greater than $1,000 and do not make an election on your Ballot to participate in the Convenience Class Distribution, or fail to submit a Ballot altogether, you will automatically receive the Trust Interests Distribution. THIRD: Holders of Class 4, 5, and 6 Claims may choose whether to refrain from granting releases of certain parties involved with the Debtors. A holder that votes to accept the Plan will be deemed to have granted the releases, regardless of which box on the ballot is checked. A holder who does not return its Ballot will be deemed to have granted the releases. A holder that votes to reject may choose to check the box on the Ballot (Item 3) to refuse to grant the releases. If the box is not checked, the holder will be deemed to have granted the releases. Any holder of a claim who rejects the Plan and opts out of the releases described in Section 12.04(b) of the Plan will not receive any distributions. THE COMMITTEE RECOMMENDS THAT HOLDERS OF UNSECURED CLAIMS VOTE TO ACCEPT THE PLAN. 2 The estimated recovery to Class 5 claimants represents a recovery before consideration of costs necessary to administer Creditor Trust Assets or pay Creditor Trust Expenses. Additionally, actual recoveries may be higher or lower based on, among other things, the success of litigation of the Assigned Estate Claims and the ultimate size of the claims pool.

4 Case rfn11 Doc Filed 03/18/16 Entered 03/18/16 15:54:23 Page 4 of 6 Page 3 The current version of the Plan reflects enhanced treatment negotiated by the Committee for the benefit of holders of General Unsecured Claims. The Plan, as originally filed by the Debtors, provided holders of Class 5 General Unsecured Claims with their pro rata share of $1 million and the proceeds, if any, from the Assigned Avoidance Actions. After significant negotiations, the Debtors, other key constituencies, and the Committee reached agreement on changes to the Plan that increased the pool of Cash available to fund the Creditor Trust to $2.25 million and enlarged the litigation claims being preserved for the benefit of holders of Class 5 General Unsecured Claims. Plan Treatment A plan of reorganization separates each group of creditors and equity-holders into distinct classes, and then provides for the treatment of each class upon consummation of the plan, which is the debtor s emergence from chapter 11 bankruptcy. Below is a brief summary of the Plan s proposed treatment of unsecured claims. Treatment of Class 4 Convertible Notes Claims: Class 4 consists of the claims of the holders of the unsecured 8.0% convertible subordinated notes issued under the Convertible Notes Indenture, dated July 22, 2014 (the Convertible Notes Claims ). The dollar amount of the Convertible Notes Claims is $375.0 million. In full satisfaction, release, settlement, and discharge of such claim, subject to dilution by the Management Incentive Plan, if any, such holder shall receive its pro rata share of warrants exercisable into 0.7% of the New Common Interests, which warrants shall be struck assuming a cashless exercise, at an equity value equal to $195.0 million less the aggregate principal amount of debt outstanding as of the Effective Date, and will be exercisable at any time from the Effective Date until the seven (7) year anniversary thereof (the Noteholder Warrants ). The Disclosure Statement estimates that the cashless exercise will result in a percentage of less than 0.7% of the New Common Interests being granted to holders of Convertible Notes Claims on account of the Noteholder Warrants and estimates recovery to holders of Class 4 Convertible Notes Claims of 0.00%. The treatment of holders of Class 4 Convertible Notes Claims reflects the terms of a deal, negotiated, between the Debtors, a majority (approximately 93.8%) of Prepetition Secured Claims (the Consenting Secured Lenders ) and holders of 78.8% of Class 4 Convertible Notes Claims (the Consenting Noteholders ). This agreement is set forth in a restructuring support agreement (as may be amended, restated, supplemented, or otherwise modified from time to As a result, holders of 78.8% of Class 4 Convertible Notes Claims have committed their support for the Plan. Treatment of Class 5 General Unsecured Claims: The other primary class of unsecured creditors is Class 5 (General Unsecured Claims), which includes all unsecured claims against the Debtors, other than the Convertible Notes Claims and the Convenience Claims, including (a) claims arising from the rejection of nonresidential real property leases and executory contracts, (b) claims of the Debtors trade vendors, suppliers, and service providers, (c) Junior Statutory Lien Claims, (d) the deficiency claims of the Prepetition Secured Lenders (the Deficiency Claims ), 3 and (e) and the Chesapeake Note Claim. Due to myriad of uncertainties related to, among other things, the ultimate amount of Allowed claims, the Debtors project that the dollar amount of the Class 5 General Unsecured Claims will be between $47,000,000 and $50,000,000, exclusive of the Deficiency Claims. The Plan provides each holder of a Class 5 General Unsecured Claims (other than Deficiency Claims) shall receive from its respective Debtor, in full satisfaction, release, settlement, and discharge of such claim, such holder s pro rata share of Class A Interests in the Creditor Trust. Holder of Deficiency Claims will receive their pro rata share of Class B Interests in the Creditor Trust. On the Effective Date, the GUC Cash in the amount of $2,250,000 and the Assigned Estate Claims 4 will be assigned to the Creditor Trust for the benefit of the Creditor 3 For Plan purposes the Deficiency Claims will be deemed Allowed in the amount of $718 million. 4 The Assigned Estate Claims will include, but are not limited to (i) Avoidance Actions related to prepayment penalties paid by the Debtors prepetition on their funded debt, (ii) Avoidance Actions related to the Fort Trinidad transaction, (iii) all claims based on avoidance theories under sections 547, 548, 550 or applicable state law, not otherwise designated as excluded by the Debtors and the Ad Hoc Group of Lenders, and (iv) director or derivative claims or causes of action against any Excluded

5 Case rfn11 Doc Filed 03/18/16 Entered 03/18/16 15:54:23 Page 5 of 6 Page 4 Trust Beneficiaries. Any GUC Cash to be distributed to Holders of General Unsecured Claims pursuant to the Creditor Trust Agreement shall only be distributed to the Holders of Class A Interests. Net proceeds from the Assigned Estate Claims shall be payable by the Creditor Trust as follows: (i) the first $1,000,000 will be paid to Reorganized ENXP LLC, (ii) then, pro rata to holders of Class A Interests, until such holders recover an aggregate of 15% of the Allowed amount of their claims from the Creditor Trust Assets, and (iii) thereafter, on a pro rata basis, to all holders of Class A Interests and Class B Interests. The Disclosure Statement estimates a recovery of approximately 4.6% 5 for Holders of Class 5 General Unsecured Claims (exclusive of Deficiency Claims). Treatment of Class 6 Convenience Claims: The final class of unsecured claims is Class 6 which consists of General Unsecured Claims against the Debtors that are either (a) in the amount of $1,000 or less or (b) pursuant to an irrevocable agreement by the holder of such General Unsecured Claim, have been reduced to $1,000 (the Convenience Claims ). Each holder of an Allowed Convenience Claim, on or as soon as practicable after the Effective Date, shall receive from its respective Debtor, in full satisfaction, release, settlement, and discharge of such Claim, payment in full in Cash in the amount of its Allowed Convenience Claim (i.e., $1,000 or less in Cash). A holder of an Allowed General Unsecured Claim that is equal to or less than $1,000 will automatically receive the Convenience Claim Distribution. Holders of General Unsecured Claims in excess of $1,000, may, on a properly cast Ballot, make the Convenience Class election (i.e., affirmatively elect to receive the Convenience Class Distribution instead of the receipt of a beneficial interest in the Creditor Trust). The Committee recommends that holders of Claims in the amount of $20,000 or less opt to reduce their claims and that holders in the amount of up to $30,000 also considering opting to reduce their claims to $1,000 and participate in the Convenience Class Distribution. The range of recovery for creditors receiving the Convenience Class Distribution will range from 100% for a creditor with an Allowed Claim of $1,000 or less, 5.0% for a creditor holding an Allowed Claim of $20,000, to 3.3% for a creditor holding an Allowed Claim of $30,000. The Creditors Committee s View The principal issues for consideration in connection with the Plan are, among other things, (a) the reasonableness of the compromises and settlements of the Debtors claims, potential claims, causes of action and rights to certain assets resolved under the Plan; (b) the reasonableness of the compromises and settlements of the issues and disputes between the Debtors, holders of Prepetition Secured Claims, holders of Convertible Notes Claims, the Creditors Committee, and other persons or entities under the Plan; (c) the reasonableness of the distributions to be received by holders of unsecured claims; and (d) whether the benefits of the settlements and compromises outweigh the results that could be achieved through litigation or whether litigation could result in better recoveries. Under the current facts and circumstances, the Committee believes that the Plan is in the best interests of the Debtors unsecured creditors. The opinion of the Committee is that other alternatives, including further litigation, would involve significant risk, delay, uncertainty and additional administrative costs. The Committee does not believe that further negotiations or litigation will result in materially higher or better recoveries to unsecured creditors. Party, including but not limited to, for breach of fiduciary duty or aiding or abetting breach of fiduciary duty, or under and pursuant to any D&O or fiduciary insurance policies (including for bad faith) maintained by the Debtors; provided, however, that no causes of action may be brought against any Released Persons or their Related Persons. 5 The estimated recovery to Class 5 claimants represents a recovery before consideration of costs necessary to administer Creditor Trust Assets or pay Creditor Trust Expenses. Additionally, actual recoveries may be higher or lower based on, among other things, the success of litigation of the Assigned Estate Claims and the ultimate size of the claims pool.

6 Case rfn11 Doc Filed 03/18/16 Entered 03/18/16 15:54:23 Page 6 of 6 Page 5 Accordingly, the Committee recommends that all unsecured creditors vote in favor of the Plan by indicating your acceptance of the Plan, and where applicable, agree and consent to the releases provided under the Plan, on the Ballot you will receive from the Debtors. Your ballot must be received by the balloting agent, Prime Clerk, by. Before you cast your Ballot, you should carefully review the enclosed Plan, the Disclosure Statement and the exhibits to the Disclosure Statement in their entirety and you may want to consult your own legal and financial professionals. This letter is not intended or offered as legal advice as to any specific claim or the treatment of such specific claim under the Plan or to make or not make the Convenience Claim election. It has been prepared for educational and informational purposes only. By this letter, the Committee is expressing its support for the Plan. This letter does not purport to reflect the views of the Bankruptcy Court and does not constitute findings of facts or conclusions of law endorsed by the Bankruptcy Court; nor does it necessarily reflect the views of any individual Committee member, each of which reserves any and all of its rights. If you have any questions regarding voting procedures or otherwise, please contact counsel to the Creditors Committee, Robert M. Hirsh at (212) or George P. Angelich at (212) Very truly yours, The Official Committee of Unsecured Creditors of Energy & Exploration Partners, Inc., et al. YOU ARE URGED TO CAREFULLY READ THE DISCLOSURE STATEMENT, THE PLAN, AND THE EXHIBITS ATTACHED TO EACH OF THE FOREGOING IN THEIR ENTIRETY. THE DESCRIPTION OF THE PLAN IN THIS LETTER IS INTENDED TO BE ONLY A SUMMARY PREPARED BY THE COMMITTEE. THIS LETTER MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN THE COMMITTEE S VIEWS ON HOW TO VOTE ON THE PLAN AND THE INFORMATION CANNOT BE RELIED UPON FOR ANY OTHER PURPOSE. THERE IS ALWAYS A RISK THAT FURTHER LITIGATION AND/OR A LATER SETTLEMENT COULD RESULT IN HIGHER OR LOWER RECOVERIES FOR HOLDERS OF UNSECURED CLAIMS THAN THE PLAN. THE COMMITTEE DOES NOT GUARANTEE ANY PARTICULAR RESULT IN THE DEBTORS BANKRUPTCY CASES. THE BANKRUPTCY COURT S APPROVAL OF THIS SOLICITATION LETTER TO BE INCLUDED AS PART OF THE SOLICITATION PACKAGE DOES NOT CONSTITUTE AN ENDORSEMENT BY THE BANKRUPTCY COURT OF THE MERITS OF THE PLAN OR THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN. THIS COMMUNICATION DOES NOT CONSTITUTE, AND SHALL NOT BE CONSTRUED AS, A SOLICITATION BY ANY INDIVIDUAL MEMBER OF THE COMMITTEE. IN ADDITION, THE DEBTORS WILL BE FILING A PLAN SUPPLEMENT ON APRIL 1, 2016 THAT CONTAINS ADDITIONAL DOCUMENTATION ABOUT THE RESTRUCTURING TRANSACTIONS DESCRIBED HEREIN AND IN THE PLAN. HOLDERS OF CLAIMS ENTITLED TO VOTE ON THE PLAN SHOULD READ THE PLAN SUPPLEMENT PRIOR TO VOTING ON THE PLAN.