History
Spun out of Forest Oil in 2011, Lone Pine Resources collapsed under debt and weak gas prices, and shareholders were wiped out in a 2014 restructuring.
2011: A spin-out from Forest Oil
Lone Pine Resources began life as a standalone public company in mid-2011. The New York Stock Exchange cleared its securities for listing on 25 May, and on 1 June it completed its IPO, selling 15 million shares at $13.00 for about $178 million net. It was separated from Forest Oil Corporation, which kept 82.3% pending a full share distribution to its own shareholders. Lone Pine planned to use the proceeds and credit facility borrowings to pay Forest $29 million and repay about $401 million of intercompany debt. By the end of 2011 there were about 85 million shares on issue.
2012: A pivot to oil and a debt-funded balance sheet
In February 2012 Lone Pine amended its credit agreement to allow a bond offering and reported its year-end reserves. It also set a pivot toward light oil, aiming to raise its liquids weighting from 21% in 2011 to 35% on average in 2012 and about 40% by year-end. On 15 February its Canadian subsidiary sold $200 million of 10.375% Senior Notes due 2017 in a private placement, using the money to pay down its bank revolver. As a term of the deal, the bank borrowing base (the limit the banks will lend against its assets) was cut from $425 million to $375 million.
Gas prices stayed weak, so Lone Pine looked to cut debt further. In November it agreed to sell its Wild River, Alberta natural gas properties to Canadian Natural Resources for C$82 million. The sale closed on 18 December for net proceeds of $80.6 million, which went to pay down the revolver. The borrowing base fell by $50 million to $275 million. Share counts barely moved over the year, ending at about 85.2 million.
2013: Warnings and filing for protection
Trouble became public in 2013. On 29 May the NYSE warned that the stock had traded below the $1.00 minimum average price for continued listing. On 19 June came a second notice, for falling below the $75 million minimum average market-capitalization threshold.
On 29 July the lenders raised the maximum debt-to-EBITDA covenant (a cap on debt relative to earnings) to 5.75x through the second quarter, after Lone Pine said it would otherwise breach the 4.5x limit. It warned it likely would not comply even with that relief by the third quarter. It also said that missing the $10.4 million interest payment due 15 August on the Senior Notes would trigger default, including on its bank debt, and that it might not be able to continue as a going concern without a restructuring.
On 25 September Lone Pine and its subsidiaries filed for creditor protection under Canada's CCAA, recognized in the U.S. under Chapter 15. They had a support agreement with holders of 75% of the Senior Notes: existing stock would be cancelled, the notes converted to new equity, and noteholders would put in $100 million of new capital to repay roughly Cdn$180 million owed to the banks. The NYSE moved to delist the stock effective 22 October, after trading had been suspended in mid-September, and the Toronto Stock Exchange halted trading too. On 30 October Lone Pine secured a Cdn$10 million debtor-in-possession facility (financing during the proceedings) from its existing lenders, led by JPMorgan.
2014: Shareholders wiped out
The Alberta court sanctioned the restructuring plan on 9 January 2014, and a U.S. court recognized it on 10 January. Under the plan, all 86.9 million existing common shares are to be cancelled for no consideration, the Senior Notes exchanged for new common equity, and US$100-110 million of new preferred equity raised to repay the bank debt. On 31 January Lone Pine terminated the registration of a class of its securities, ending its reporting obligation for them.
Written from the 15 story beats below (2011 to 31 Jan 2014), which come from the company's own announcements and filings.