EPL files for Chapter 11



    New Orleans — Independent exploration and production company Energy Partners, Ltd. (EPL) (Pink Sheets: ERPL.PK) and certain of its domestic subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

    EPL has reached an agreement with an ad hoc committee of the company’s senior noteholders on the terms of a comprehensive financial restructuring that would substantially reduce the company’s indebtedness and provide a long-term solution for its balance sheet. The company and its subsidiaries will continue to manage their properties and operate their businesses in the ordinary course throughout the Chapter 11 process while the company seeks confirmation of its reorganization plans under the jurisdiction of the Bankruptcy court.

    “During the past year, an extraordinary confluence of factors led to our need to pursue this financial restructuring, including the impact of hurricanes, the collapse of the credit markets, sharply declining commodity prices and a resulting deficiency in the company’s borrowing base,” said Alan D. Bell, Chief Restructuring Officer.

    “The Board and management believe this financial restructuring is a necessary and prudent step and represents the best path forward for EPL’s future. In addition, having a pre-negotiated plan of reorganization will allow us to target an accelerated timeline for emergence from bankruptcy, at which point we expect to be a stronger, more competitive company.”

    Bell continued, “I would like to acknowledge our noteholders, whose support throughout this process speaks to the inherent strengths of our business. The Chapter 11 process allows us to preserve the value of our assets and to operate our business without interruption while we implement our restructuring in a controlled, court-supervised environment. I would also like to thank our employees, whose hard work and dedication has been essential to our continued operations.”

    At the time of filing, EPL had in excess of US$13 million in cash on hand. As it proceeds with its financial restructuring, the company expects, based on current commodity prices, that its cash on hand and cash from operating activities will be adequate to fund its projected cash needs, including the payment of operating costs and expenses.

    EPL intends, under the plan of reorganization, to pay all its vendors and other service providers in full, whether their claims arose prior to or after the filing of the Chapter 11 cases, and to continue paying its employees’ salaries and benefits and to maintain its cash management systems.

    Under the plan of reorganization, EPL and stockholders agreed upon, EPL may enter into a debtor-in-possession, multi-draw term loan facility (DIP Facility) to provide the company with working capital while the Chapter 11 cases are pending. Upon the effectiveness of the plan of reorganization, the company expects to enter into a first lien working capital facility that the company expects to negotiate while the Chapter 11 cases are pending. The company has agreed with the consenting holders not to make any principal payments on its existing credit agreement while the Chapter 11 cases are pending. The company expects to treat the amounts outstanding under its existing credit agreement in a manner mutually acceptable to the company, the bank lenders thereunder and the consenting holders upon the emergence of the company from bankruptcy.

    Under the terms of the plan of reorganization, the holders of the senior Notes and the holders of the company’s 8.75 percent senior notes due 2010 would receive their pro rata share of 100 percent of the outstanding common stock in the reorganized company upon its emergence from bankruptcy. In addition, the current stockholders of the company would receive warrants exercisable for 12.5 percent of the common stock of the reorganized company.

    The plan of reorganization is subject to confirmation by the Bankruptcy court and the approval of the impaired classes. The company expects the Bankruptcy court to enter a ruling on the plan of reorganization prior to Aug. 15, 2009.

    EPL has retained Vinson & Elkins LLP as legal counsel, and Parkman Whaling LLC as financial advisor.



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