Investing.com -- Linn Energy LLC (NASDAQ:LINE) became the latest casualty of the precipitous fall in oil prices on Wednesday evening when the Houston-based oil and gas company filed for Chapter 11 bankruptcy.
As part of the deal, Linn Energy agreed to restructure $8.3 billion of its debt and obtain $2.2 billion in new financing through a reserve-based and term loan credit facility on the terms set forth in the Restructuring Support Agreement with creditors. More than 65 oil and gas companies have filed for bankruptcy since oil peaked at $115 a barrel in June, 2014, representing $34.3 billion in secured and unsecured debt, according to Houston law firm Haynes & Boone.
"We believe the Restructuring Support Agreement reflects the confidence of our first lien lenders in the quality of our assets and represents an important step forward for the Company. After our review of the available options, with the assistance of our financial and legal advisors, we determined that this court supervised financial restructuring process is the best course of action for the Company and our stakeholders," Linn Energy CEO Mark Ellis said in a statement.
While Linn Energy said in a statement that two-third of its creditors have agreed to the broad terms of the company's comprehensive restructuring indebtedness, the company provided few details on how they will proceed. The agreement reached on Wednesday enabled the company to spend a portion of the cash from the credit facility to secure the additional $2.2 billion in financing, Linn said in a statement. Linn Energy filed for restructuring under Chapter 11 of the Bankruptcy Code of the U.S. Bankruptcy Court for the Southern District of Texas.
"Like many others in our industry, Linn has been impacted by continued low commodity prices. We believe that these steps will provide us the financial flexibility to successfully manage in the current commodity price environment and, when combined with constructive agreements with our remaining creditors and potential third party financing, will provide a platform for future growth," Ellis added.
Shares in Linn Energy plummeted 0.20 or 59.21% to 0.14 in after-hours trading. Over the last 12 months, Linn Energy shares have tumbled more than 98%.