Vanguard Natural Resources, LLC (NASDAQ:VNR) will no longer be a part of the Alerian Small Cap MLP Index. This is due to a special market rebalancing, after market close. This was first announced February, 2 by Alerian.
Market rebalancing can be applied in a various range of cases, such as mergers, bankruptcies and so forth. Vanguard Natural Resources has filed for relief, which falls under Chapter 11 of the Bankruptcy code. However, this was filed prior to the separation, on February, 1.
More details about Vanguard Natural Resources Filings In Terms Of Bankruptcy
Vanguard Natural Resources filed to eliminate over $708 million in debt. In the filing, the company reported a total financial asset holding of $1.5 billion. However, the company also listed a total of $2.3 billion, in debt.
The way, in which Vanguard National Resources plans to gain the privilege to Chapter 11 Bankruptcy privileges, is through the agreement, which was made with bondholders, which is known as the debt-for-equity agreement.
Essentially, the company’s restructuring deal will cause the elimination of up to $433 million, in debt. However, the new company which emerges, bondholders, will be forced to exchange the majority of their equity in the company.
What Vanguard Natural Resource Bondholders Achieve From This Deal
Although bondholders, will be trading in the majority of their assets, the company has ensured that they will still benefit from this deal. According to company notes, Senior bondholders will receive a total of $275 million.
This will be paid in combination with right’s offering, as well as noteholders equity. Furthermore, the company has declared that it will be taking up a new $1.1 billion loan. The second-tier bondholders, which are owed a total of $75.6 million, will receive a new debt, with an increased 2-percentage interest rate.
These requests from the company have been scheduled for a hearing, in court on Tuesday. The judge responsible for monitoring the case is Judge Marvin Isgur, the hearing will be taking place in Houston.