Stone Energy survived bankruptcy with a different ownership structure

Stone Energy emerged from bankruptcy on February 28, 2017, but its previous shareholders held a much smaller share of the reorganized business. The Lafayette-headquartered oil and gas producer said its former unsecured noteholders would receive 95 percent of the new common shares, while existing shareholders would receive 5 percent. Stone’s February 2017 announcement.

Those percentages were subject to dilution from warrants and a management incentive plan, the company said. The announcement also reported that the restructuring eliminated approximately $1.2 billion in principal debt, leaving about $236.3 million outstanding. Those were company-wide figures, not an estimate of money lost or retained within Lafayette Parish.

The route through court was relatively short. In its unaudited financial statements for the six months ended June 30, 2017, Stone reported that it and two subsidiaries filed Chapter 11 petitions on December 14, 2016. The bankruptcy court confirmed the reorganization plan on February 15, 2017; it took effect at the end of that month. Stone’s financial statement note.

The same note explains why the familiar company name did not mean its financial accounts could simply continue on the old basis. Stone adopted fresh-start accounting at emergence, becoming a new entity for financial reporting purposes. The company warned that statements after February 28 were not comparable with those before that date.

That accounting distinction did not describe a newly founded Lafayette startup. It separated the reorganized company’s financial results from those of its predecessor within the same bankruptcy history.

The February announcement also reported $75 million in a restricted account for near-term plugging and abandonment liabilities, under the terms of its credit facility. Debt reduction therefore coexisted with money set aside for obligations associated with the company’s oil and gas properties.

In Stone’s account, emergence meant continued operations with a different distribution of shares, a smaller debt balance and a break between the old and new financial statements.