Energy XXI: How Restrictive Are The 2nd Lien Notes And What Does This Mean For Destressing Efforts Going Forward? (Video)

Dallas Salazar profile picture
Dallas Salazar
5.23K Followers

Summary

  • After recently taking on the responsibility of consulting a mid-size ownership group of Energy XXI shareholders, we felt compelled to break out the Energy XXI capital structure even further.
  • The 2020 senior secured second lien notes are junior in the capital structure ONLY to the revolving credit facility.
  • This is an important debt tranche to detail.
  • Not having an intimate familiarity with these notes is a risk-management blind spot.
  • Our analysis shows the 2020 senior secured second lien notes to be more than just mildly restrictive.

The following is a screencast breakout of the Energy XXI (EXXI) 2020 senior secured second lien notes. We recommend using the 2020 senior secured second lien notes deck in conjunction with our "Stressed Equity, Risk Management RoadMap" deck. Together, we believe Energy XXI investors -- across the capital structure -- will have a very solid foundational base for risk managing a position. We recommend investors pay particular attention to the cadence of the restructuring/destressing efforts as well as to the depth of the announced efforts, which we're certain will be coming over the next few quarters.

The deck presentation broken out in the screencast can be downloaded here. Good luck and enjoy.

This article was written by

Dallas Salazar profile picture
5.23K Followers
Dallas Salazar is the CEO an Austin-based consulting firm that specializes in private company lifecycle management, up to and including taking companies public, and in helping consult publicly traded companies. Mr. Salazar is also a venture investor in a portfolio of energy and commodity startups, including startups extracting oil, natural gas, helium, and carbon dioxide, as well as engaged in the business of large scale carbon sequestration. Mr. Salazar has recently had large exits in Comstock Resources, Eclipse Resources, Torchlight Energy, as well as numerous privately held natural resource and commodity extraction ventures.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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