White Star Petroleum is exploring strategic alternatives including a sale of the US company as it navigates a voluntary Chapter 11 bankruptcy protection filing, writes Caroline Evans.

The mid-continent-focused company said it had received $28.5 million in committed "debtor-in-possession" financing to boost liquidity and it then commenced voluntary Chapter 11 cases with the support of its primary secured creditors.

The financing is being provided by members of the company's current syndicate of RBL lenders, with MUFG Union Bank as administrative agent and collateral agent. The financing is subject to court approval.

"White Star expects to generate positive operating income during its Chapter 11 case and to use the proceeds of the DIP financing to pay the expenses of Chapter 11 and provide supplemental liquidity," the company said.

The company was founded as part of the late Aubrey McClendon’s American Energy Partners and was previously called American Energy – Woodford.

"White Star is continuing to operate its business during the strategic process, and with the DIP financing, has sufficient liquidity to timely pay all employees, vendors and suppliers for services and products provided during Chapter 11," said White Star chief executive Elliot Chambers.

"We recognise that the uncertainty of the past months has been difficult for many of our stakeholders but are pleased to have the support of our RBL lenders and an appropriate budget established for operations in Chapter 11," he added.

White Star has hired Guggenheim Securities to act as its investment banker in connection with the Chapter 11 cases and to advise White Star in the exploration of the strategic alternatives.

The company is also being assisted by Alvarez & Marsal North America as financial advisor, and Sullivan & Cromwell and Morris, Nichols, Arsht & Tunnell as legal advisors.

White Star has filed its Chapter 11 cases in the US Bankruptcy Court for the District of Delaware. However on 24 May, five vendor creditors filed another, involuntary Chapter 11 case against White Star in the US Bankruptcy Court for the Western District of Oklahoma.

"The company is reviewing the facts surrounding the involuntary petition and will seek a determination of the appropriate ultimate venue for its Chapter 11 case promptly in accordance with applicable law and in consultation with its DIP lenders and other stakeholders," White Star said.

Weekly

White Star Petroleum in Chapter 11 filing