Kirkland Counsels Permian Resources on Common Equity Issuance and Debt Exchange

Kirkland & Ellis LLP represented Permian Resources, LLC (the Company) and certain affiliated entities in connection with a series of definitive agreements with funds managed by affiliates of The Energy & Minerals Group (EMG), OnyxPoint Global Management LP (OnyxPoint), Sable Management, LLC and other investors that provide for the purchase of $744 million of newly-issued common equity interests of PRES New Equity LLC (New Equity), a newly-created entity that will contribute the net proceeds of the equity financing to, and become an ultimate parent holding company of, PRES Holdings, LLC (PRES), a parent holding company of the Company.  Following the recapitalization transactions described below, EMG and OnyxPoint also have the option to purchase an additional $356M of common equity interests of New Equity.

In connection with the equity financing, funds affiliated with OnyxPoint have also agreed to exchange approximately $325 million of principal amount of the company’s secured and unsecured indebtedness for equity interests of PRES Initial Capital Aggregator, LLC (Initial Capital), a newly-created entity that together with New Equity will own 100 percent of the equity interests of PRES.  Concurrently with the senior debt exchange, certain holders of the Exchangeable Junior Subordinated Notes (the Sub Notes) issued by Permian Resources Holdings, LLC, a subsidiary of PRES, have agreed to exchange approximately $249 million principal amount of the Sub Notes (including accrued and unpaid interest through the closing date) for equity interests of Initial Capital.  The recapitalization is the result of a highly successful and consensual process.

Following the transactions, the Company will be re-named Sable Permian Resources, LLC (Sable Resources). Sable Resources will be led by industry veteran James C. Flores as Chief Executive Officer and Chairman of the Board. In connection with the equity financing and recapitalization, the board of directors of PRES will be re-constituted to consist of three members to be appointed by EMG, three members to be appointed by OnyxPoint and one member to be appointed by management.

The full release is available here.

The Kirkland team was led by corporate partners Bill Benitez and Mark Ramzy; debt finance partners Will Bos and Andy Veit; capital market partners Matt Pacey and Justin Hoffman; and tax partners Chad McCormick and Russell Light.