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Actionable news in HK: HALCON RESOURCES Corp,

Halcon Resource: Bankruptcy Emergence Nears


Halcon has received confirmation from the Bankruptcy Court for its restructuring plan and is planning to emerge from bankruptcy as soon as it can.

This could potentially happen in mid-to-late September. Current equity and much of its current debt will be cancelled and replaced with new equity.

Current common shares are estimated to be worth $0.25 to $0.35 (before the effect of dilution from management incentives) based on the percentage of new equity they will convert into.

Unsecured bonds are estimated to be worth 26 to 34 cents on the dollar (before the effect of dilution from management incentives).

Bonds are still slightly undervalued compared to common shares.

Halcon Resources (NYSE:HK) is nearing the end of its time in Chapter 11. It now has court confirmation of the restructuring plan that it filed in late July and aims to emerge from bankruptcy as soon as possible. Bankruptcy emergence could happen in September, which would result in Halcon's current equity being cancelled, with third-lien, unsecured and convertible noteholders as well as current common equity holders receiving shares in Halcon's new equity.

Emergence From Bankruptcy

The Bankruptcy Court entered an order confirming Halcon's restructuring plan on September 8. Halcon indicated that it expects to emerge from bankruptcy "immediately after all remaining conditions to effectiveness of the Plan have been satisfied".

There doesn't appear to be any conditions in the plan that should significantly delay Halcon's emergence from bankruptcy, so based on recent cases I'd expect Halcon to emerge from bankruptcy in mid-to-late September and for its new shares to start trading by early October.

Company Valuation

I previously discussed the post-restructuring value of...