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LINN Energy Enters Into a Settlement Agreement With Certain Senior Secured Second Lien Noteholders

HOUSTON, April 05, 2016 (GLOBE NEWSWIRE) -- LINN Energy, LLC (LINE) (“LINN” or the “Company”) announced today that LINN has entered into a settlement agreement (the “Settlement Agreement”) with certain holders of the Company’s $1.0 billion of outstanding 12 percent Senior Secured Second Lien Notes due 2020 (the “Second Lien Notes”), which collectively hold more than two-thirds of the outstanding principal amount of the Second Lien Notes. Under the terms of the Settlement Agreement, the Company delivered the mortgages associated with the Second Lien Notes and is no longer in default under the Indenture governing the Second Lien Notes.

The Settlement Agreement provides that LINN and the Second Lien Note holders will commence good faith negotiations with each other regarding the terms of a potential comprehensive and consensual restructuring of the Company’s indebtedness, including a potential restructuring under a chapter 11 plan of reorganization. The Company expects to continue operations throughout this process. The Settlement Agreement has been filed on Form 8-K with the U.S. Securities and Exchange Commission.

Potential Tax Liabilities and Exchange Offer

As previously announced, LinnCo, LLC (“LinnCo”) has commenced an offer to exchange each outstanding unit of LINN for one LinnCo share (the “Exchange Offer”). The purpose of the Exchange Offer is to permit holders of LINN units to maintain their economic interest in LINN through LinnCo, an entity that is taxed as a corporation rather than a partnership, which may allow LINN unitholders to avoid future allocations of taxable income and loss, including cancellation of debt income, that could result from future debt restructurings or other strategic transactions by LINN. LinnCo believes that many LINN unitholders may benefit by participating in the Exchange Offer. However, because the tax situation of each LINN unitholder is unique, LinnCo recommends that each LINN unitholder consult with such unitholder’s own individual tax advisor to determine whether it is in such unitholder’s best interest to participate in the Exchange Offer.

Unitholders of LINE are required to pay taxes on their share of LINE’s taxable income, including their share of ordinary income and capital gain upon dispositions of properties by LINE or cancellation of debt, even if they do not receive any cash distributions from LINE. In 2015, debt restructuring resulted in approximately $1.7 billion of cancellation of debt income (“CODI”). If LINN were to...


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