As projected by the company back in early July – and covered by the BDC Credit Reporter on July 6 – shale driller Rosehill Resources has filed for Chapter 11 on July 27, 2020 in Texas. At the time, Rosehill believed the filing would come by mid-July but has delayed till now.
In the absence of any new information, we’ll just re-purpose what we wrote on July 6 about BDC involvement in the company: “There is only one BDC involved with Rosehill – non-traded BDC FS Energy & Power – which has $4.2mn advanced in the form of second lien and preferred, a tiny fraction of the company’s half a billion dollars in debt. The BDC’s exposure has already been written down by (66%) in the preferred but is valued close to par in the second lien. We expect a further loss will be forthcoming and conversion of the full amounts into new common equity. FS Energy may also contribute to the convertible DIP and/or the new debt facility envisaged after bankruptcy. The amount of income likely to be lost is under ($0.2mn) a year.Given FS Energy & Power’s side, this RSA and planned bankruptcy will not be material“.
With Rosehill, the number of BDC-financed company bankruptcies increases to seven in the month of July to date. Five have been in the energy sector broadly defined.