Pipeline operator CorEnergy Infrastructure Trust has filed for Chapter 11 bankruptcy protection after reaching a restructuring agreement with some of its noteholders resulting in a comprehensive financial restructuring to reduce debt and restructure its balance sheet, the company said Feb. 25.

“Restructuring our debt will help to right-size our capital structure for the smaller scale of the enterprise following the MoGas and Omega sale, building on our efforts to increase liquidity through a combination of asset sales and tariff increases,” said Dave Schulte, chairman and CEO of CorEnergy. The company sold its natural gas pipeline and distribution systems in January for net proceeds of $165 million.

The Kansas City, Missouri-based company, which was suspended from the New York Stock Exchange in December, said an ad hoc group of noteholders with 90% of its unsecured convertible senior notes, which are due in 2025, entered into a restructuring support agreement.  Debt on the 5.875% notes totals $118 million, court filings show.

“As we move through the reorganization process, we intend to continue to meet all obligations to our valued customers, employees, vendors and partners, and we expect Crimson Pipeline will also continue to operate normally,” Schulte said in a press release. “Our case for rate relief before the California Public Utilities Commission must be resolved favorably to ensure the future viability of the Crimson Pipeline assets, which continue to provide a critical service to shippers in that state.”

Crimson Pipeline, in which CorEnergy holds a non-controlling joint interest, or any other CorEnergy subsidiary, has filed for bankruptcy. Both the CorEnergy and Crimson Pipeline expect to have sufficient liquidity to continue operating without interruption during and after CorEnergy’s restructuring process.

Under the company’s bankruptcy plans, senior notes will be exchanged for cash, $45 million in new secured debt with a five-year term and a 12% coupon and approximately 89% of the equity in a reorganized CorEnergy — subject to dilution from the management incentive plan and adjustment based on final cash available upon emergence.

The company’s unsecured claims will be paid in full in cash. All outstanding common stock will be canceled. Existing preferred equity holders will receive the remaining approximately 11% of the equity of the reorganized CorEnergy. Schulte owns about 5.64% of the company’s common stock, according to court filings.

CorEnergy aims to complete this restructuring process and emerge from bankruptcy in second-quarter 2024 as a real estate investment trust. In bankruptcy filings, the company listed assets between $10 million and $50 million and debts ranging between $100 million and $500 million. The bulk of its debt is the senior notes.

The company and the restructuring parties plan to pursue trading on the OTC following emergence from bankruptcy.

CorEnergy retained Husch Blackwell LLP as legal counsel, Teneo Capital LLC as its financial adviser and Miller Buckfire as its investment banker. The ad hoc group of noteholders retained Faegre Drinker Biddle & Reath LLP as its legal counsel and Perella Weinberg Partners and TPH&Co., the energy business of Perella Weinberg Partners, as its investment bankers.

The company filed the pre-packaged bankruptcy in the Western District of Missouri. The case number is 24-40236-can11, and court filings are available here.

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