Energy XXI Ltd. (NASDAQ:EXXI), together with some of its subsidiaries, has initiated a Restructuring Support Agreement (RSA) with investors of over 63% of its secured second lien 11% notes on the balance sheet reorganization prospect’s material terms, which is anticipated to improve the company’s financial condition and minimized debt levels. In fulfillment of the terms of the said agreement, Energy XXI has initiated cases under Bankruptcy Code Chapter 11 in the US Bankruptcy Court.

Energy XXI is expected to issue a Securities and Exchange Commission filing, which shall be composed of the full disclosure of the terms of agreement.

RSA Implications

With the RSA, Energy XXI will be able to get rid of over $2.80 billion worth of debt to re-establish its balance sheet, enabling it to sustain long-term growth prospects. This substantially eliminates all the company’s indebtedness, deleveraging the balance sheet of Energy XXI as a result of the Chapter 11 restructuring process.

John Schiller, Energy XXI CEO and President, will still serve as the company’s CEO and one of the members of the board of directors as provided in the RSA. Moreover, despite the completion of the restructuring process, Energy XXI will continue to negotiate with a committee of lenders under its first lien reserve based loan facility since it is not encompassed within the RSA.

The company shall carry out normal operations, which include paying royalty and surety obligations. Throughout the reorganization, Energy XXI will also continue its compliance with its long-term agreement with the Bureau of Ocean Energy Management.

Energy XXI’s Growth Prospects

Schiller believes that the RSA reflects the company’s efforts to respond to the changing nature of the market. Energy XXI has demonstrated its dedication to realize its goals as it has focused on efficiently managing its balance sheet over the past months. Schiller added that the company hopes to carry out and implement the RSA through a “court-supervised process”, protecting the interests of Energy XXI, its employees, and its clients.