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Legacy Reserves to file for bankruptcy as oil and gas price downturn prompts financial restructuring

Tomi Kilgore

Legacy Reserves Inc.'s stock plunged 42% in active premarket trade Tuesday, after the oil and gas company said it expects to file for bankruptcy, in an effort to facilitate the implementation of a restructuring agreement with its lenders. Trading volume topped 3 million shares ahead of the open. The agreement will provide for a de-leveraging of its capital structure by over $900 million, including an equity capital infusion of at least $200 million; and payment in full of its other secured creditors, tax and other claimants, trade creditors and employees. The company said it will continue to operate its business without material disruption. "We explored a wide variety of alternatives to address our balance sheet and looming bank maturity during a sustained downturn in oil and gas prices," said Chief Executive Dan Westcott. "After concluding this broad process, we believe that the financial restructuring negotiated with our creditors provides the best path forward for the company." The stock has plummeted 83% year to date through Monday, while the SPDR Energy Select Sector ETF has gained 7.2% and the S&P 500 has advanced 15%.