What will happen to Whiting Petroleum (WLL) options after restructuring completes
Whiting Petroleum is currently in chapter 11 restructuring.
If the restructuring plan is agreed, existing stock holders will get a 3% stake in they call "new common stock" and bond holders etc. will get a 97% in new common stock. (Restructuring plan cases.stretto.com/public/X059/10187/PLEADINGS/1018706302080000000068.pdf ... search for "common stock").
My question is, what happens to the old common stock and the options that are based on it? Are there going to be trading in old common stock and new common stock for some time?
Will there be a new ticker symbol for the new common stock (let's say NWLL) and the old common stock goes over to the pink sheets and the options continue to operate based on whatever price they old stock trades there?
Or will the price/ratio be adjusted according to the dilution (let's say technically this will a bit like a 100:3 stock split) plus issuance of new shares?
Also, assuming you sold calls, upon being called, you would be required to deliver old and new stock?
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From the document you linked
All Existing Interests shall be canceled on the Effective Date and
Reorganized Whiting Parent shall issue the New Common Stock, the New
Warrants-A, and the New Warrants-B to Holders of Claims and Interests
entitled to receive the New Common Stock, the New Warrants-A, and the
New Warrants-B, as applicable, pursuant to the Plan in the proportions
set forth in the Plan.
There will ne "New Common", but no "Old Common".
The options will be adjusted. The best way to think of it is this - (But note, my experience is just that, what I've observed, not quite stating a certainty here) - If one entered into a covered position, one wouldn't suddenly find themselves in a completely different set of risk/reward. e.g. You owned 100 shares, and were short a call at . Post transaction, I expect that you own 3 shares, are still short the call, but at an adjusted strike. Far out of the money. Keep in mind, shareholders just lost 97% of their equity to the bond holders.
If there is a corporate restructuring, the old shares will be gone. The new shares will continue to trade on the exchange where they are currently listed if the company meets listing requirements or they may be delisted and will head for the Pink Sheets.
If the company is able to remain listed on the current exchange, its symbol will likely remain the same but that's not guaranteed.
All existing options will be adjusted to reflect the terms of the corporate restructuring.
Here is a general reference guide that depicts various option adjustments due to a corporate event. The OIC and OCC also provide explanations about option adjustments.
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