U.S.-based oil field services provider Seventy Seven Energy Inc. filed for a pre-packaged bankruptcy with $1.1bn of debt amid depressed oil prices.
Under the terms of the restructuring plan, the company’s 2019 unsecured bondholders will receive at least 96.75% of the restructured company’s equity in exchange for debt of $650m.
A second group of bondholders are slated to get a 3.25% equity stake plus warrants for 15% of the new common stock if they vote to support the plan.
The company’s term-loan lenders will receive a 2% payout of their loan upfront and a better collateral package securing the remaining loan, which will be carried over.
The incremental term-loan lenders will be paid at least $15m upfront, and the remaining $84m balance of its loan will remain in place.
Additionally, current equity holders will receive warrants for 20% of new common stock if all the debtholders vote for the plan.
Seventy Seven said its trade creditors, suppliers and contractors will be paid in the ordinary course of business.
The company’s lenders, led by Wells Fargo, have agreed to provide $100m in financing to fund the chapter 11 case, which Seventy Seven hopes to complete within 60 days.
Previously, the company had raised the possibility of bankruptcy in a February 2016 regulatory filing and hired advisers from Lazard to help it restructure its business.
The law firm Baker Botts is handling the company’s chapter 11 case, and the company has hired Alvarez & Marsal as its restructuring adviser. The case number is 16-11409 and Judge Laurie Selber Silverstein has been assigned the case.