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.
U.S. bankruptcy judge Benjamin Goldgar, who was overseeing Caesars Entertainment’s operating unit’s bankruptcy stated that it would be difficult to halt bondholder lawsuits against the company in New York and Delaware given that proceedings had already begun.
Several hedge funds were suing the parent casino company for a total of $11.4bn, as it reneged on guarantees on bonds issued by its operating unit, which filed for bankruptcy in January 2015.
Parentco Caesars was planning to pump about $4bn into its operating unit to help restructure it.
Legal action against the parent could jeopardize the funding and force it into bankruptcy as well, the unit argued in seeking an injunction to stop the lawsuits.
Caesars has the right to terminate its funding agreement by 22 June 2016 if the judge does not halt the lawsuits by 15 June 2016, the unit’s lawyers said at the hearing.
The operating company of Caesars has spent about $1.1bn on interest payments on its first lien debt and administrative expenses. Further, if the parentco files for bankruptcy, it may incur additional expenses of $200m in restructuring costs.
Separately, according to an independent examiner’s report in March 2016, Caesars and its private equity sponsors Apollo Global and TPG Capital could face $5bn in damages from the operating unit’s bankruptcy. Junior bondholders are claiming $12.6bn as part of the bankruptcy.
South Korea’s central bank unexpectedly cut the benchmark seven-day repurchase rate to 1.25%, a new record low, to aid indebted companies in their restructuring plans. The South Korean won moved sharply lower.
The decision to cut benchmark rates was projected by only Goldman Sachs of 18 economists surveyed while others saw a reduction in the next couple of months.
South Korea’s sovereign yield dropped to a record low this month after minutes of the May meeting showed a board member called for lower rates while the government and central bank planned to create a KRW 11tn ($9.5bn) fund to facilitate corporate restructuring.
The board’s May minutes showed several members were worried about downside risks from the corporate overhaul such as unemployment and declining investment.
The government’s plans to aid corporate restructuring would support its ailing shipbuilders
who had slashed jobs and were in process of restructuring their debt.
According to Reserve Bank of India’s Governor Raghuram Rajan, banks should refrain from taking a majority stake in planned stressed-asset funds, and prefers external investors and funds to take up that role.
His words came amid the Indian government’s plans to find ways to lower bank’s distressed debt pile of $120bn, or 11.5% of all loans.
However, bankers have said talks are on for two kinds of stressed-asset funds: one that would buy bad loans from the banks and the other that can invest in companies needing more capital.
Rajan also stressed that pricing would be a key issue for a stressed fund if it wanted to buy bad loans from the banks.
The government, as part of its plan of implementing new bankruptcy laws, is considering setting up an external panel to decide on the quantum of ‘haircuts’ taken on the bad loans, mainly due to disagreements between companies and banks at the time of transacting on such loans.
Brazilian miner Vale S.A. tapped the U.S. dollar debt market for the first time in almost four years as a commodity-price recovery brings down the Brazilian mining giant’s borrowing costs.
The company’s subsidiary Vale Overseas Limited, issued and priced its senior unsecured $1.25bn bond due 2021. The notes are guaranteed by Vale S.A.
Joint Books are BB Securities, Bank of America, Bradesco BBI, HSBC and Santander.
The company, which last sold U.S. dollar bonds in 2012, would use proceeds from the issuance to develop its iron-ore project, which it plans to commission later in 2016.
Separately, the company plans on divesting assets worth $10bn by 2017 after reporting a fourth-quarter net loss of $8.6bn.
Mining giant Rio Tinto is buying back as much as $3bn of its debt amid a rebounding commodity market.
The company plans to repurchase $2.9bn of notes due in 2018 and will then consider offers from holders of about $5.2bn of bonds maturing in 2020 to 2022.
The buy-back is the company’s second in 2016, with the company repurchasing $1.5bn of debt back in April 2016.
Commodity prices gained in the last week, ending a five-year decline, on gains in prices of raw materials from zinc to soybeans.
In order to cut down on costs and bolster its balance sheet during the commodity slump, Rio sold about $4.7 billion of assets since 2013 and announced a cut in dividend in February 2016.
The World Bank on Tuesday cut GDP growth projections for India by up to three percentage points to 7.6-7.7% for fiscal years 2016-17 and 2017-18 despite 5 rate cuts which failed to spur corporate lending.
Previously, in January this year, India was projected to grow at 7.9% during both these years.
Despite the reduction in forecasts, India would continue to be the fastest growing major economy in the world.
However, the World Bank warned of headwinds the country could face in the next few years.
Monsoons in India would largely determine the growth of the country’s economy as rural consumption has been affected over the last couple of years by lower than expected rainfall.
Credit growth in the corporate sector has been hampered by rising stressed assets in the aviation, steel and infrastructure sectors.
However, efforts made by India to ramp up FDI in various sectors would help bring in much desired investment in manufacturing and service sectors.
The ‘Make in India’ campaign, aimed at spurring FDI, has seen investment pledges worth $45bn as of December 2015.
Source: Business Standard
According to sources, Yahoo Inc. has mandated investment bank Black Stone IP LLC to sell about 3,000 of its internet company’s patents.
The company notified a number of potential buyers for the patents, which date back to when the company was founded in 1996 and also include its original search technology.
The deadline for bids for the patents has been set for mid-June 2016 by Yahoo.
Previously in March 2016, the company had stated that it planned on sales of $1-3bn of patents and non-core assets.
U.S.-based retailer Ralph Lauren Corp. plans on cutting about 1,000 jobs and shutting about 50 of it’s stores amid a sluggish retail market and to lower operating costs and revive sales growth.
The retailer has been negatively impacted by department stores which offered heavy discounts whilst selling excess inventory.
Competition from rivals like Zara, H&M, which have a shorter production time, also affected Ralph Lauren’s sales which now plans to reduce the time taken to launch new product lines from 15 months to 9.
The company now plans to focus on its luxury Ralph Lauren line of clothing and lower-end Polo and Lauren brands.
The company expects full year revenue to decline by double-digits (lower end) amid store shut down, competition and weak sales volumes.
Further, the company expects to incur $400m in restructuring charges and about $150m in inventory spill back related charges, helping the company achieve $180-220m in annualized savings.
The judge overseeing proceedings of Intervention Energy‘s bankruptcy, overturned lender EIG Global Energy Partner’s bid to dismiss the court case.
Intervention filed for bankruptcy protection in May 2016 and was immediately met with opposition from EIG, which called for the case to be dismissed.
EIG argued that Intervention didn’t have the authority to file for bankruptcy without its approval as such an action required shareholder approval.
As part of the deal, Intervention agreed to secure 100% shareholder approval in order to file for bankruptcy. However, EIG said it didn’t consent to the company’s bankruptcy filing.
Intervention and EIG met in court last week, both warning that a ruling could have a broad impact beyond their specific dispute.
Intervention’s attorney said if the judge agreed to dismiss the case, this decision would allow other lenders to demand such consent rights and could negatively impact the companies’ ability to restructure outside of court.
Meanwhile, EIG argued a decision in favor of Intervention would essentially take away a company’s rights under state law to enter contracts.
A hearing would be held on Tuesday to discuss the judge’s decision to deny the dismissal as well as to proceed with other requests designed to keep Intervention’s bankruptcy moving forward.
EIG holds about $140m of Intervention’s bond debt, which stems from a $200m financing deal reached in 2012 to finance well developments.