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.
On 23 May 2016, Chaparral Energy received commitment from banks to provide it funding of $100m as part of the restructuring process.
Chaparral would continue to engage with all its lenders to achieve an agreement on terms of its restructuring.
The company provided a version of its restructuring proposal to certain members of an ad hoc committee of unsecured noteholders but after evaluating, the noteholders rejected the proposal.
It appears that the terms of the consensual restructuring may or may not involve an equity offering.
U.S.-based oil explorer Pacific Exploration & Production Corp stated that its board was in favor of a restructuring proposal submitted by Catalyst Capital Group over a bid by EIG Global Energy Partners.
Previously, EIG Global had submitted a proposal in early May 2016 to provide $250m debtor-in-possession (DIP) financing to Pacific Exploration and sponsor the company’s restructuring.
Catalyst Capital had also agreed to provide $250m in DIP financing in April 2019 to take a 29.3 percent stake in the restructured company.
U.S.-based energy firm Breitburn Energy Partners LP filed for Ch-11 bankruptcy, on being negatively impacted by falling oil prices. The company filed for restructuring in the U.S. Bankruptcy Court in New York, with reported assets of $4.7bn and debts of $3.4bn as of 31 March 2016.
According to company CFO James Jackson, the decision to file for bankruptcy was made when persistent negotiations with lenders failed and an out-of-court restructuring agreement would have affected the company’s liquidity severely.
The company has lined up a $75m DIP financing facility, and is in talks with senior lenders to include an additional $75m, if certain conditions were met.
A talking point during Breitburn’s restructuring would include its hedging assets, contracts that cushion the company’s cash holdings against oil price volatility. The company estimates that proceeds of its hedging agreements could be up to $500m, which, outside bankruptcy, could be “a significant source of liquidity.”
However, some of the Breitburn’s senior lenders have objected to the distribution of proceeds arising from hedging arrangements during bankruptcy as they are counter-parties to it.
U.S-based high-end supermarket chain Fairway Group filed for a “pre-pack” bankruptcy and reached an agreement with creditors to cut $140m in debt.
The chain, which primarily operates its stores in New York, reached an agreement with 70% of its senior secured creditors to convert $140m of c.$279m of debt into equity.
The “pre-pack” chapter 11 filing is an agreement and restructuring plan with a majority of creditors that has already been reached.
The secured lenders have also provided $55m in a superpriority secured debtor-in-possession (DIP) credit facility and a $30.6m letter of credit to cover operating financing.
The proposed DIP financing would support Fairway’s reorganization plans and enable normal post-petition operation of its business, including timely payment of employee wages, benefits and other obligations.
Source: Undercurrent News