Seventy Seven Energy files for ‘prepackaged’ restructuring

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 Fargohave 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.

Source: WSJ

Brazil’s Petrobras to raise bonds to buyback existing debt

Brazilian state owned oil & gas explorer Petrobras is planning to issue new bonds to buy back $3.5bn of its existing debt.

The company plans on buying back $576m of its outstanding bonds paying 8.375% due 2018 at a small premium.

Further, the company plans on issuing a waterfall tender to purchase up to $3bn of existing debt due next year.

The purchase offer expires on 14 June 2016.

Petrobras has about $13.2bn of debt maturing this year and c.$28.5bn due in the next two years.

Sources: WSJ

Penn West warns it may default on debt; stock tumbles

Canada-based oil and gas producer Penn West Petroleum Ltd. warned it could be in violation of its lending agreements by the end of June 2016, leading to its shares losing a quarter of its value in Monday’s trade.

The company said that it had hired investment banking firm Rothschild of New York and accounting firm PWC of Calgary as advisers as it negotiated with its lending syndicate to ease conditions that could result in default if not met by 30 June 2016.

A default would allow the lenders to demand immediate repayment.

Penn West stock fell as low as $0.78 per share on Monday morning, down 26 per cent from its close of $1.05 on Friday. A year ago, Penn West stock was trading over $3 a share.

With debt of $1.87bn as of 31 March 2016, the company is required to maintain covenants on its senior debt and total debt to adjusted earnings. But depressed oil prices have led to a steep fall in earnings as compared to its debt.

Source:  The Star

 

SandRidge Energy files for Ch-11 bankruptcy

Sandridge Energy Inc. filed for Ch-11 bankruptcy in the U.S. Bankruptcy Court of Houston on reaching a debt-to-equity swap agreement with creditors. The swap would give its existing creditors control of the re-organized company.

Sandridge, which is the latest victim of falling oil prices, intends to finance its operations without securing a bankruptcy or a DIP loan. The company intends to conduct business normally whilst undergoing restructuring and intends to pay its operating expenses associated with production activities, royalties and wages to its workers and also intends to pay all of its suppliers and vendors.

At the time of filing for bankruptcy, the company had assets of $7bn and debt of about $4bn.

SandRidge is advised by law firm Kirkland & Ellis LLP, which is handling the chapter 11 case, and Houlihan Lokey Inc. is the company’s financial adviser.

Source: WSJ

Petrobras seeks 1bn China-loan faster than planned

Brazil’s state-controlled oil company Petrobras is seeking a $1bn loan from the Export-Import Bank of China earlier than originally planned, on surging debt service costs amid plunging oil prices.

The loan was originally planned for 2017, but rising debt service costs and falling revenues due to softer oil prices compelled the company to avail the loan earlier than planned.

The company is engaged in negotiations with the Chinese lender after signing a term sheet on Monday.

The proceeds from the loan would be utilised towards its equipment and service contracts from Chinese suppliers.

Previously, the company had secured a $10bn loan from China Development Bank Corp. as part of a deal to supply crude to the Asian country. 

Source: Bloomberg

Hercules Offshore reports net loss of $26.9m for 1Q’16

Offshore-drilling vessel-provider Hercules Offshore reported a net loss of $26.9m, or $1.35 per diluted share for the 1Q’16 period, vs. net loss of $57.1m a year ago.

Revenues declined to $50.9m for the same period vs. $122.6m a year ago.

Company CEO John T. Rynd attributed the loss to continued weakness in the offshore drilling markets as oil prices declined, making its customers reduce their drilling activities.

The company had filed for bankruptcy in August 2015 and had emerged from it in November 2016.

Separately, the company had entered into a forbearance agreement with lenders last month and continues to explore options such as a potential recapitalization, business combination or other alternative strategic transactions, including the potential sale of its vessel Hercules Highlander, and a restructuring of its term loan.

Post-bankruptcy, the company had raised a $450m term loan to utilize $200m of it to pay its remaining installment on the Hercules Highlander vessel. The forbearance agreement has led to the company to explore selling its yet-to-acquired vessel.

Source: PR Newswire

P.S. Kindly refer to the one-page credit report on Hercules Offshore highlighting the company’s progress through bankruptcy.