C&J Energy Services Ltd. (NYSE: CJES) has commenced cases for a voluntary reorganization under Chapter 11 of the US Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
The reorganization cases contemplate implementing the previously announced Restructuring Support Agreement (as amended, the "RSA") that C&J executed with its lenders, which provides for the elimination of approximately $1.4 billion in debt from the company's balance sheet. Additionally, the RSA contemplates that, subject to the satisfaction of certain conditions, the company will issue one series of seven-year warrants to existing common stockholders, based on their pro rata share, exercisable for up to an aggregate of 6% of new common stock at a strike price of $1.55 billion. Currently, lenders that beneficially own or manage greater than 83% of the aggregate principal amount of debt outstanding under the company's credit facilities are parties to the RSA. The company currently estimates that it will emerge from the Chapter 11 reorganization within approximately 130 to 180 days, and expects operations to continue as normal throughout the court-supervised financial restructuring process.
President, CEO and COO Don Gawick commented, "After thoroughly evaluating our options and strategic alternatives with our advisors and Board of Directors, we are confident that this is the best path forward for C&J and all our stakeholders.