Basic Energy Services Inc. (NYSE: BAS) and certain subsidiaries have filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the District of Delaware to pursue a prepackaged plan of reorganization in accordance with its previously announced restructuring support agreement (RSA) with creditors to effectuate a comprehensive balance sheet restructuring.
The RSA and Prepackaged Plan provides for a deleveraging transaction pursuant to which Basic will improve its balance sheet by equitizing over $800 million of its existing unsecured bond obligations and will bolster its liquidity position through a $125 million rights offering for mandatorily convertible debt, to be backstopped by certain unsecured noteholders. Basic's prepetition secured term loan lenders and certain of its unsecured bondholders have also agreed, subject to the Court's approval, to provide a $90 million debtor-in-possession credit facility to help fund the costs of the restructuring.
Pursuant to the RSA, 100% of Basic's prepetition secured term loan lenders and holders of over 80% of its 7.75% senior notes due 2019 and 7.75% senior notes due 2022 have agreed to vote in favor of the Prepackaged Plan.
The company began the solicitation of votes on the Prepackaged Plan prior to filing its petition and currently estimates that it will emerge from the Chapter 11 reorganization before the end of 2016.
Basic will continue to operate the business as debtors-in-possession under the jurisdiction of the Bankruptcy Court and expects to continue existing operations and maintain staffing and equipment as normal throughout the court-supervised financial restructuring process. Basic has filed a series of motions with the Bankruptcy Court requesting authority to continue normal operations, including requesting Bankruptcy Court authority to continue paying employee wages and salaries and providing employee benefits without interruption. The company continues to work closely with its suppliers and partners to ensure it meets ongoing obligations and business continues uninterrupted.
To support and effect the restructuring, Basic has retained Weil, Gotshal & Manges LLP as legal counsel and Moelis & Company as financial advisor.
Additionally, the company engaged David Johnston of AP Services LLC (and a Managing Director at AlixPartners LLP) as Chief Restructuring Officer. Johnston is supported by a team including Charles Braley and Brian Huffman as Senior Vice President and Vice President of Restructuring, respectively.
As noted above, the RSA anticipates that the restructuring would be implemented through the Prepackaged Plan, which remains subject to Bankruptcy Court approval and the satisfaction of conditions laid out in the Prepackaged Plan.