C&J Energy Services Files for Bankruptcy

C&J Energy Services Ltd. filed for bankruptcy Wednesday after reaching a deal on a $1.4 billion debt-for-equity swap with its lenders.

C&J, an oil-field servicer that builds and services wells in the U.S. and Canada, filed for chapter 11 protection in the U.S. Bankruptcy Court in Houston with a debt-restructuring deal with senior lenders.

The restructuring is a debt-for-equity swap under which lenders have agreed to forgive all the debt they are owed in exchange for 100% ownership of the restructured company. The agreement has the support of more than half of C&J's debtholders, who have agreed to back the new financing that is included in the agreement.

C&J joins dozens of other oil-field servicers brought down by the oil bust. Since the beginning of last year, more than 70 North American oil-field servicers have filed for bankruptcy protection, according to law firm Haynes and Boone.

The Bermuda-based company was founded by Josh Comstock in Corpus Christi, Texas, in 1997. Under his leadership, the company went public in 2011 and completed a $2.8 billion merger with Nabors Industries Ltd.

The company's growth was fueled by acquisitions and debt, made possible by hydraulic fracking boom. Two years ago, when oil prices were more than $100 a barrel, C&J's stock was trading at more than $32 a share. But when oil prices plummeted, so did C&J's fortunes. On Wednesday afternoon, the company's stock was trading at 31 cents a share

The company posted losses of $872.5 million for 2015 and $428.4 million during the first quarter of 2016, causing it to fall out of compliance with its debt agreements and triggering talks with its lenders.

The restructuring deal includes $100 million in bankruptcy financing, a $100 million bankruptcy-exit facility and a $200 million rights offering, all of which will refresh the company's dwindling liquidity. The company will also issue new seven-year warrants, convertible for up to 6% of new common stock at a $1.55 billion strike price.

C&J will continue operating during its chapter 11 case. Its deal with lenders requires it to make a quick trip through bankruptcy.

The law firms Loeb & Loeb LLP, Kirkland & Ellis LLP and Fried, Frank, Harris, Shriver & Jacobson LLP are advising C&J on its debt restructuring. Investment bank Evercore ISI is the company's financial adviser and AlixPartners is C&J's restructuring adviser.

Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com

(END) Dow Jones Newswires

July 20, 2016 16:25 ET (20:25 GMT)

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