FORT WORTH, Texas, Oct. 24, 2016 /PRNewswire/ -- Basic Energy
Services, Inc. (NYSE: BAS) ("Basic" or the "Company") today
announced that the Company entered into a restructuring support
agreement (the "RSA") on October 23,
2016, with its secured term loan lenders and certain holders
of its 7.75% senior notes due 2019 (the "2019 Notes") and 7.75%
senior notes due 2022 (the "2022 Notes" and together with the 2019
Notes, the "Unsecured Notes") to effectuate a proposed prepackaged
plan of reorganization (the "Plan") that will significantly
deleverage the Company's balance sheet and provide the Company with
$125 million of additional
liquidity. Under the terms of the RSA, the Company and
certain of its subsidiaries must file chapter 11 cases to implement
the Plan on or before October 25,
2016.
Following extensive negotiation with its key creditors, Basic's
Plan has the support of 100% of its secured term loan lenders and
holders of over 80% of the outstanding 2019 Notes and 2022
Notes. In addition, the agent for the Company's secured
asset-based lenders, although not a party to the RSA, has been
involved in the negotiations regarding the Plan.
Roe Patterson, Basic's President and Chief Executive Officer,
commented, "After careful consideration, we have taken this
difficult but necessary step to secure a bright future for Basic
Energy Services. This process is about fixing our capital
structure for the long-term to benefit all of our stakeholders.
"The sharp and prolonged period of depressed commodity prices
have created poor operating conditions in the field and
significantly reduced our operating cash flow. The actions we have
taken, combined with the support of our existing lenders, will help
us strengthen our balance sheet and position Basic for a
sustainable future to benefit from what we anticipate will be an
eventual recovery in oil and natural gas prices.
"During this process, we anticipate meeting all of our ongoing
obligations to suppliers, customers, employees, and others, as
usual, and we will continue to provide our customers with
dependable, high-quality services, which is the hallmark of our
Company.
"The fundamentals of the business are strong and having access
to new capital will enable us to strengthen our current business
lines, grow organically as opportunities develop and participate in
potential merger and acquisition activities in the future."
Upon effectuation, the consensual financial restructuring would,
among other things:
- Amend and restate the terms of the Company's prepetition term
loan outstanding in the principal amount of approximately
$165 million to provide for more
flexible covenants.
- Cancel over $800 million of
principal and accrued interest in outstanding Unsecured
Notes. In exchange, holders of the Unsecured Notes
(collectively, the "Noteholders") will receive 99.5% of reorganized
Basic's equity as of the effective date of the Plan (the "Effective
Date") (which will be 51.2% of the total outstanding equity in
reorganized Basic upon conversion of the mandatorily convertible
notes assuming such conversion occurs 36 months after the Effective
Date) and eligible existing Noteholders will have the opportunity
to participate in a rights offering for $125
million of new mandatorily convertible unsecured
notes. This new capital commitment will be backstopped
pursuant to an agreement to be entered into by certain supporting
Noteholders.
- Pay all undisputed customer, employee, vendor and other trade
obligations in full in the ordinary course.
- Provide the Company's existing shareholders with a recovery in
the form of 0.5% of reorganized Basic's equity on the Effective
Date (which will be 0.26% of the total outstanding equity in
reorganized Basic upon conversion of the mandatorily convertible
notes assuming such conversion occurs 36 months after the Effective
Date) and 7-year warrants to acquire an additional 6% of total
outstanding equity in reorganized Basic (after giving effect to the
conversion of the mandatorily convertible notes).
Reorganized Basic equity issued under the management incentive
plan and upon exercise of the warrants will further dilute the
equity recovery for Noteholders and existing shareholders described
above.
All aspects of the Plan remain subject to Bankruptcy court
approval and the satisfaction of conditions set forth in the
Plan.
In further support of the restructuring, the Company's secured
term lenders and certain of its Noteholders have committed to
provide up to $90 million of
liquidity, in the form of debtor-in-possession financing, to help
maintain the Company's uninterrupted operations while in chapter
11.
The Company is in active discussions with potential lenders to
find a replacement for its prepetition $100
million asset-based revolving credit facility, under which
no revolving borrowings and approximately $51 million in contingent letter of credit
obligations are outstanding. Basic is exploring its options
and, while it can provide no assurances it will find a replacement
facility, it anticipates that it will find one that will further
enhance its capital structure upon emergence.
Today, Basic commences solicitation on the Plan. Votes on
the Plan must be received by Epiq Corporate Restructuring, the
Company's voting agent, by November 29,
2016, unless the deadline is extended. The record date
for voting has been set as October 11,
2016. Subject to approval by Basic's board of
directors, the Company anticipates filing voluntary petitions for
relief under chapter 11 in the United
States Bankruptcy Court for the District of Delaware by October
25, 2016. Subject to Bankruptcy Court approval of the
Plan and the satisfaction of certain conditions to the Plan and
related transactions, the Company expects to exit chapter 11 before
the end of 2016. There can be no assurances that the Plan
will be approved or confirmed pursuant to the Bankruptcy Code.
The Company recommends that its creditors, including
Noteholders, refer to the information in the Company's Disclosure
Statement, which attaches a copy of the Plan. Information
contained in the Disclosure Statement is subject to change, whether
as a result of amendments, actions of third parties or
otherwise.
This press release is for information purposes only and is not a
solicitation to accept or reject the Plan referred to herein or an
offer to sell or a solicitation of an offer to buy any securities
of the Company. Any solicitation or offer to sell will be
made pursuant to and in accordance with the Disclosure Statement
distributed to Noteholders and applicable law.
More detailed information on the restructuring can be found in
the RSA which will be included with a Form 8‐K being filed with the
SEC today. Further information on the Company as well as the
restructuring process and plan will be included in a disclosure
document which will be used in the solicitation process and will
also be included with the Form 8‐K filed today with the SEC.
Advisors
Weil, Gotshal & Manges LLP is acting as legal counsel,
Moelis & Company LLC is acting as investment banker, and AP
Services, LLC is acting as restructuring advisors to the Company in
connection with its restructuring efforts. Fried, Frank,
Harris, Shriver & Jacobson LLP is acting as legal counsel and
GLC Advisors & Co., LLC is acting as investment banker to
certain supporting Noteholders. Davis
Polk & Wardwell LLP is acting as legal counsel and PJT
Partners Inc. is acting as investment banker to the secured term
loan lenders. Vinson & Elkins LLP is acting as legal
counsel to the asset-based lenders.
About Basic Energy Services
Basic Energy Services provides well site services essential to
maintaining production from the oil and gas wells within its
operating area. The Company employs over 3,500 employees in
more than 100 service points throughout the major oil and gas
producing regions in Texas,
Louisiana, Oklahoma, New
Mexico, Arkansas,
Kansas, California and the Rocky Mountain and
Appalachian regions. Additional information on Basic Energy
Services is available on the Company's website at
www.basicenergyservices.com.
Safe Harbor Statement
This release includes forward-looking statements and
projections, made in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, including
statements regarding the status of the negotiations and our
liquidity. Basic has made every reasonable effort to ensure
that the information and assumptions on which these statements and
projections are based are current, reasonable, and complete.
However, a variety of factors could cause actual results to differ
materially from the projections, anticipated results or other
expectations expressed in this release, including (i) changes in
demand for our services and any related material impact on our
pricing and utilizations rates, (ii) Basic's ability to execute,
manage and integrate acquisitions successfully, (iii) changes in
our expenses, including labor or fuel costs and financing costs,
(iv) continued volatility of oil or natural gas prices, and any
related changes in expenditures by our customers, (v) competition
within our industry, (vi) Basic's ability to comply with its
financial and other covenants and metrics in its debt agreements,
as well as any cross-default provisions, and (vii) (vii) Basic's
ability to obtain approval by the Bankruptcy Court of the Plan or
any other plan of reorganization, including the treatment of the
claims of the Basic's lenders and trade creditors, among others;
(viii) Basic's ability to obtain approval with respect to motions
in the Chapter 11 cases and the Bankruptcy Court's rulings in the
Chapter 11 cases and the outcome of the Chapter 11 cases in
general; (ix) the length of time the Debtors will operate under the
Chapter 11 cases; (x) risks associated with third-party motions in
the Chapter 11 cases, which may interfere with the Debtors' ability
to develop and consummate the Plan or other plan of reorganization;
(xi) the potential adverse effects of the Chapter 11 cases on the
Debtors' liquidity, results of operations or business prospects;
(xii) the ability to execute Basic's business and restructuring
plan; and (xiii) increased legal and advisor costs related to the
Chapter 11 cases and other litigation and the inherent risks
involved in a bankruptcy process. Additional important risk
factors that could cause actual results to differ materially from
expectations are disclosed in Item 1A of Basic's Form 10-K for the
year ended December 31, 2015 and
subsequent Form 10-Qs filed with the SEC. While Basic makes
these statements and projections in good faith, neither Basic nor
its management can guarantee that anticipated future results will
be achieved. Basic assumes no obligation to publicly update
or revise any forward-looking statements made herein or any other
forward-looking statements made by Basic, whether as a result of
new information, future events, or otherwise.
Contacts:
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Alan Krenek, Chief
Financial Officer
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Basic Energy
Services, Inc.
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817-334-4100
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Jack
Lascar
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Dennard-Lascar
Associates
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713-529-6600
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SOURCE Basic Energy Services, Inc.