Private-Equity-Backed Vista Proppants Files for Bankruptcy
June 10 2020 - 6:55PM
Dow Jones News
By Becky Yerak
Vista Proppants & Logistics LLC, a frac-sand supplier backed
by investment firms First Reserve Corp. and Ares Capital Corp., has
filed for bankruptcy, saying it is facing unprecedented problems
due to the coronavirus pandemic.
Vista said the chapter 11 bankruptcy, from which it expects to
emerge in about four months, will help it reduce its debt and free
itself from dozens of railcar leases that it says it no longer
needs.
Proppants are small granular particles, often sand, that are
part of the fluid mixture injected into a well to hold open the
fractures created during the hydraulic fracturing, or fracking,
process, according to the U.S. Geological Survey.
The frac-sand sector had already been troubled by a slump in
natural-gas and oil prices. Suppliers that filed for bankruptcy
last year, also aiming to shed railcar leases, include Shale
Support Global Holdings LLC and Emerge Energy Services LP.
The Covid-19 pandemic compounded Vista's problems, forcing it to
deal with such logistical challenges as travel restrictions,
social-distancing guidelines, business restrictions and local
"shelter in place" orders, it said.
Revenue and profits have been insufficient to meet financial
obligations, including servicing its debt, and support its capital
spending needs, Vista said.
The Fort Worth, Texas, company said it has lined up $11 million
in financing from a supportive senior lender group that includes
Ares, MSD Partners LP and Angelo Gordon & Co. The financing
will help cover costs and limited business operations during the
bankruptcy, including paying employees and vendors, Vista said. The
lenders will have the right to offer a credit bid for the company,
or buy it by forgiving some of its loans.
Vista said it would continue with limited day-to-day operations
until the oil-and-gas industry rebounds. Its operations include
mining, processing and transporting -- with a fleet of 100 vehicles
-- industrial sand, mostly for oil and gas wells in Texas and
Oklahoma. It has 56 employees after having furloughed most of its
workforce.
The company's biggest debt is a roughly $370 million secured
term loan. Other debts include almost $16 million owed under a
secured asset-based lending facility provided by PlainsCapital
Bank.
Energy-focused private-equity firm First Reserve holds a roughly
31% stake in Vista, according to a filing in U.S. Bankruptcy Court
in Fort Worth.
Ares Capital Corp., a business-development company managed by
private-equity firm Ares Capital Management LLC, owns a small
equity stake, around 2%, the filing said.
Ares Capital Corp. also is a senior lender to Vista. The
frac-sand supplier has a loan from Ares with a face value of
roughly $150 million and a fair value of $71 million, according to
a Securities and Exchange Commission filing. Ares has already
written down its $9.7 million common equity investment in Vista to
zero, the SEC filing shows.
Vista and six related companies have hired law firm Haynes &
Boone LLP. The case, which has been consolidated under number
20-42002, has been assigned to Judge Edward Morris.
Write to Becky Yerak at becky.yerak@wsj.com
(END) Dow Jones Newswires
June 10, 2020 18:40 ET (22:40 GMT)
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