Seventy Seven Energy emerges from pre-packaged Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, Aug. 1 – Seventy Seven Energy Inc. completed its pre-packaged restructuring and recapitalization and emerged from Chapter 11 bankruptcy protection on Monday, according to a news release.

The company’s Chapter 11 plan of reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware on July 14.

Seventy Seven said execution of the balance sheet restructuring resulted in a conversion of $1.1 billion of pre-bankruptcy debt into equity.

“The rapid completion of the bankruptcy process and today’s emergence from Chapter 11 represent the final step forward in our financial restructuring,” chief executive officer Jerry Winchester said in the release.

“We will now be able to focus completely on maximizing our operational strengths and assets to grow our business as the market recovers. We are very enthusiastic about the future of the company.”

As previously reported, the restructuring plan includes the following terms:

• Trade creditors and other general unsecured creditors will be paid in full;

• The $650 million of 6 5/8% notes will be exchanged into 96.75% of the company’s new common stock;

• The $450 million of 6˝% notes due 2022 will be exchanged for 3.25% of the new common stock plus warrants exercisable for 15% of the new common stock at predetermined equity values;

• If all classes of claims entitled to vote accepted the plan, holders of existing common stock will receive two series of warrants exercisable for 20% of the new common stock at predetermined equity values;

• The company’s existing $400 million secured term loan will be reinstated on identical terms; and

• A consent fee will be paid to term loan holders equal to 2% of the incremental term loan plus $15 million of the outstanding incremental term loan balance, together with the reinstatement of the remaining $84 million balance of the incremental term loan on identical terms other than the suspension of any prepayment premium for a period of 18 months.

The company said it expects its common stock to be traded over the counter pending listing on a major exchange at some point in the future.

Based in Oklahoma City, Seventy Seven provides wellsite services and equipment to U.S. land-based exploration and production customers. The company filed for bankruptcy on June 7 under Chapter 11 case number 16-11409.

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