Weatherford launches solicitation of votes on plan of reorganization

By Caroline Salls

Pittsburgh, June 28 – Weatherford International plc, Weatherford International Ltd. and Weatherford International, LLC launched a solicitation of votes on their proposed pre-packaged Chapter 11 plan of reorganization, according to an 8-K filed Friday with the Securities and Exchange Commission.

Weatherford previously said it expects to implement the restructuring agreement through a pre-packaged Chapter 11 bankruptcy case, which the company said in the 8-K will be filed in the U.S. Bankruptcy Court for the Southern District of Texas. In addition, the company said it expects to file Irish examinership proceedings.

Restructuring terms

Under the restructuring agreement, unsecured noteholders would exchange $7.4 billion of senior unsecured notes for approximately 99% of the equity in the company and $1.25 billion of new tranche B senior unsecured notes.

The company’s existing secured funded debt and unsecured revolving credit facility debt will be repaid in full in cash.

Existing equity will be canceled and exchanged for 1% of the new common stock in the reorganized company and three-year warrants to purchase 10% of the new common stock at a strike price that will be set at an equity value at which the consenting creditors would receive a recovery equal to par plus accrued interest as of the date of the bankruptcy filing.

Weatherford said it will receive commitments for $1.75 billion in debtor-in-possession financing comprised of a $1 billion DIP term loan that would be fully backstopped by members of the noteholder group and an undrawn $750 million revolving credit facility provided by some of the company’s bank lenders.

This financing would be available as part of the Chapter 11 process and be led by Citigroup, subject to conditions to be agreed.

The restructuring agreement also calls for a commitment of up to $1.25 billion in new tranche A senior unsecured notes, backstopped by members of the noteholder group, that would be funded at emergence to repay the DIP financing, pre-bankruptcy revolving credit debt and case costs and to recapitalize the company at exit.

The company said it would have up to $2.5 billion in total funded debt, which could be reduced based on several factors at exit.

The size of the tranche A notes issuance can be adjusted downward based on expected cash needs at exit and could result in a smaller issuance than the $1.25 billion backstopped by members of the noteholder group. Additionally, up to $500 million of the $1.25 billion of tranche B notes to be issued can, at the discretion of individual holders, be converted to equity at the midpoint of the Chapter 11 plan equity value.

The company said in the DIP facilities are expected to mature on the earlier of 12 months after entry into the facilities and the date of completing of the restructuring transaction.

Interest payment skipped

In addition, Weatherford said in the 8-K that it did not pay a $68.9 million interest payment that was due on June 15 on its senior notes.

If the company does not make its interest payment by July 16 or has not filed the bankruptcy cases by then, an event of default would occur under the applicable notes indentures.

Weatherford is an oilfield services company based in Baar, Switzerland.

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