Basic Energy Services, Inc. (NYSE:BAS) Files An 8-K Bankruptcy or Receivership
Item 1.03 Bankruptcy or Receivership.
As previously disclosed by Basic Energy Services, Inc. (Basic or
the Company) on the Current Report on Form 8-K filed on October 25,
2016, the Company and certain of its subsidiaries (collectively
with Basic, the Debtors) filed voluntary petitions (the Bankruptcy
Petitions, and the cases commenced thereby, the Chapter 11 Cases)
under chapter 11 of title 11 of the United States Code (the
Bankruptcy Code) on October 25, 2016 in the United States
Bankruptcy Court for the District of Delaware (the Court). The
Debtors Chapter 11 Cases are being jointly administered under the
caption In re Basic Energy Services, Inc., et al.>(Case No.
16-12320 (KJC)). The Debtors continue to operate as
debtors-in-possession under the jurisdiction of the Court and in
accordance with the applicable provisions of the Bankruptcy Code.
the Company) on the Current Report on Form 8-K filed on October 25,
2016, the Company and certain of its subsidiaries (collectively
with Basic, the Debtors) filed voluntary petitions (the Bankruptcy
Petitions, and the cases commenced thereby, the Chapter 11 Cases)
under chapter 11 of title 11 of the United States Code (the
Bankruptcy Code) on October 25, 2016 in the United States
Bankruptcy Court for the District of Delaware (the Court). The
Debtors Chapter 11 Cases are being jointly administered under the
caption In re Basic Energy Services, Inc., et al.>(Case No.
16-12320 (KJC)). The Debtors continue to operate as
debtors-in-possession under the jurisdiction of the Court and in
accordance with the applicable provisions of the Bankruptcy Code.
Confirmation of Joint Prepackaged Chapter 11 Plan
On December 9, 2016, the Court entered an order (the Confirmation
Order) approving the Joint Prepackaged Chapter 11 Plan of Basic
Energy Services, Inc. and its Affiliated Debtors (as amended and
supplemented, the Prepackaged Plan). The Debtors anticipate
emerging from Chapter 11 Cases on the date (the Effective Date)
when all remaining conditions to effectiveness to the Prepackaged
Plan are satisfied. Currently, the Debtors expect all conditions
precedent to the Prepackaged Plan to have been satisfied on or
around December 23, 2016, but the Debtors can make no assurances as
to when or whether the Prepackaged Plan will become effective.
Order) approving the Joint Prepackaged Chapter 11 Plan of Basic
Energy Services, Inc. and its Affiliated Debtors (as amended and
supplemented, the Prepackaged Plan). The Debtors anticipate
emerging from Chapter 11 Cases on the date (the Effective Date)
when all remaining conditions to effectiveness to the Prepackaged
Plan are satisfied. Currently, the Debtors expect all conditions
precedent to the Prepackaged Plan to have been satisfied on or
around December 23, 2016, but the Debtors can make no assurances as
to when or whether the Prepackaged Plan will become effective.
Summary of the Prepackaged Plan
The following is a summary of the material terms of the Prepackaged
Plan. This summary highlights only certain substantive provisions
of the Prepackaged Plan and is not intended to be a complete
description of the Prepackaged Plan. This summary is qualified in
its entirety by reference to the full text of the Prepackaged Plan
and the Confirmation Order, which are attached hereto as Exhibits
2.1 and 99.1 respectively, and incorporated by reference herein.
Capitalized terms used but not defined in this Current Report on
Form 8-K have the meanings set forth in the Prepackaged Plan.
Plan. This summary highlights only certain substantive provisions
of the Prepackaged Plan and is not intended to be a complete
description of the Prepackaged Plan. This summary is qualified in
its entirety by reference to the full text of the Prepackaged Plan
and the Confirmation Order, which are attached hereto as Exhibits
2.1 and 99.1 respectively, and incorporated by reference herein.
Capitalized terms used but not defined in this Current Report on
Form 8-K have the meanings set forth in the Prepackaged Plan.
Under the Prepackaged Plan:
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The existing shares of Basic will be cancelled, and
reorganized Basic will issue (i) new common shares (the New Common Shares) and (ii) seven (7) year warrants (the Warrants) entitling their holders upon exercise thereof, on a pro rata basis, to 6% of the total outstanding New Common Shares at a per share price based upon a total equity value of $1,789,000,000 of the reorganized Company (assuming the maximum conversion amounts of the New Convertible Notes (as defined below)), which New Common Shares and Warrants will be distributed as set forth below; |
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The Company completed a rights offering (the Rights
Offering), which was open to participation by eligible holders of the Companys 2019 Notes and 2022 Notes and backstopped by certain supporting holders of Unsecured Notes, of the Companys 9% PIK interest unsecured notes due 2019 in the aggregate principal amount of $131,250,000 (the New Convertible Notes), mandatorily convertible within 36 months or sooner |
upon the occurrence of certain events, and it is expected that the
New Convertible Notes will be deemed converted into equity of Basic
on the Effective Date;
New Convertible Notes will be deemed converted into equity of Basic
on the Effective Date;
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The Companys Amended and Restated Credit Agreement, dated as
of November 26, 2014, as amended (the ABL Credit Agreement) will be amended and restated; |
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The Companys Term Loan Credit Agreement, dated as of February
17, 2016, as amended (the Term Loan Agreement), will be amended and restated on substantially similar terms, subject to certain agreed upon changes set forth in the Prepackaged Plan, and the lenders under the Term Loan Agreement have agreed under the Prepackaged Plan to waive payment of the Applicable Premium (as such term is defined in the Term Loan Agreement) triggered by the filing of the Bankruptcy Petitions; |
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The Unsecured Notes will be cancelled and discharged and the
holders of those Unsecured Notes will receive New Common Shares representing, in the aggregate, 99.5% of the New Common Shares issued on the Effective Date to the Prepackaged Plan, and which upon conversion of the New Convertible Notes (assuming the deemed conversion occurs on the Effective Date) will comprise 57.79% of the total outstanding New Common Shares on the Effective Date (in each case subject to dilution by awards under the Management Incentive Plan and the New Common Shares issuable upon exercise of the Warrants). Eligible holders of Unsecured Notes will also receive 50% of the subscription rights to acquire $125,000,000 in New Convertible Notes in accordance with Rights Offering Procedures; |
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Each holder of existing equity interests in the Company will
receive its pro rata share of (i) New Common Shares representing, in the aggregate, 0.5% of the New Common Shares issued on the Effective Date to the Prepackaged Plan, and which upon conversion of the New Convertible Notes (assuming the deemed conversion occurs on the Effective Date) will comprise 0.29% of the total outstanding New Common Shares on the Effective Date (in each case subject to dilution by awards under the Management Incentive Plan and the New Common Shares issuable upon exercise of the Warrants) and (ii) the Warrants; and |
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Holders of allowed claims arising under the Companys DIP
Facility, administrative expense claims, priority tax claims, other priority claims, other secured claims and general unsecured creditors of the Company will receive in exchange for their claims payment in full in cash or otherwise have their rights unimpaired under the Bankruptcy Code. |
Share Information
As of November 9, 2016, the Company had 43,500,032 shares of common
stock issued and 42,757,644 shares outstanding. By operation of the
Prepackaged Plan, on the Effective Date, all shares of the Companys
common stock will be cancelled and will permanently cease to exist,
and the New Common Shares will be issued as set forth in the
Prepackaged Plan.
stock issued and 42,757,644 shares outstanding. By operation of the
Prepackaged Plan, on the Effective Date, all shares of the Companys
common stock will be cancelled and will permanently cease to exist,
and the New Common Shares will be issued as set forth in the
Prepackaged Plan.
On the Effective Date, the Company expects to issue (i) 14,925,000
New Common Shares to holders of the Unsecured Notes, (ii) 75,000
New Common Shares to existing stockholders of Basic as of the
Effective Date and (iii) assuming a deemed
New Common Shares to holders of the Unsecured Notes, (ii) 75,000
New Common Shares to existing stockholders of Basic as of the
Effective Date and (iii) assuming a deemed
conversion of the New Convertible Notes on the Effective Date,
10,825,802 New Common Shares for the anticipated deemed
conversion of the New Convertible Notes. The Company expects to
reserve an additional (i) 2,066,598 New Common Shares for
issuance upon the potential exercise of the Warrants and (ii)
3,237,671 New Common Shares for issuance under the Management
Incentive Plan. On a fully diluted basis, assuming conversion of
the New Convertibles Notes and exercise of all interests expected
to be issued on or after the Effective Date to the Prepackaged
Plan, the Company would have an aggregate of 31,130,071 New
Common Shares issued and outstanding. The Second Amended and
Restated Certificate of Incorporation of the Company, which is
expected to be filed with the Secretary of State of the State of
Delaware on or prior to the Effective Date, authorizes 85,000,000
New Common Shares, of which 80,000,000 shall be common stock, par
value $0.01 per share, and 5,000,000 shall be preferred stock,
par value $0.01 per share.
10,825,802 New Common Shares for the anticipated deemed
conversion of the New Convertible Notes. The Company expects to
reserve an additional (i) 2,066,598 New Common Shares for
issuance upon the potential exercise of the Warrants and (ii)
3,237,671 New Common Shares for issuance under the Management
Incentive Plan. On a fully diluted basis, assuming conversion of
the New Convertibles Notes and exercise of all interests expected
to be issued on or after the Effective Date to the Prepackaged
Plan, the Company would have an aggregate of 31,130,071 New
Common Shares issued and outstanding. The Second Amended and
Restated Certificate of Incorporation of the Company, which is
expected to be filed with the Secretary of State of the State of
Delaware on or prior to the Effective Date, authorizes 85,000,000
New Common Shares, of which 80,000,000 shall be common stock, par
value $0.01 per share, and 5,000,000 shall be preferred stock,
par value $0.01 per share.
The share amounts and percentages above assume that the Company
timely receives the Conversion Notice (as defined in the
Prepackaged Plan) from the requisite parties otherwise entitled
to receive a majority in aggregate principal amount of the New
Convertible Notes, requesting the conversion of the New
Convertible Notes on the Effective Date of the Prepackaged Plan.
If the New Convertible Notes were not deemed converted on the
Effective Date, the maximum number of shares of New Common Stock
issuable upon conversion of the New Convertible Notes (including
future PIK) would be 14,139,038 shares, and the fully diluted
share amounts and percentages above on the Effective Date would
be adjusted accordingly.
timely receives the Conversion Notice (as defined in the
Prepackaged Plan) from the requisite parties otherwise entitled
to receive a majority in aggregate principal amount of the New
Convertible Notes, requesting the conversion of the New
Convertible Notes on the Effective Date of the Prepackaged Plan.
If the New Convertible Notes were not deemed converted on the
Effective Date, the maximum number of shares of New Common Stock
issuable upon conversion of the New Convertible Notes (including
future PIK) would be 14,139,038 shares, and the fully diluted
share amounts and percentages above on the Effective Date would
be adjusted accordingly.
Assets and Liabilities
As of October 31, 2016, the Debtors total assets were approximately
$1,006,058,000 and total liabilities were approximately
$1,182,964,000. This financial information has not been audited or
reviewed by the Companys independent registered public accounting
firm and may be subject to future reconciliation or adjustments.
This information should not be viewed as indicative of future
results.
$1,006,058,000 and total liabilities were approximately
$1,182,964,000. This financial information has not been audited or
reviewed by the Companys independent registered public accounting
firm and may be subject to future reconciliation or adjustments.
This information should not be viewed as indicative of future
results.
Post-Emergence Governance and Management
On the Effective Date, a new board of directors of the Company (the
New Board) will take office. The Companys New Board will initially
consist of seven members, at least five (5) of whom shall be
designated prior to the Effective Date. Roe Patterson, who is the
Chief Executive Officer and an existing director of the Company,
shall be one of the five directors. The other directors shall be
designated as follows: one (1) by Ascribe Capital LLC; one (1) by
Silver Point Capital, L.P.; and four (4) by the Ad Hoc Group;
provided, however, that notwithstanding the foregoing, any initial
director of the reorganized Company who has not been designated as
of the Effective Date shall be designated by Ascribe Capital LLC
and Silver Point Capital, L.P.. The nomination of the initial
Chairperson of the Company will be satisfactory to the Ad Hoc Group
in its sole discretion in good faith consultation with the Companys
Chief Executive Officer. Other than Mr. Patterson, the current
directors of the Company shall be deemed to have resigned or shall
otherwise cease to be a director of the Company on the Effective
Date.
New Board) will take office. The Companys New Board will initially
consist of seven members, at least five (5) of whom shall be
designated prior to the Effective Date. Roe Patterson, who is the
Chief Executive Officer and an existing director of the Company,
shall be one of the five directors. The other directors shall be
designated as follows: one (1) by Ascribe Capital LLC; one (1) by
Silver Point Capital, L.P.; and four (4) by the Ad Hoc Group;
provided, however, that notwithstanding the foregoing, any initial
director of the reorganized Company who has not been designated as
of the Effective Date shall be designated by Ascribe Capital LLC
and Silver Point Capital, L.P.. The nomination of the initial
Chairperson of the Company will be satisfactory to the Ad Hoc Group
in its sole discretion in good faith consultation with the Companys
Chief Executive Officer. Other than Mr. Patterson, the current
directors of the Company shall be deemed to have resigned or shall
otherwise cease to be a director of the Company on the Effective
Date.
Management Incentive Plan
In connection with the Management Incentive Plan (the MIP) adopted
in connection with the Prepackaged Plan, the Company expects the
New Board to issue initial equity awards under the MIP on the
Effective Date or within 90 days
in connection with the Prepackaged Plan, the Company expects the
New Board to issue initial equity awards under the MIP on the
Effective Date or within 90 days
thereafter. The MIP will provide for equity or equity-linked
instruments providing for an aggregate of up to 3,237,671 New
Common Shares in accordance with the terms of the Prepackaged
Plan.
instruments providing for an aggregate of up to 3,237,671 New
Common Shares in accordance with the terms of the Prepackaged
Plan.
Item 7.01 Regulation FD Disclosure.
On December 9, 2016, Basic issued a press release announcing the
Confirmation Order, as described above in Item 1.03. A copy of the
press release is being furnished as Exhibit 99.2 and is
incorporated into this Item 7.01 by reference.
Confirmation Order, as described above in Item 1.03. A copy of the
press release is being furnished as Exhibit 99.2 and is
incorporated into this Item 7.01 by reference.
The information furnished to Item 7.01, including Exhibit 99.2,
shall not be deemed filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the Exchange Act), is
not subject to the liabilities of that section and is not deemed
incorporated by reference in any filing of Basics under the
Securities Act of 1933, as amended (the Securities Act), unless
specifically identified therein as being incorporated therein by
reference.
shall not be deemed filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the Exchange Act), is
not subject to the liabilities of that section and is not deemed
incorporated by reference in any filing of Basics under the
Securities Act of 1933, as amended (the Securities Act), unless
specifically identified therein as being incorporated therein by
reference.
Item 8.01 Other Events.
The Company cautions that trading in its securities during the
pendency of the Chapter 11 Cases is highly speculative and poses
substantial risks. As discussed above, the Prepackaged Plan has
been approved by the Court, and to the Prepackaged Plan, the
Companys common stock, as well as all unexercised options, warrants
or rights to acquire or receive an equity interest in the Company,
in each case, outstanding immediately prior to effectiveness of the
Prepackaged Plan, will be cancelled and cease to exist on the
Effective Date, and the holders of the Companys common stock will
receive only the pro rata portion of New Common Shares as set forth
in the Prepackaged Plan. Even though the Companys common stock
continues to trade on the New York Stock Exchange (the NYSE), under
the Prepackaged Plan, its underlying value may be significantly
less than the current trading price on the NYSE, and the Companys
stockholders should not view the trading activity of the Companys
common stock on the NYSE or any other market or trading platform as
being indicative of any value they would receive in respect of the
Companys common stock in connection with the Chapter 11 Cases.
pendency of the Chapter 11 Cases is highly speculative and poses
substantial risks. As discussed above, the Prepackaged Plan has
been approved by the Court, and to the Prepackaged Plan, the
Companys common stock, as well as all unexercised options, warrants
or rights to acquire or receive an equity interest in the Company,
in each case, outstanding immediately prior to effectiveness of the
Prepackaged Plan, will be cancelled and cease to exist on the
Effective Date, and the holders of the Companys common stock will
receive only the pro rata portion of New Common Shares as set forth
in the Prepackaged Plan. Even though the Companys common stock
continues to trade on the New York Stock Exchange (the NYSE), under
the Prepackaged Plan, its underlying value may be significantly
less than the current trading price on the NYSE, and the Companys
stockholders should not view the trading activity of the Companys
common stock on the NYSE or any other market or trading platform as
being indicative of any value they would receive in respect of the
Companys common stock in connection with the Chapter 11 Cases.
Forward-Looking Statements
This Current Report on Form 8-K contains certain statements that
are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. We have based these forward-looking statements
largely on our current expectations and projections about future
events and financial trends affecting the financial condition of
our business. These forward-looking statements are subject to a
number of risks, uncertainties and assumptions, including, among
other things, the risk factors discussed in this Current Report and
in our most recent Annual Report on Form 10-K as well as in other
reports filed from time to time by the Company with the Securities
and Exchange Commission (the SEC), most of which are beyond our
control. The words believe, may, estimate, continue, anticipate,
intend, plan, expect, indicate and similar expressions are intended
to identify forward-looking statements. All statements other than
statements of current or historical fact contained in this Current
Report are forward-looking statements. Although we believe that the
forward-looking statements contained in this Current Report are
based upon reasonable assumptions, the forward-looking events and
circumstances discussed in this Current Report may not occur and
actual results could differ materially from those anticipated or
implied in the forward-looking statements.
are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. We have based these forward-looking statements
largely on our current expectations and projections about future
events and financial trends affecting the financial condition of
our business. These forward-looking statements are subject to a
number of risks, uncertainties and assumptions, including, among
other things, the risk factors discussed in this Current Report and
in our most recent Annual Report on Form 10-K as well as in other
reports filed from time to time by the Company with the Securities
and Exchange Commission (the SEC), most of which are beyond our
control. The words believe, may, estimate, continue, anticipate,
intend, plan, expect, indicate and similar expressions are intended
to identify forward-looking statements. All statements other than
statements of current or historical fact contained in this Current
Report are forward-looking statements. Although we believe that the
forward-looking statements contained in this Current Report are
based upon reasonable assumptions, the forward-looking events and
circumstances discussed in this Current Report may not occur and
actual results could differ materially from those anticipated or
implied in the forward-looking statements.
These forward-looking statements relate, in part, to (i) the
ability to satisfy the conditions necessary to declare the
Prepackaged Plan effective in the anticipated timeframe, (ii)
changes in demand for our services and any related material impact
on our pricing and utilizations rates, (iii) Basic’s ability to
execute, manage and integrate acquisitions successfully, (iv)
changes in our expenses, including labor or fuel costs and
financing costs, (v) continued volatility of oil or natural gas
prices, and any related changes in expenditures by our customers,
(vi) competition within our industry, (vii) Basics ability to
comply with its financial and other covenants and metrics in its
debt agreements, as well as any cross-default provisions, (viii)
the length of time the Debtors will operate under the Chapter 11
Cases, (ix) risks associated with third-party motions in the
Chapter 11 Cases, which may interfere with the Debtors ability to
develop and consummate the Prepackaged Plan, (x) the potential
adverse effects of the Chapter 11 Cases on the Debtors liquidity,
results of operations or business prospects, (xi) the ability to
execute the requirements of the Prepackaged Plan subsequent to its
effective date and (xii) 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 Basics 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.
ability to satisfy the conditions necessary to declare the
Prepackaged Plan effective in the anticipated timeframe, (ii)
changes in demand for our services and any related material impact
on our pricing and utilizations rates, (iii) Basic’s ability to
execute, manage and integrate acquisitions successfully, (iv)
changes in our expenses, including labor or fuel costs and
financing costs, (v) continued volatility of oil or natural gas
prices, and any related changes in expenditures by our customers,
(vi) competition within our industry, (vii) Basics ability to
comply with its financial and other covenants and metrics in its
debt agreements, as well as any cross-default provisions, (viii)
the length of time the Debtors will operate under the Chapter 11
Cases, (ix) risks associated with third-party motions in the
Chapter 11 Cases, which may interfere with the Debtors ability to
develop and consummate the Prepackaged Plan, (x) the potential
adverse effects of the Chapter 11 Cases on the Debtors liquidity,
results of operations or business prospects, (xi) the ability to
execute the requirements of the Prepackaged Plan subsequent to its
effective date and (xii) 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 Basics 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.
Item 9.01 Financial Statements and Exhibits.
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Exhibits
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2.1
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First Amended Joint Prepackaged Chapter 11 Plan of Basic
Energy Services, Inc. and its affiliated Debtors, dated December 7, 2016. |
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99.1
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Findings of Fact, Conclusions of Law, and Order Approving
the Debtors Joint Prepackaged Chapter 11 Plan of Basic Energy Services, Inc. and its Affiliated Debtors, dated December 9, 2016. |
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99.2
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Press release dated December 9, 2016
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About Basic Energy Services, Inc. (NYSE:BAS)
Basic Energy Services, Inc. provides a range of well site services in the United States to oil and natural gas drilling and producing companies, including completion and remedial services, fluid services, well servicing and contract drilling. The Company operates through the segment, which include Completion and Remedial Services, Fluid Services, Well Servicing and Contract Drilling. The Company’s operations are managed regionally and are concentrated in the United States onshore oil and natural gas producing regions located in Texas, New Mexico, Oklahoma, Arkansas, Kansas, Louisiana, Wyoming, North Dakota, Colorado, Utah, Montana, West Virginia, California, Ohio and Pennsylvania. Its operations are focused on liquids-rich basins, as well as natural gas-focused shale plays characterized by prolific reserves. It has a presence in the Permian Basin and the Bakken, Eagle Ford, Haynesville and Marcellus shales. Basic Energy Services, Inc. (NYSE:BAS) Recent Trading Information
Basic Energy Services, Inc. (NYSE:BAS) closed its last trading session up +0.028 at 0.445 with 2,024,685 shares trading hands.