Days after announcing it had started asking for approval from its creditors of a prepackaqed Chapter 11 bankruptcy reorganization plan, Oklahoma City-based Seventy Seven Energy Inc. stated it had entered into a second amended and Restated Restructuring Support agreement. But it still intends to head to bankruptcy court.
In Friday’s announcement, the struggling energy company said it had won approval of 100% of certain lenders of the outstanding principal amount under one set of loans and 86% approval from holders of the Company’s $400 million Term Loan Credit Agreement.
“The exchange of debt for equity will provide us with a significantly deleveraged balance sheet and we will emerge from this process with the ability to take advantage of our operational strengths and strong asset base to grow our business as market conditions improve,” said Jerry Winchester, Chief Executive Officer.
The second agreement supersedes one announced and dated May 3, 2016 and will require the parties to support the consensual Joint Prepackaged Plan of Reorganization to be filed under Chapter 11. In exchange for their support, the Consenting 2022 Noteholders will be entitled to appoint a board observer and consultation rights with respect to the naming of independent members of the reorganized Company’s Board of Directors.
“The participation of all of our debtholders in this process is a further endorsement by the stakeholders of Seventy Seven Energy in the future of this company,” said Winchester.
The announcement indicated that the company intends to begin the Chapter 11 movement on or before June 9. Under its plan, all trade creditors, suppliers nad contractors will be paid in the ordinary course of business. The firm said employees can expect that operations will continue as usual “and they will be paid in the ordinary course.”
