A month after it filed for Chapter 11 bankruptcy with $1.7 billion debt, Oklahoma City-based Seventy Seven Energy Inc. has won a judge’s permission for its reorganization plan.
It virtually lets the company out of bankruptcy and also gives it access to $100 million in a new borrowing deal, according to the Wall Street Journal.
A U.S. Bankruptcy Court judge in Wilmington, Delaware ruled recently to let the company leave bankruptcy. It also means bondholders owed $1.7 billion by the company will take over most of the ownership.
Under the reorganization plan, the company’s unsecured debt would be fully paid and shareholders will get warrants for 20% of new common stock.
“By converting all of the funded bond debt to equity under the plan and structuring the exit facility—Seventy Seven Energy and its affiliates have the means to withstand the volatility endemic in the current commodity market,” said Chief Financial Officer Cary Baetz in court documents.
Seventy Seven Energy took in nearly $1.1 billion last year compared to the $2.1 billion in revenue two years ago in 2014 when the company was created after separating from Chesapeake Energy Corp. Its land-drilling rig fleet is considered one of the largest in the industry with 92 all-electric drilling rigs and 13 hydraulic-fracturing fleets