Fort Worth-based FTS International, Inc., a fracking servicing firm said it plans to file chapter 11 bankruptcy protection and has reached a restructuring support agreement with its investors.
The company said 64% of the secured debt claims and 75% of the holders of the firm’s senior secured notes agreed to the restructuring. FTS said it would make the bankruptcy filing in the coming weeks.
“The agreement outlines a comprehensive restructuring that will deleverage the Company’s balance sheet by $437.3 million and provide it with the financial flexibility to deliver results-oriented and innovative well completion solutions to its customers, “stated the company in making the announcement. It also said its vendors, suppliers and customers “will remain unaffected by the transaction.”
“In recent months, we have worked diligently to cut costs and preserve liquidity under circumstances few people could have predicted. I am extremely pleased to announce this consensual deal with our Secured Noteholders which guarantees that we will remain a strong partner to our customers and suppliers going forward,” said Michael Doss, Chief Executive Officer.
To implement the restructuring, the Company and its subsidiaries, including FTS International Services, LLC, and FTS International Manufacturing, LLC, will commence voluntary cases under chapter 11 of the U.S. Bankruptcy Code and file a prepackaged chapter 11 plan of reorganization in the coming weeks.
The agreement provides that holders of the secured notes and lenders under the Term Loan will exchange their debt claims for $30.6 million in cash consideration and 90.1% of the equity of a reorganized FTSI. Existing holders of FTSI equity will receive the remaining 9.9% of the equity.
The creditors have also agreed to allow FTSI to use existing cash of nearly $193 million to fund the chapter 11 cases and continue operations.
Kirkland & Ellis LLP and Winston & Strawn LLP are acting as legal counsel, Lazard is acting as financial advisor, and Alvarez & Marsal LLP is acting as restructuring advisor to the Company in connection with the restructuring. Davis Polk & Wardwell LLP is acting as legal counsel and Ducera Partners LLC and Silver Foundry, LP are acting as financial advisors to an ad hoc group of Secured Noteholders and consenting creditors.