Fracture sand provider Vista Proppants & Logistics LLC has filed for bankruptcy protection, citing financial pressures related to the coronavirus pandemic.
The private equity sponsored operator, financed by First Reserve Corp. and Ares Capital Corp., said the Chapter 11 reorganization would position it for long-term success “given the current significantly depressed industry environment.”
The company and its subsidiaries, which serve operators in the Permian Basin, Eagle Ford Shale and in Oklahoma, “are undergoing unprecedented financial distress and operational challenges relating to the Covid-19 pandemic,” it said in the filing in U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division.
The Chapter 11 filings “represent a significant milestone in our financial restructuring process to significantly strengthen our financial condition by reducing debt, enhancing liquidity and best positioning our company to weather the storm and proactively respond when the market begins to recover,” CFO Kristin Whitley Smith said.
“After thoroughly evaluating our options and strategic alternatives with our advisers and board of directors, we are confident that this is the best path forward for Vista and our stakeholders. During the reorganization proceeding, we will continue with limited day-to-day operations until an industry rebound, and we will maintain ample liquidity and resources to support our business.”
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First Reserve holds about a 31% stake in Vista, while Ares controls around 2%, according to a filing.
Vista has secured $11 million in financing from a senior lender group that includes Ares, MSD Partners LP and Angelo Gordon & Co. that would be used to, among other things, help cover payroll costs and payments to vendors.
The company and six related entities have retained Alvarez & Marsal North America LLC as its chief restructuring officer, as well as Haynes and Boone LLP as bankruptcy counsel.
According to a recent report by Haynes and Boone, at least 19 North American exploration and production operators have sought bankruptcy protection since the start of the year, and it is “reasonable to expect” more companies will seek protection from creditors in the months to come.
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