Top Lower 48 completions expert FTS International Inc. has launched a prepackaged restructuring plan with the support of most of its lenders in a debt-for-equity swap to delever the balance sheet.
Following a restructuring support agreement filed in August, FTS issued an amended plan that received support of nearly 88% of the debtholders. With the prepackaged approval, the Fort Worth, TX-based operator on Tuesday filed for Chapter 11 protection in U.S. Bankruptcy Court for the Southern District of Texas.
“The company will continue to operate in the ordinary course of business during the restructuring,” using existing cash for funding, it said. The initial agreement called for erasing about $437 million of debt. The cash balance as of last Friday (Sept. 18) was $161 million.
The restructuring plan, which requires court approval, would allow lenders and bondholders to swap debt for a near 90% equity stake and about $31 million in cash. Current shareholders would retain close to 10% of the equity.
FTS, which works in nearly every major onshore oil and gas basin, has been stung by crumbling oil and gas demand, which has led to bankruptcies by dozens of energy operators since the start of the year.
FTS CEO Michael Doss last month said the impacts from Covid-19 and the oil price war earlier this year between Saudi Arabia and Russia had led to a challenging second quarter.
FTS adjusted to the reduced demand by “aggressively cutting costs to preserve liquidity,” Doss said. Annual costs of revenue per active fleet were cut by around $6 million and another $18 million was lopped from selling, general and administrative expenses.
“We continue to expect a challenging market for the remainder of the year,” Doss said last month. “While I am encouraged by the recent improvement in activity levels from the trough, margins are expected to remain compressed.”
Kirkland & Ellis LLP and Winston & Strawn LLP are acting as legal counsel, with Lazard Frères & Co. LLC as financial adviser, and Alvarez & Marsal LLP the restructuring adviser.
In related news, Oklahoma exploration-focused Chisholm Oil & Gas Operating LLC on Wednesday received approval in U.S. Bankruptcy Court in Delaware to reorganize under Chapter 11. Chisholm’s plan, initially filed in June, would cut $480 million of debt.
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