Key Energy Services’ $242 Million Restructuring

Sullivan & Cromwell LLP advised Key Energy Services in an out-of-court restructuring.

Key Energy Services, Inc. announced that it has entered into a Restructuring Support Agreement (including the exhibit thereto, the “RSA”) with lenders under its term loan facility collectively holding over 99.5% (the “Supporting Term Lenders”) of the principal amount of the Company’s outstanding term loans. The RSA contemplates a series of out-of-court transactions that will effectuate a financial restructuring of the Company’s capital structure and indebtedness and related facilities, including the conversion of approximately $241.9 million aggregate outstanding principal of the Company’s term loans (together with accrued interest thereon) into (i) newly issued shares of the common stock of the Company and (ii) $20 million of term loans under a new approximately $51.2 million term loan facility (the “Restructuring”). The Restructuring is expected to reduce the Company’s long term debt by approximately 80%.

Upon completion of the Restructuring, Supporting Term Lenders are expected to own 97% of the common stock of the Company and holders of existing equity interests are expected to hold 3% of the common stock of the Company, in each case subject to potential dilution as a result of certain new warrants (the “New Warrants”) and a new management incentive plan (the “MIP”), each as described further below.

Under the RSA, the parties have agreed to support and cooperate with each other in good faith, to coordinate and to use their respective commercially reasonable best efforts to consummate the Restructuring as soon as reasonably practicable on the terms set forth in the RSA. The Company currently expects to complete the restructuring by the end of February 2020.

Key Energy Services is the largest onshore, rig-based well servicing contractor based on the number of rigs owned. Key provides a complete range of well intervention services and has operations in all major onshore oil and gas producing regions of the continental United States.

The S&C team was led by Alison Ressler (Pictue) and Patrick Brown on corporate matters. James Bromley and Ari Blaut led the team on restructuring matters. David Spitzer advised on tax matters.

Involved fees earner: Ari Blaut – Sullivan & Cromwell; James Bromley – Sullivan & Cromwell; Patrick Brown – Sullivan & Cromwell; Alison Ressler – Sullivan & Cromwell; David Spitzer – Sullivan & Cromwell;

Law Firms: Sullivan & Cromwell;

Clients: Key Energy Services;

Author: Ambrogio Visconti