Basic Energy Services’ Pre-packaged Chapter 11 Bankruptcy Filing

Davis Polk is advising certain funds affiliated with Goldman Sachs Merchant Banking Division and Riverstone Holdings, LLC, as term loan lenders under both a prepetition $165 million secured term loan and a $90 million secured superpriority debtor-in-possession facility in the pre-packaged chapter 11 restructuring of Basic Energy Services, Inc. and certain of its subsidiaries (collectively, “Basic Energy”).

On October 23, 2016, Basic Energy, the term loan lenders and an ad hoc group of noteholders holding more than 80% of the $775 million principal amount due under prepetition unsecured notes entered into a restructuring support agreement (the “RSA”) for a comprehensive recapitalization of Basic Energy. Under the terms of the pre-packaged plan of reorganization, Basic Energy will replace the term loan with an amended and restated term loan and distribute to the holders of the unsecured notes 99.5% of the equity of reorganized Basic Energy (subject to dilution by the rights offering, management incentive plan and certain warrants) plus participation rights to subscribe to a rights offering for $125 million of new mandatorily convertible unsecured notes. Existing common stock holders will receive 0.5% of the equity in reorganized Basic Energy (subject to dilution by the rights offering, the management incentive plan and certain warrants) plus certain warrants. On October 25, 2016, Basic Energy filed voluntary petitions for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware.

The RSA also contemplates a $90 million delayed-draw superpriority debtor-in-possession financing facility provided by the term loan lenders and certain holders of the unsecured notes to be used for general working capital and other purposes during Basic Energy’s chapter 11 cases. The debtor-in-possession facility is subject to approval by the Bankruptcy Court. Basic’s “first day” hearing will be held on October 26, 2016.

Basic Energy is headquartered in Fort Worth, Texas and provides a wide range of well site services including completion and remediation services, well servicing, fluid services and contract drilling to over 2,000 land-based oil and natural gas producing companies.

The Davis Polk insolvency and restructuring team includes partners Marshall S. Huebner (Picture) and Darren S. Klein and associate Adam L. Shpeen. The credit team includes partners Jinsoo H. Kim and Meyer C. Dworkin and associates Scott M. Herrig and Conor J. McCormick.

Involved fees earner: Marshall Huebner – Davis Polk & Wardwell; Darren Klein – Davis Polk & Wardwell; Adam Shpeen – Davis Polk & Wardwell; Jinsoo Kim – Davis Polk & Wardwell; Meyer Dworkin – Davis Polk & Wardwell; Scott Herrig – Davis Polk & Wardwell; Conor McCormick – Davis Polk & Wardwell;

Law Firms: Davis Polk & Wardwell;

Clients: Riverstone Holdings LLC; Goldman Sachs Group, Merchant Banking Division;


Author: Michael Patrini