Alvarez & Marsal is acting as restructuring advisor, Kirkland & Ellis and Winston & Strawn are acting as legal counsel, and Lazard is acting as financial advisor to FTS International, which entered into a restructuring support agreement with approximately 75% of the holders of the company’s 6.25% senior secured notes due 2022 and approximately 64% of the company’s secured debt claims.
The agreement outlines a restructuring that will deleverage the company’s balance sheet by $437.3 million and provide it with the financial flexibility to continue operating. Importantly, the agreement contemplates that the company’s 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.” Michael Doss, CEO of FTS International, said. “We could not have reached this agreement without the support of our lenders, employees, customers and suppliers, and I thank you for that.”
To implement the restructuring, FTS International and its subsidiaries, including FTS International Services and FTS International Manufacturing, 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 FTS International. Existing holders of FTS International equity will receive the remaining 9.9% of the equity. Additionally, the consenting creditor parties to the agreement agreed to allow the company to use existing cash to fund the Chapter 11 cases and continue operations in the ordinary course, thereby preserving critical value for all stakeholders. The company’s cash balance was $192.7 million as of August 20, 2020. Upon execution of the agreement, consenting creditors also will receive a cash payment equal to 3% of the principal amount of secured debt claims held by the applicable consenting creditor, subject to the terms and conditions described in the agreement. Upon completion of the transaction, FTI International intends to enter into a new revolving exit facility on terms acceptable to the consenting creditors to provide working capital to support operations.
Davis Polk & Wardwell is acting as legal counsel and Ducera Partners and Silver Foundry are acting as financial advisors to an ad hoc group of secured noteholders and consenting creditors.
Headquartered in Fort Worth, TX, FTS International is an independent hydraulic fracturing service company.
