Parker Drilling and its material U.S. subsidiaries entered into a restructuring support agreement with holders of the company’s securities, including a significant amount of its 7.50% senior notes due 2020 and 6.75% senior notes due 2022, outstanding preferred stock and outstanding common stock.
To implement the terms of the RSA, Parker has voluntarily filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. Parker’s non-U.S. subsidiaries and certain U.S. subsidiaries are excluded from the filing and will not be affected.
According to a related 8-K filing, Bank of America and Deutsche Bank, New York Branch, have agreed to provide Parker Drilling with debtor-in-possession financing to facilitate the restructuring, including a $50 million asset-based revolving term loan and a $20 million standby letter of credit facility.
Both banks have also agreed to provide exit financing, including a $50 million first lien exit facility (which may be upsized to $100 million after emergence from Chapter 11) and a $210 million second lien exit facility due 2024 to satisfy the remaining existing notes.
Parker’s proposed plan of reorganization would reduce approximately two-thirds of funded debt and inject $95 million of new, fully committed equity capital through a backstopped rights offering, subject to court approval. Current preferred equity holders, as well as common equity holders if the class votes to approve the plan, would receive reorganized equity and warrants.
All existing customer and vendor contracts are expected to remain in place and be serviced in the ordinary course of business. The company also intends to continue to pay employee wages and benefits as usual, and to pay trade creditors in full. Employees, customers and vendors should see minimal interruption through this process.
The existing management team is expected to remain in place, and Parker expects to complete the restructuring process in the first quarter of 2019.
Kirkland & Ellis is serving as legal advisor to Parker in connection with the restructuring. Moelis & Company is serving as Parker’s investment banker and Alvarez & Marsal as its financial advisor.
Akin Gump Strauss Hauer & Feld is serving as legal advisor to the consenting stakeholders, while Houlihan Lokey acts as their financial advisor.
Parker Drilling provides drilling services and rental tools to the energy industry, working with operators in the inland waters of the U.S. Gulf of Mexico and in select U.S. and international markets and harsh environment regions.