Key Energy Services has entered into a Restructuring Support Agreement with lenders under its term loan facility collectively holding over 99.5% 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 newly issued shares of the common stock of the company and $20 million of term loans under a new approximately $51.2 million term loan facility.

According to a related 8-K filing Courtland Products is serving as administrative agent for the term loan.

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 and a new management incentive plan, 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.

“This agreement marks an important milestone in our process of addressing Key’s capital structure, reducing our debt and improving the company’s liquidity. I would like to thank Key’s dedicated employees, who through this period of uncertainty, have continued to provide safe and excellent service to our customers. While the market conditions we face in 2020 are expected to remain challenging, I believe that with the improved capital structure this transaction affords Key, our great employees will be able to take advantage of the opportunities present in today’s market and continue on our path to improved financial performance,” said Marshall Dodson, Key’s Interim chief executive officer.

Key Energy Services is the largest onshore, rig-based well servicing contractor based on the number of rigs owned.

Follow the story on ABF Journal:

BofA, Cortland Extend Key Energy Forbearance Agreements
Key Energy Closes Forbearance Agreements with Term Loan & ABL Lenders
BofA, Others to Support Key Energy Reorganization