Forbes Energy Services’ plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code of Forbes and its domestic subsidiaries became effective on April 13, 2017. As previously announced, the plan was confirmed by the U.S. Bankruptcy Court for the Southern District of Texas-Corpus Christi Division on March 29, 2017.
On the effective date, the debtors entered into a new loan and security agreement, with certain financial institutions and Wilmington Trust as agent. The new loan agreement provides for a term loan of $50 million with a stated maturity date of April 13, 2021.
On the effective date, the outstanding principal balance of $15 million plus outstanding interest and fees under the company’s prior loan and security agreement dated as of September 9, 2011 with Regions Bank was paid off and the prior loan agreement was terminated. Also on the effective date, the debtors entered into a letter of credit and bank products facility with Regions to cover the letters of credit and certain bank product obligations, principally related to company credit cards, then outstanding under the prior loan agreement.
The debtors have emerged from a successful restructuring process with a net reduction in their debt of approximately $260 million. On the effective date, all prior equity interests of Forbes were extinguished and a new class of common stock was created. Also on the effective date, all of Forbes’ 9% senior notes due 2019 were cancelled, and each holder of the senior notes received such holder’s pro rata share of $20 million in cash and 100% of the new common stock of reorganized Forbes, subject to dilution.