Pioneer Energy Services emerged from Chapter 11 bankruptcy protection, successfully completing its debt restructuring process and implementing the Chapter 11 reorganization plan confirmed by the U.S. Bankruptcy Court for the Southern District of Texas on May 11.
In connection with the debt restructuring, Pioneer reduced total debt by approximately $267 million, from $475 million to $208 million, eliminated a substantial portion of its cash interest obligations, and obtained a new $75 million asset-backed revolving credit facility. According to an 8K filed with the SEC, PNC Bank is serving as administrative agent for the revolving credit facility.
Pioneer Energy Services’ $208 million of new debt consists of $78 million of floating rate senior secured notes due May 2025, with 50% of the interest in the first year paid in-kind rather than in cash, and $130 million of 5% convertible notes due November 2025, with all interest paid in-kind rather than in cash. Based on current interest rates, total cash interest payable on the notes is anticipated to be approximately $4.3 million in the first year and $8.6 million thereafter.
The convertible notes are initially convertible into 75 shares of common stock per $1,000 principal amount of the convertible notes, subject to customary anti-dilution adjustments. The convertible notes are mandatorily convertible at maturity as long as the value of the shares issuable upon conversion exceeds the principal amount of the notes plus accrued interest. In addition, upon the occurrence of certain “merger events”, which include a sale of the company and acquisitions by the company where the acquired entity has an equity value in excess of $100 million or the convertible noteholders have consented, the company may require all or a portion of the convertible notes to convert into shares of common stock. Upon conversion of the convertible notes, and assuming the company does not incur additional debt (including borrowings under its revolving credit facility), the company would have $82.4 million of debt outstanding, which includes paid in-kind interest.
“Today marks the completion of a restructuring and recapitalization that allows the company to continue providing our customers with industry-leading expertise and safe, value-added services,” Wm. Stacy Locke, CEO of Pioneer Energy Services, said. “On behalf of the management team, I would like to extend my gratitude to our employees for their hard work and dedication and to our customers, suppliers and stakeholders for their support during this process.”
Pioneer Energy Services also announced a newly constituted board of directors, effective in conjunction with the company’s emergence from Chapter 11. The new board is composed of David Coppé, John Jacobi, Locke, Matt Porter and Charlie Thompson.
“Our newly constituted board includes a group of individuals with a range of experience and expertise,” Locke said. “We look forward to benefiting from their guidance as we embark on our new beginning.”
Shares of Pioneer Energy Services’ common stock will no longer trade on the OTC Pink Marketplace. The company anticipates trading of its common stock on the OTC market to commence again in the near future.
Pioneer Energy Services provides well servicing and wireline services to producers primarily in the Texas and Rocky Mountain regions. Pioneer also provides contract land drilling services to oil and gas operators in the Texas and Appalachia regions and internationally in Colombia.