Independence Contract Drilling (ICD) entered into a plan of reorganization unanimously supported by all of the holders of the company’s senior secured PIK toggle notes due 2026. The plan is expected to substantially reduce ICD’s debt and provide increased financial flexibility, accelerate investments in the company’s super-spec rig fleet and position the company for long-term success. Under the terms of the plan, almost all of the senior secured convertible notes, including accrued interest, will be equitized, and all other secured and unsecured creditors will be paid in the ordinary course without impairment._x000D_
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“I am pleased we have reached agreement with the two holders of our senior secured convertible notes on a restructuring that materially strengthens ICD and de-levers our balance sheet. I am excited that as part of the restructuring the noteholders, who have deep oilfield experience and have been investors in ICD for some time, will provide us with additional capital that will support rig reactivations and continued investments in technology and performance enhancing features for our rig fleet,” Anthony Gallegos, CEO of ICD, said. “I believe this new capital supports our overall efforts and vision to deliver contract drilling services exceeding the expectations of our E&P customer base. I am equally pleased that under the terms of the negotiated plan, we will continue to operate our business in the ordinary course, including payment of all vendors and employees.”_x000D_
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On Dec. 2, 2024, ICD commenced a prepackaged Chapter 11 process to implement the plan in the United States Bankruptcy Court for the Southern District of Texas, Houston division. The plan includes the following:_x000D_
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- A debtor-in-possession (DIP) financing facility provided by the noteholders consisting of up to $32.5 million to support the company’s ongoing operations and obligations and repay outstanding revolving credit obligations, vendors and employees
- The noteholders’ commitment to provide exit financing of $40 million to refinance outstanding DIP financing obligations and $7.5 million of noteholder claims, and support ICD’s future operations and investments in its super-spec rig fleet
- The exchange of all remaining noteholder claims (totaling approximately $199.3 million) for equity securities of the reorganized company, which will not be listed for public trading
- The cancellation of the company’s common stock
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In connection with the implementation of the plan, the company filed other various “first day” motions with the court, requesting customary relief that, once approved by the court, will further facilitate the company operating its businesses during the streamlined case and facilitate the payment of all vendors and employees in the ordinary course of business, including undisputed claims on both a pre-petition and post-petition basis._x000D_
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Sidley Austin is the company’s restructuring counsel, Riveron is the restructuring advisor and Piper Sandler is the investment banker. Latham & Watkins is legal counsel for the noteholders.
