Nine Energy Service, an onshore completion solutions provider, reached an agreement with its debtholders on a comprehensive recapitalization transaction designed to strengthen its capital structure and support the company’s long-term financial health. To implement the transaction, Nine Energy Service and certain of its U.S. and Canadian subsidiaries have filed a voluntary, prepackaged Chapter 11 case in the U.S. Bankruptcy Court for the Southern District of Texas. The company’s operations outside the U.S. and Canada are not included in the filing.
Through the restructuring transactions, Nine will eliminate approximately $320 million of senior secured notes, reducing its annual interest expense by roughly $40 million. The company will continue operating as usual throughout the court-supervised process.
“Since our founding, we have consistently risen to meet the challenges of an ever-changing industry and support our oil and gas partners in North America and abroad. Today, we are taking an important strategic step to position the business for long-term success and ensure we have the appropriate capital structure to support us going forward,” Ann Fox, president and CEO of Nine Energy Service, said. “We are confident that entering into this agreement will enable us to stay focused on what matters most: supplying the teams, the tools and the technology to ensure success for our customers, safely and efficiently. I would like to thank our Nine team for their resilience, tenacity and commitment and our customers and vendors for their ongoing partnership and support. We look forward to emerging from this process with a healthier financial foundation, well-positioned to offer comprehensive well solutions for many years to come.”
The company began to solicit votes on its restructuring plan in advance of filing the Chapter 11 petitions and expects to complete the process and emerge from Chapter 11 within 45 days. Nine has received a commitment for $125 million in debtor-in-possession financing from its existing ABL lender to support the business throughout the Chapter 11 process. The existing ABL lender also committed to providing an exit ABL facility of $135 million upon emergence from Chapter 11.
The company has filed a number of customary motions with the court to support ordinary course operations, enabling the company to pay employees as usual and continue benefits without disruption. The company has also filed an “all-trade” motion with the court that will allow it to pay vendors for all goods and services that were provided in ordinary course of business before and after the Chapter 11 filing. Nine expects to receive approval for these requests.
Nine is advised in this matter by Kirkland & Ellis and Kane Russell Coleman Logan as legal counsel, Moelis as investment banker and FTI Consulting as financial and communications advisors. Certain noteholders under the company’s senior secured notes indenture are advised by Milbank as legal counsel and Houlihan Lokey as investment banker. The ABL lender is advised by Paul Hastings as legal counsel.
