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FTS International to File Chapter 11, Enters Agreement With Majority of Secured Debtholders

August 25, 2020, 09:00 AM
Filed Under: Energy

FTS International announced that it has entered into a restructuring support agreement (the “Agreement”) with approximately 75 percent of the holders of the Company’s 6.250% senior secured notes due 2022 (the “Secured Notes”) and approximately 64 percent of the Company’s secured debt claims. The Agreement outlines a comprehensive restructuring that will deleverage the Company’s balance sheet by $437.3 million and provide it with the financial flexibility to deliver results-oriented and innovative well completion solutions to its customers. Importantly, the Agreement contemplates that the Company’s vendors, suppliers, and customers will remain unaffected by the transaction.

To implement the restructuring, the Company and its subsidiaries, including FTS International Services, LLC, and FTS International Manufacturing, LLC, will commence voluntary cases under chapter 11 of the U.S. Bankruptcy Code and file a prepackaged chapter 11 plan of reorganization in the coming weeks. The Agreement provides that holders of the Secured Notes and lenders under the Term Loan will exchange their debt claims for $30.6 million in cash consideration and 90.1% of the equity of a reorganized FTSI. Existing holders of FTSI equity will receive the remaining 9.9% of the equity. Additionally, the consenting creditor parties to the Agreement have agreed to allow the Company to use existing cash to fund the chapter 11 cases and continue operations in the ordinary course, thereby preserving critical value for all stakeholders. The Company’s cash balance was $192.7 million as of August 20, 2020. Upon execution of the Agreement, consenting creditors will also receive a cash payment equal to 3% of the principal amount of secured debt claims held by the applicable consenting creditor, subject to the terms and conditions described in the Agreement. Upon completion of the transaction, the Company intends to enter into a new revolving exit facility on terms acceptable to the consenting creditors to provide working capital to support operations.

Kirkland & Ellis LLP and Winston & Strawn LLP are acting as legal counsel, Lazard is acting as financial advisor, and Alvarez & Marsal LLP is acting as restructuring advisor to the Company in connection with the restructuring. Davis Polk & Wardwell LLP is acting as legal counsel and Ducera Partners LLC and Silver Foundry, LP are acting as financial advisors to an ad hoc group of Secured Noteholders and consenting creditors.

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