Parker Drilling Company – Amends Restructuring Support Agreement to Include Plan Holdout Saba Capital Management

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January 28, 2019 – The Debtors notified the Court that (i) on January 28, 2019, the Debtors and the necessary consenting stakeholders executed a first amendment to the Debtors’ restructuring support agreement dated December 12, 2018, (the “RSA Amendment” and the “RSA,” respectively), (ii) executed a joinder agreement to the RSA with Saba Capital Management, L.P. (“Saba” and the “Saba RSA Joinder Agreement,” respectively) and (iii) executed an amended and restated backstop commitment agreement (the “Amended and Restated BCA”) amongst the Debtors, Saba and signatories to the original BCA [Docket No. 326]. 
Together these agreements represent a comprehensive settlement with Saba which had otherwise threatened to withhold support for the Debtors’ Plan as the Debtors’ take the last steps in advance of soliciting Plan votes. The Debtors have already received approval for their Disclosure Statement [Docket No. 298 filed on January 21, 2019 and approved on January 23, 2019] which noted then still ongoing negotiations with Saba and committed to update the Disclosure Statement should a settlement be reached in advance of vote solicitation.  
With the execution of the Saba RSA Joinder Agreement, the Debtors now have the support of stakeholders holding approximately 81% of the Debtors’ 7.50% senior notes due August 2020 Notes ($225.0mn), 79% of the Debtors’ 6.75% senior notes due July 2022 ($360mn), 62% of the existing preferred Interests, and 27% of the existing common interests.
Although Saba has made it presence felt throughout the Debtors’ bankruptcy, it is not clear whether having them on board is actually a game changing necessity or merely the elimination of a potential nuisance. In a declaration filed in support of the Petition [Docket No. 15], the Debtors detailed the then level of support for the RSA amongst key stakeholders, noting that, “The Debtors have a concentrated debtholder composition: just four institutions—Brigade, Highbridge, Värde, and Whitebox (collectively, the ‘Consenting Stakeholders’)—hold a significant amount of the Debtors’ funded debt, Preferred Stock (as defined below), and Common Stock (as defined below). This composition has provided the Debtors with a unique opportunity to negotiate and achieve a comprehensive restructuring transaction. These four institutions collectively hold approximately 77% of the Debtors’ Unsecured Notes, approximately 62% of the Debtors’ outstanding preferred stock, and approximately 15% of the Debtors’ outstanding Common Stock.”
In documents filed with the Court (a Reservation of Rights [Docket No. 239] and a Declaration of Status as a Substantial Shareholder [Docket No. 320]), Saba noted its position “As the largest holder of common stock of Debtor Parker Drilling Company and a holder of a substantial amount of Notes” and notes that it is the holder of approximately 1.1mn of the Debtors’ outstanding common stock. The math is pretty straightforward, Saba appears to hold approximately 3% of the Debtors’ unsecured notes and 12% of the Debtors’ common stock. Those numbers, combined with the Court’s blessing of the Disclosure Statement and the Debtors’ willingness to solicit Plan votes without Saba on board, speak volumes. Throughout the lead up to the Chapter 11 filing and into the bankruptcy process, the Debtors have repeatedly voiced concern over a deteriorating oil prices and the need to move quickly in order to restructure while there still remained support levels amongst its stakeholders to do so.
The Debtors’ Disclosure Statement details the significant (or at least disclosable) role played by Saba and the interaction of Saba and its need for speed, noting “In the weeks leading up to the Petition Date, uncertainty in the commodity and capital markets drove the Debtors to move with all haste to finalize their negotiations and lock in a deal that they believe will maximize value….While Saba made certain financing and/or restructuring proposals to the Debtors, the Debtors determined that pursuing such transactions would not maximize value for the Debtors’ stakeholders. Contrary to Saba’s assertion that its proposed transaction provided ‘significant flexibility’ to the Debtors, the Debtors and their Advisors determined that Saba’s proposals would have increased the Debtors’ leverage and the amount of secured debt, thereby decreasing go -forward flexibility….The Debtors received an additional alternative transaction proposal from Saba on January 12, 2019 (the ‘Alternative Proposal’). The Debtors adjourned the hearing on the Disclosure Statement originally scheduled for January 15, 2019 to January 22, 2019 to allow the Debtors additional time to evaluate and consider the Alternative Proposal. The Debtors determined that the Alternative Proposal was not superior to the existing transaction, particularly because the Alternative Proposal would not increase recoveries to each class of Claims and Interests that is Impaired under the Plan. At this time, the Debtors, the Consenting Stakeholders, and Saba are in the midst of discussions regarding a potential comprehensive settlement that would result in Saba’s support of the Plan.”

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