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Seventy Seven Energy Disclosure Statement Approved, Plan Confirmed

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The U.S. Bankruptcy Court approved Seventy Seven Energy’s Disclosure Statement and concurrently issued an order confirming its Amended Joint Prepackaged Chapter 11 Plan.

According to documents filed with the Court, “The key components of the Plan are as follows: Holders of Allowed General Unsecured Claims…will not be affected by the filing of the Chapter 11 Cases and, subject to Bankruptcy Court approval, are anticipated to be paid in full in the ordinary course of business….Holders of Allowed Term Loan Claims will receive (i) their Pro Rata share of the Term Loan Payment; and (ii) continue to hold their Pro Rata share of Term Loans under the Term Loan Credit Agreement….Holders of Allowed Incremental Term Loan Claims will receive their Pro Rata share of (i) the Incremental Term Loan Payment, and (ii) $15 million of the outstanding Incremental Term Loan balance….Holders of Allowed OpCo Notes Claims will receive their Pro Rata share of 96.75%, or if Class 13 (HoldCo Notes Claims) does not vote to accept the Plan, 98.67%, on a fully diluted basis (subject only to the New Warrants and any securities issued under the Management Incentive Plan) of the New HoldCo Common Shares outstanding as of the Effective Date. Holders of Allowed HoldCo Notes Claims will receive their Pro Rata share of 3.25% on a fully diluted basis (subject only to the New Warrants and any securities issued under the Management Incentive Plan) of the New HoldCo Common Shares outstanding as of the Effective Date plus warrants exercisable 15% of the New HoldCo Common Shares at a share price based on a total equity value of $524 million, or if Class 13 HoldCo Notes Claims does not vote to accept the Plan, 1.33% on a fully diluted basis (subject only to the New Warrants and any securities issued under the Management Incentive Plan) of the New HoldCo Common Shares outstanding as of the Effective Date. Existing HoldCo Interests shall be cancelled and discharged and shall be of no further force or effect.” The Disclosure Statement further notes, “The Debtors and the other parties to the Restructuring Support Agreement believe that the restructuring contemplated by the Plan is in the best interests of all stakeholders because it (i) achieves a substantial deleveraging of the Debtors’ balance sheet through consensus with a significant portion of the Debtors’ debt holders, (ii) provides for a reduction of approximately $65 million of the Debtors’ pre-Restructuring annual interest burden on previously funded debt, (iii) provides $100 million of new financing and (iv) eliminates potential deterioration of value–and disruptions to operations–that could otherwise result from protracted and contentious bankruptcy cases.”

This oil and gas well site services and equipment provider filed for Chapter 11 protection on June 7, 2016, listing $2 billion in pre-petition assets. Read more Seventy Seven Energy News.