Weatherford International plc – Announces Ballot Results, Files Key Exit Documents and Schedules September 11th Confirmation Hearing

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September 4, 2019 – The Debtors' claims agent notified the Court of the results of Plan voting [Docket No. 313]. There were two classes that were entitled to vote on the Plan and each of them voted to accept; although holders of more than 20% of the Debtors' common stock (set to get a 1% recovery in the form of the emerged Debtors' common stock) voted to reject (approximately 50% of the Debtors' 1 billion shares of common stock were voted). The 20% rises to 25% if votes excluded by the claims agent had been included. The claims agents' notice does not list voting shareholders by name although there clearly remains quarters of stiff shareholder opposition. Much more significantly, holders of $6.4bn of pre-petition notes claims (representing 99.79% in amount) voted in favor of the Plan which will see them recover their pro rata share of 99% of the emerged Debtors' common stock and post-petition senior unsecured notes.

Equity Opposition

On July 22, 2019, an ad hoc committee of shareholders (the "Ad Hoc Committee" which includes Silver Point Capital, L.P., Paloma Partners Management Company, Latigo Partners, Diameter Master Fund LP, funds, accounts, and other clients managed by affiliates of Apollo Global Management, and Weiss Multi-Strategy Advisers, LLC) asked the Court for an order appointing a statutory committee of equity security holders (an “Equity Committee”) that they insisted is needed to conduct an investigation regarding (i) the events leading to the Debtors' May 10, 2019, Restructuring Support Agreement (the “RSA”) with holders of approximately 62% in aggregate principal amount of the Debtors’ outstanding unsecured notes (ii) and the treatment of those noteholders (including in respect of releases) under the Plan [Docket No. 193]. The Ad Hoc Committee is clearly also unhappy that the management of a company that has whipsawed between a planned reverse stock split…and bankruptcy, "will get 400% more recovery than the current Shareholders will receive" as well as benefit from continued employment (and an equity position); all the while cloaked in the protective armor of broad releases in respect of pre-bankruptcy conduct. 

On July 30, 2019, the Debtors pushed back [Docket No. 239] arguing that even with "computing gymnastics and rank cherry-picking," equity was "hopelessly out of the money."

The Plan voting results were as follows:

  • Class 7 (“Prepetition Notes Claims”) – 1,780 claims holders, representing $6,419,301,330 (or 99.79%) in amount and 97.53% in number, accepted the Plan. 45 claims holders, representing $13,642,000 (or 0.21%) in amount and 2.47% in number, rejected the Plan.
  • Class 10 (“Existing Common Stock”) – accepted by holders representing 387,344,353 shares (or 79.38%) in amount and rejected by holders representing 100,622,047 (or 20.62%) in amount.

On September 4, 2019, the Debtors also filed a Plan Supplement to their First Amended Joint Prepackaged Plan of Reorganization [Docket No. 315].

The Supplement attached the following documents:

  • Exhibit 1: First Amended Plan of Reorganization
  • Exhibit 2: Redline of First Amended Plan of Reorganization to Original Plan of Reorganization
  • Exhibit 3: Restructuring Support Agreement [Docket No. 9, Exhibit A]
  • Exhibit 4: First Amendment to the Restructuring Support Agreement [Docket No. 9, Exhibit B]
  • Exhibit 5: Second Amendment to the Restructuring Support Agreement
  • Exhibit 6: Amended/New Corporate Governance Documents
  • Exhibit 7: Directors and Officers of the Reorganized Debtors
  • Exhibit 8: Backstop Commitment Agreement
  • Exhibit 9: Retained Causes of Action
  • Exhibit 10: New Registration Rights Agreement
  • Exhibit 11: New Tranche A Senior Unsecured Notes Indenture
  • Exhibit 12: New Tranche B Senior Unsecured Notes Indenture
  • Exhibit 13: Rights Offering Subscription and/or Tranche B Equity Election Form
  • Exhibit 14: New Warrant Term Sheet [Docket No. 62, Exhibit K]
  • Exhibit 15: New Warrant Agreement
  • Exhibit 16: Amended Reorganization Steps Overview
  • Exhibit 17: Amended Description of Reorganization Steps

A combined hearing to approve the Disclosure Statement and confirm the Plan is scheduled for September 11, 2019.

Further Background on Plan and Classes

Plan Overview

The Debtors' Disclosure Statement provides the following Plan overview: 

“The Plan contemplates certain transactions, including, without limitation, the following transactions (described in greater detail in Section IV herein):

  •  each Holder of an Allowed Prepetition Revolving Credit Claim will receive payment in Cash equal to such Allowed Claim from the DIP Facility;
  • each Holder of an Allowed Prepetition Term Loan Claim will receive payment in Cash equal to such Allowed Claim from the DIP Facility;
  • each Holder of an Allowed Prepetition A&R Claim will receive payment in Cash equal to such Allowed Claim from the Exit Facility;
  • each Holder of an Allowed Prepetition Notes Claim will receive its Pro Rata share of (i) 99% of the New Common Stock, subject to dilution on account of equity issued pursuant to the New Management Incentive Plan, the New Tranche B Equity Conversion, and the New Common Stock issuable pursuant to the New Warrants and (ii) the New Tranche B Senior Unsecured Notes; provided, however, that each Holder of Allowed Prepetition Notes Claims will have the option, in its sole discretion, of converting its New Tranche B Senior Unsecured Notes pursuant to the Tranche B Equity Conversion at the mid-point of the equity value range set forth in this Disclosure Statement; provided, further that the aggregate principal amount of New Tranche B Senior Unsecured Notes converted into New Common Stock will not exceed $500,000,000.  To the extent that less than $500,000,000 in principal amount of the New Tranche B Senior Unsecured Notes is converted in New Common Stock pursuant to the Tranche B Equity Conversion, any Holder of Allowed Prepetition Notes Claims that elected to convert its full Pro Rata share of New Tranche B Senior Unsecured Notes into New Common Stock in the Tranche B Equity Conversion shall also be eligible to exercise their Overallotment Rights.  Procedures for the effectuation of theTranche B Equity Conversion and the Overallotment Rights are set forth in Article V.V of the Plan.  Each Holder of Prepetition Notes issued by Weatherford International, LLC will receive New Tranche B Senior Unsecured Notes issued by Reorganized Weatherford Delaware and each Holder of Prepetition Notes issued by Weatherford International Ltd. will receive New Tranche B Senior Unsecured Notes issued by Reorganized Weatherford Bermuda;
  • each Holder of an Allowed Prepetition Notes Claim will receive Subscription Rights to purchase its Pro Rata share of New Tranche A Senior Unsecured Notes pursuant to the Rights Offering (as defined below) and in accordance with the applicable Rights Offerings Procedures;
  • Existing Common Stock will be cancelled and each Holder of Existing Common Stock will receive its Pro Rata share of (i) 1.0% of the New Common Stock, subject to dilution on account of the equity issued pursuant to the New Management Incentive Plan, the Tranche B Equity Conversion and the New Common Stock issuable pursuant to the New Warrants and (ii) the New Warrants;
  • the Allowed DIP Facility Claims will be paid in full in Cash upon emergence;
  • the Intercompany Claims will be adjusted, reinstated, compromised, or cancelled to the extent determined appropriate by the Debtors, with the consent of the Required Consenting Noteholders (and to the extent permitted by the laws of the Debtor’s jurisdiction of incorporation if non-bankruptcy law applies);
  • the Intercompany Equity Interests will be reinstated for administrative convenience or cancelled as determined by the Debtors, with the reasonable consent of the Required Consenting Noteholders;
  • the Unexercised Equity Interests will be cancelled, and the Holders of such Unexercised Equity Interests will not receive any distribution or retain any property on account of such Unexercised Equity Interests; and
  • the legal, equitable, and contractual rights of the Holders of Allowed Other Priority Claims, Allowed Other Secured Claims, Allowed General Unsecured Claims, and Allowed Secured Tax Claims will be unaltered by the Plan.

Debtors' Prepetition and Re-organized Capital Structure

Pre-Petition Capital Structure

Reorganized Capital Structure

Prepetition Amended & Restated Credit Facility ("A&R")

$305,000,000

Exit Facility (undrawn on Effective Date

Up to $1,000,000,000

Prepetition Term Loan

$297,500,000

New Tranche A Senior Unsecured Notes

Up to $1,250,000,000

Prepetition Revolver

$316,742,581

New Tranche B Senior Unsecured Notes

Up to $1,250,000,000

Prepetition Notes

$7,427,067,000

N/A

N/A

Total Funded Debt

$8,346,309,581

Total Funded Debt

 Up to $2,500,000,000

Summary of Classes, Claims, Voting Rights and Projected Recoveries (defined terms as defined in the Plan and/or Disclosure Statement)

  • Class 1 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
  • Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
  • Class 3 (“Secured Tax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
  • Class 4 (“Prepetition Revolving Credit Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate principal amount of allowed claims is $316.7mn, plus accrued and unpaid interest thereon. Recovery is 100% in cash.
  • Class 5 (“Prepetition Term Loan Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate principal amount of allowed claims is $297.5mn, plus accrued and unpaid interest thereon. Recovery is 100% in cash.
  • Class 6 (“Prepetition A&R Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate principal amount of allowed claims is $305.0mn, plus accrued and unpaid interest thereon, plus outstanding letters of credit in an amount of $166.0mn. Recovery is 100% in cash.
  • Class 7 (“Prepetition Notes Claims”) is impaired and entitled to vote on the Plan. The aggregate principal amount of allowed claims is $7.4bn,plus accrued and unpaid interest thereon. This class is comprised of the following series of notes:
    • $365,107,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 5.125% Notes;
    • $750,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 7.750% Notes;
    • $1,265,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 5.875% Notes;
    • $646,286,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 4.500% Notes;
    • $750,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 8.250% Notes; 
    • $790,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 9.875% 2024 Notes;
    • $453,045,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 6.500% Notes;
    • $461,300,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 7.000% Notes;
    • $250,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 9.875% 2039 Notes;
    • $462,601,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 6.750% Notes;
    • $374,961,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 5.950% Notes;
    • $600,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 9.875% 2025 Notes; and
    • $258,767,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 6.8000% Notes.

Each Holder of an Allowed Prepetition Notes Claim will receive its pro rata share of (i) 99% of the emerged Debtors’ new equity (the “New Common Stock”), subject to dilution on account of equity issued pursuant to the New Management Incentive Plan (the “MIP”), the Tranche B Equity Conversion (see above), and the New Common Stock issuable pursuant to the New Warrants and (ii) the New Tranche B Senior Unsecured Notes; provided, however, that each of such Holders will have the option, in its sole discretion, to convert its pro rata share of $500.0mn in principal amount of the New Tranche B Senior Unsecured Notes into New Common Stock (the “Tranche B Equity Conversion”) at a conversion price of $36.20 per share of New Common Stock; provided, further that the aggregate principal amount of New Tranche B Senior Unsecured Notes converted into New Common Stock will not exceed $500.0mn (this subject to overallotment rights should the full $500.0mn not otherwise be subscribed to).  

  • Class 8 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. 
  • Class 9 (“Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
  • Class 10 (“Existing Common Stock”) is impaired and entitled to vote on the Plan. Each Holder of Existing Common Stock will receive its pro rata share of (i) 1.0% of the New Common Stock, subject to dilution on account of the equity issued pursuant to the MIP, the Tranche B Equity Conversion and the New Common Stock issuable pursuant to the New Warrants and (ii) the New Warrants.
  • Class 11 (“Intercompany Equity Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
  • Class 12 (“Unexercised Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.

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