Pioneer Energy Services Announces Agreement with Key Stakeholders to Create Strong Capital Structure

Source Company Press Release
Company Pioneer Energy Services Corp.
Tags Country: United States, Other: Issues/Setbacks, Segment: OFS News
Date March 04, 2020

Pioneer Commences Financial Restructuring through Pre-Packaged Chapter 11 Process with $75 Million in Committed Financing and Approximately $200 Million in Additional Post-Emergence Financing

Pioneer Operations Are Continuing Without Interruption and With No Expected Impact to Customers, Vendors or Employees

Pioneer Energy Service Corp.  (OTC: PESX) ("Pioneer" or "the Company") announced today that the Company and certain of its subsidiaries have reached an agreement with its key stakeholders regarding the terms of a comprehensive financial restructuring, including the elimination of its existing notes through a debt-for-equity conversion.  To implement the financial restructuring, Pioneer also announced that it had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texasto effectuate its pre-packaged Plan of Reorganization (the "Chapter 11 Cases").  This Chapter 11 process does not include the Company's international entities, the majority of which are located in Colombia.  As part of the process, Pioneer began soliciting votes on its Plan of Reorganization from certain of its creditors prior to the filing.

Pioneer expects to continue to operate in the normal course during the court-supervised process and the terms of the restructuring contemplate paying all customer, vendor, and other trade obligations in full in the ordinary course of business. 

Pioneer intends to use the Chapter 11 process to implement a balance sheet restructuring by significantly reducing the Company's long-term debt and related interest costs, providing access to additional financing and establishing a strong capital structure.  In addition to equitizing approximately $300 million in aggregate amount of existing notes, Pioneer will raise (i) up to $125 million of new capital through a rights offering of new convertible debt from eligible noteholders and shareholders, a substantial portion of which will be backstopped by certain existing holders and (ii) approximately $78 million of new senior secured notes to be provided by certain existing noteholders.  Upon emergence, this new capital will be used to refinance Pioneer's existing term loan debt, make distributions under the plan and add cash to the balance sheet. 

The Company is focused on implementing its restructuring expeditiously through the pre-packaged plan, which is overwhelmingly supported by its secured lenders and noteholders.  Upon the consummation of its financial restructuring, Pioneer expects to emerge in a stronger financial position, capable of accelerating future growth and better able to serve our valued customers.

"Over the course of the last several years, Pioneer has been challenged by the difficult economics of the oil and gas industry.  We have continued to adapt to the challenging market environment in which we operate, but our strong underlying business has continued to labor under a heavy debt burden.  Our objective is to use the restructuring process to implement a balance sheet restructuring and set the Company on a path to succeed in the future with a right-sized debt structure and ample liquidity going forward.  We are confident that these are the right steps to deliver value for the benefit of our stakeholders," said Wm. Stacy Locke, President and Chief Executive Officer of Pioneer Energy Services Corp.

Locke continued, "We appreciate the ongoing hard work and commitment of the entire Pioneer team.  I am confident our employees will continue to focus on safety, the day-to-day operations and provide our customers the quality of service they have come to expect from Pioneer.  We are also grateful for the ongoing support of our vendors, suppliers and other business partners during the restructuring process."

Pioneer has received a commitment for $75 million in debtor-in-possession ("DIP") financing from PNC Bank.  Upon Court approval, the new financing and cash generated from the Company's ongoing operations will be used to support the business during the reorganization process.  PNC has also committed to "roll" the DIP financing into an asset-based revolving credit facility at exit.

Pioneer has filed several customary motions with the U.S. Bankruptcy Court seeking authorization to operate its business in the normal course during the Chapter 11 process, including the continued payment of employee wages and benefits without interruption.  The Company intends to pay vendors and suppliers in full under normal terms for goods and services provided on or after the filing date in the ordinary course of business.  In addition, Pioneer is requesting Court authority to pay for all goods and services delivered in the normal course of business prior to the filing.  Pioneer expects to receive Court approval for all of these requests.

Additional information is available by calling (833) 991-0977 (toll free) or (503) 597-7679 (international).  Court filings and other information related to the court-supervised proceedings are available at a website administered by the Company's claims agent, Epiq Corporate Restructuring, LLC, at https://dm.epiq11.com/pioneerenergy.

Paul, Weiss, Rifkind, Wharton & Garrison LLP and Norton Rose Fulbright US LLP are serving as legal counsel to Pioneer, Lazard is acting as financial advisor and Alvarez & Marsal is serving as restructuring advisor.  Davis Polk & Wardwell LLP and Haynes and Boone, LLP are acting as legal counsel for the ad hoc group of Senior Unsecured Noteholders and Houlihan Lokey is acting as financial advisor.

Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd