Nuverra completes successful restructuring
October 2017 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING
Financier Worldwide Magazine
October 2017 Issue
Nuverra Environmental Solutions, Inc announced in August that it had emerged from Chapter 11 bankruptcy protection after eliminating more than $500m of outstanding debt.
The company filed for pre-packaged Chapter 11 protection in May 2017 at the United States Bankruptcy Court for the District of Delaware, listing between $100m and $500m in assets and between $500m and $1bn in liabilities. The company noted that it had received “overwhelming support” from its creditors and noteholders, as well as more than $30m in DIP financing from lenders.
Under the terms of the restructuring plan, the company completed a debt-for-equity swap under which Nuverra’s 12.5 percent and 10 percent senior secured second lien notes, which were due in 2021, were converted into newly issued common stock. In addition, the company’s prior term loans and junior debtor-in-possession credit facility were converted into newly issued common stock, and a term loan conversion fee and exit financing commitment fee were satisfied through the receipt of newly issued common stock. Holders of claims relating to the company’s 9.875 percent 2018 notes received newly issued common stock and warrants in satisfaction of their claims. All shares of the company’s common stock and all other previously issued and outstanding equity interests in the company, and any rights of any holder in respect thereof, were cancelled and discharged on the effective date.
Mark D. Johnsrud, the company’s chief executive and chairman, said, “I would like to thank our employees, customers and vendors for their loyalty throughout this process, as well as express appreciation for the overwhelming support of our lenders and noteholders, all of which has enabled us to complete a smooth and swift process in less than four months. We are very pleased to have the right capital structure to support our work going forward. Throughout this process, our priority has remained providing a critical service to the market with top-notch customer service. We have made important progress in aligning our cost structure with market demand while ensuring that we have the right talent and equipment to meet customers’ needs, and that focus on operational excellence will continue.”
In July, the company’s reorganisation plan was met with disapproval by one unsecured noteholder who accused the company of proposing an “impermissible and unconfirmable” Chapter 11 plan that fully pays general unsecured creditors without providing any cash to holders of $41m in notes. However, the company dismissed the noteholder’s objections, noting that the individual was simply “disgruntled” that the plan favours other unsecured creditors, trade creditors in particular.
Upon the company’s emergence from bankruptcy protection, Nuverra has entered into a $30m senior secured revolving credit facility and a $15m senior secured credit facility provided by ACF FinCo I LP, an entity managed by Ares Management, L.P., and a second lien term loan credit facility of up to $26.8m, provided by certain affiliates of Ascribe Capital LLC and Gates Capital Management, Inc. These credit facilities, totalling over $70m, will support the reorganised company’s operations going forward.
The company also agreed to hand over a fracking water treatment plant to a creditor in exchange for dropping claims, freeing up value for other unsecured creditors. The plant deal resolved a $4m unsecured claim which threatened to jeopardise the company’s restructuring plan.
Following the company’s emergence from Chapter 11 protection, Nuverra also released its second quarter and six month financial and operating results. Second quarter revenue was $41.5m, an increase of approximately 5.9 percent, or $2.3m, compared with revenue of $39.2m in Q1 2017.
Total losses from continuing operations for the second quarter were $19.6m, or a loss of $0.13 per diluted share, compared with a loss from continuing operations of $36m, or a loss of $0.24 per diluted share, in Q1 2017.
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