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Basic Energy Services to File Chapter 11; Outlines Reorganization Plan

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Basic Energy Services has entered into a restructuring agreement with loan lenders.

The reorganization will deleverage the Company's balance sheet and provide the Company with $125 million of additional liquidity.  Under the terms of the RSA, the Company and certain of its subsidiaries must file chapter 11 cases to implement the Plan on or before October 25, 2016.

Key Details:

• Amend term loan outstanding in the principal amount of approximately $165 million to provide for more flexible covenants.
• Cancel over $800 million of principal and accrued interest in outstanding Unsecured Notes. 

Reorganized Basic equity issued under the management incentive plan and upon exercise of the warrants will further dilute the equity recovery for Noteholders and existing shareholders described above.

All aspects of the Plan remain subject to Bankruptcy court approval and the satisfaction of conditions set forth in the Plan. 

The Company's secured term lenders and certain of its Noteholders have committed to provide up to $90 million of liquidity aimed at maintaining operations.

The Company is in active discussions with potential lenders to find a replacement for its prepetition $100 million asset-based revolving credit facility, under which no revolving borrowings and approximately $51 million in contingent letter of credit obligations are outstanding.  Basic is exploring its options and, while it can provide no assurances it will find a replacement facility, it anticipates that it will find one that will further enhance its capital structure upon emergence. 

Advisors

Weil, Gotshal & Manges LLP is acting as legal counsel, Moelis & Company LLC is acting as investment banker, and AP Services, LLC is acting as restructuring advisors to the Company in connection with its restructuring efforts.  Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal counsel and GLC Advisors & Co., LLC is acting as investment banker to certain supporting Noteholders.  Davis Polk & Wardwell LLP is acting as legal counsel and PJT Partners Inc. is acting as investment banker to the secured term loan lenders.  Vinson & Elkins LLP is acting as legal counsel to the asset-based lenders.