Service & Supply | Oilfield Services | Bankruptcy / Restructure Update | Capital Markets

C&J Energy Services Enters Chapter 11

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July 20, 2016 Announcement Update

C&J Energy Services Ltd. has commenced its Chapter 11 / bankruptcy filing. 

The reorganization cases contemplate implementing the previously announced Restructuring Support Agreement that C&J executed with its lenders, which provides for the elimination of approximately $1.4 billion in debt from the Company's balance sheet, substantially deleveraging C&J's capital structure and strongly positioning the Company for long-term success.  

Other Bankrupt Service Companies:

• June 2016 - Seventy Seven Energy
• May 2016 - Hercules Offshore
• April 2016 - Sanjel Corp.

President, Chief Executive Officer and Chief Operating Officer Don Gawick commented, "Today's Chapter 11 filings represent a significant milestone in our financial restructuring process to significantly strengthen our financial condition by reducing debt, enhancing liquidity and best positioning our Company to proactively respond as the market begins to recover.  After thoroughly evaluating our options and strategic alternatives with our advisors and Board of Directors, we are confident that this is the best path forward for C&J and all our stakeholders.  During the reorganization proceeding, all of our day-to-day operations will continue in the normal course, and we will maintain ample liquidity and resources to support our business and continue providing safe, reliable and efficient services to all of our customers.  We appreciate the continued, strong support demonstrated by our lenders, which will hopefully enable us to move quickly and smoothly the restructuring process.

"On behalf of C&J's Board of Directors and executive management team, I want to thank our employees for their continued hard work and dedication, and note that we look forward to working with our customers and vendors as we move through this process and build a strong foundation for C&J to emerge as a stronger partner." 

Earlier Announcement / Forebearance - July 11, 2016

C&J Energy Services Ltd. has entered into a Restructuring Support Agreement with certain of its secured lenders representing greater than 50% of the outstanding principal amount under the Company's secured credit facility. It will be carried out via a Chapter 11 plan of reorganization.

In early June 2016, the company entered into a forebearance deal with its lenders as it tried to stay afloat.

Other Bankrupt Service Companies:

• June 2016 - Seventy Seven Energy
• May 2016 - Hercules Offshore
• April 2016 - Sanjel Corp.

The terms of the RSA provide for the implementation of a restructuring that contemplates, among other things, a debt-to-equity conversion of the entire Secured Credit Facility and an equity rights offering, which will be effectuated through a Chapter 11 plan of reorganization.  The Restructuring will enable the Company to substantially deleverage its balance sheet – eliminating approximately $1.4 billion of existing debt – while continuing daily operations in the normal course.

Notably, the RSA provides for debtor-in-possession financing in the form of a $100 million senior secured delayed-draw term loan facility being provided by certain lenders who are parties to the RSA.  The Company will also raise $200 million of additional capital through a backstopped rights offering.  In addition, after emergence from the Restructuring, the Company intends to raise at least $100 million in exit financing through an ABL credit facility.

Cortland Capital Market Services LLC, as Administrative Agent under the Secured Credit Facility, and the Steering Committee of lenders, are being advised by Davis Polk & Wardwell LLP, FTI Consulting, Inc. and Moelis & Company.