December 12, 2018 – Parker Drilling filed a Joint Chapter 11 Plan [Docket No. 17] and related Disclosure Statement [Docket No. 21].
The Disclosure Statement provides the following overview of the Debtors restructuring efforts:
“The Debtors face obsolescence risk and technology changes while remaining capital constrained. A meaningful investment will be critical for
the Debtors to continue to expertly and safely operate its rig assets and to maintain market share in the rental tools industry. Recognizing these needs, the Debtors have evaluated a series of out-of-court transactions, but determined that any such transaction did not adequately resolve the headwinds the Debtors were facing or were at risk of experiencing in the future. Rather than simply hope for a market recovery, or enter into inferior transactions without addressing the viability of the Debtors’ capital structure and liquidity issues, the Debtors have negotiated a comprehensive financial reorganization pursuant to the Plan and Restructuring Support Agreement to reduce leverage, extend maturities, provide a recovery to all stakeholders, and increase liquidity. The Debtors have a concentrated debtholder composition. This composition has provided the Debtors with a unique opportunity to negotiate and achieve a comprehensive restructuring transaction. The Consenting Stakeholders hold approximately 77% of the Debtors’ Unsecured Notes, approximately 62% of the Debtors’ Existing Preferred Stock, and a material amount of the Debtors’ Existing Common Stock. After more than six months of diligence and negotiations with Holders throughout the Debtors’ capital structure, the Debtors have reached agreement with the Consenting Stakeholders to support a restructuring that will maximize stakeholder recoveries and ensure a viable enterprise upon emergence.”
The following is a summary of classes, claims, and voting rights and expected recoveries (defined terms are as defined in the Plan):
- Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote the Plan. The projected amount of claims is $9.8mn and expected recovery is 100%.
- Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote the Plan. The projected amount of claims is $0 and expected recovery is 100%.
- Class 3 (“Existing ABL Claims”) is unimpaired, deemed to accept and not entitled to vote the Plan. The projected amount of claims is $0 and expected recovery is 100%.
- Class 4 (“2020 Notes Claims”) is impaired and entitled to vote on the Plan. Holders will receive their pro rata share of (i) 34.3% of the New Common Stock, (ii) $92,571,429 of the New Second Lien Term Loan and (iii) 38.4% of the Noteholder Subscription Rights. The projected amount of claims is is $231.1mn and expected recovery is 73%.
- Class 5 (“2022 Notes Claims”) is impaired and entitled to vote the Plan. Holders will receive their pro rata share of (i) 62.9% of the New Common Stock, (ii) $117,428,571 of the New Second Lien Term Loan and (iii) 61.5% of the Noteholder Subscription Rights. The projected amount of claims is $369.9mn and expected recovery is 69%.
- Class 6 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote the Plan. Holder will receive cash in an amount equal to such Allowed General Unsecured Claim on the later of: (i) the Effective Date; or (ii) the date due in the ordinary course of business in accordance with the terms and conditions of the particular transaction or agreement giving rise to such Allowed General Unsecured Claim. The projected amount of claims is $14.5mn and expected recovery is 100%.
- Class 7 (“Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote the Plan. The projected amount of claims is N/A and expected recovery is N/A.
- Class 8 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote the Plan. The projected amount of claims is N/A and expected recovery is N/A.
- Class 9 (“Existing Preferred Interests”) is impaired and entitled to vote the Plan. Holder will receive their pro rata share of (i) 1.1% of the New Common Stock, (ii) 40.0% of the New Warrants and (iii) the Existing Preferred Stockholder Subscription Rights, The projected amount of claims is N/A and expected recovery is 28%.
- Class 10 (“Existing Common Interests”) is impaired and entitled to vote the Plan. Holder will receive pro rata share of (i) 1.65% of the New Common Stock, (ii) 60.0% of the New Warrants and (iii) the Existing Common Stockholder Subscription Rights. The projected amount of claims is N/A and expected recovery is 3%.
The Disclosure Statement attached the following exhibits:
- Exhibit A: Plan of Reorganization
- Exhibit B: Restructuring Support Agreement
- Exhibit C: Corporate Organization Chart
- Exhibit D: Disclosure Statement Order
- Exhibit E: Liquidation Analysis
- Exhibit F: Financial Projections
- Exhibit G: Valuation Analysis
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