Multiple parties – including the Texas Ad Valorem Taxing Jurisdictions, Ziad Abu Al-Ragheb, Blue Ribband Holdings, the Mississippi Department of Revenue, Ariba, SAP America, Nabors Corporate Services and Nabors International Management, the Texas Comptroller of Public Accounts and Oracle America – filed with the U.S. Bankruptcy Court separate objections to C&J Energy Services’ Second Amended Joint Plan of Reorganization.
Nabors Corporate Services and Nabors International Management’s objection asserts, “The Plan effectuates what has been a fait accompli since the inception of these chapter 11 cases: a ‘quick and dirty’ wipeout of existing shareholders at a rock-bottom valuation for the benefit of a small group of aggressive, opportunistic prepetition lenders. In seeking confirmation of the Plan, the Debtors are complicit in the Lenders’ efforts to usurp value from existing shareholders and capture the upside of the Debtors’ businesses at the nadir of the current industry cycle.”
The objection continues, “Notably, in the brief course of these cases, the Debtors have already been compelled to elevate such ‘plan value’ by $150 million in light of the market rebound – further validating equityholders’ contentions that the valuation upon which the RSA was premised was grossly understated. Despite this recognized increase in value, the terms of the Plan remain unchanged, and a sweetheart deal for the Lenders has only improved, to the detriment of the Debtors’ equityholders….Moreover, the Debtors’ board determined to enter into the RSA with the Lenders despite being uninformed that approximately one-third of their assets were not subject to the Lenders’ security interests….Indeed, the Debtors’ valuation – contrived to justify the egregious debt-for-equity swap embodied by the Plan – falls flat in the face of a market-based proposal by Nabors that reflects an imputed enterprise value for the Debtors of $1.7 billion, with $260 million of balance sheet cash.”
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