C&J Energy Services emerges from Chapter 11 bankruptcy

HOUSTON — C&J Energy Services, Inc., has announced that effective as of Jan. 6, 2017, the Company has successfully completed its financial restructuring and emerged from Chapter 11 bankruptcy, having satisfied all of the conditions to the effectiveness of its plan of reorganization. Through this financial restructuring, C&J has significantly improved its financial position by eliminating approximately $1.4 billion of debt from its balance sheet, as well as more than $80 million of annual interest expense.

Effective today, the Company has entered into a new $100-million revolving credit facility and paid off outstanding amounts under its prior debtor-in-possession facility with proceeds from a $200-million equity rights offering.  Combining its cash balance after emergence with the available borrowing capacity under the new credit facility, the Company is exiting its restructuring with over $220 million of total liquidity.

New board of directors

In accordance with the plan, a newly constituted board of directors was appointed, consisting of Patrick Murray (chairman), Stuart Brightman, John Kennedy, Steven Mueller, Michael Roemer and Michael Zawadzki, in addition to Don Gawick, C&J’s president and CEO.

Gawick commented, “I am honored to serve on the new board of directors with such a distinguished group of directors whose diverse knowledge and experience will serve our Company well for many years to come. I am confident that each of our new directors will bring a fresh perspective to our organization, and we will all benefit from their guidance as we embark on the next chapter for C&J.”

Issuance of new securities

Effective immediately, Legacy C&J common stock will be cancelled pursuant to the plan. The Company issued seven-year warrants to former holders of Legacy C&J common stock, based on their pro rata share of Legacy C&J common stock as of Jan. 6, 2017, exercisable for up to an aggregate of 2% of the Company’s new common stock, at a strike price of $1.55 billion.

C&J will have approximately 55.5 million shares of New Common Stock outstanding after the reorganization, which will be issued to certain holders of Legacy C&J’s secured debt claim in accordance with the debt-for-equity conversion provisions of the Plan, a rights offering and a backstop commitment agreement.

The Company also expects to issue additional seven-year warrants to a claims representative for the benefit of holders of Legacy C&J unsecured creditor claims, exercisable for up to an aggregate of 4% of New Common Stock at a strike price of $1.55 billion.

The New Common Stock and the warrants will not be traded on a national securities exchange, and the Company intends to pursue a listing on a national securities exchange as soon as reasonably practicable. C&J will continue to file Exchange Act reports with the U.S. Securities and Exchange Commission (SEC).

Evercore acted as financial advisor, AlixPartners LLP acted as restructuring advisor, and Fried, Frank, Harris, Shriver & Jacobson LLP, Kirkland & Ellis LLP and Loeb & Loeb LLP served as legal counsel to the Company.

Moelis & Company LLC and FTI Consulting acted as financial advisors, Davis Polk & Wardwell LLP served as legal counsel to the administrative agent and certain holders of Legacy C&J secured debt, and Diamond McCarthy LLP acted as Texas local counsel.

Adoption of stockholder rights plan

C&J also announced that the board has adopted a stockholder rights plan, declaring a dividend of one preferred stock purchase right for each outstanding share of the Company’s New Common Stock.  The Rights Plan is designed to reduce the likelihood that a potential acquirer would gain control of the Company by open market accumulation or other coercive takeover tactics, without paying a premium for all of the Company’s New Common Stock.

Under the Rights Plan, the Rights will be distributed as a dividend at the rate of one Right for each share of New Common Stock held by stockholders of record at the close of business on Jan. 6, 2017.  Each Right will entitle stockholders to buy, upon occurrence of certain events, one one-hundredth of a share of a new series of participating preferred stock at an exercise price of $80.

The rights generally will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the Company’s New Common Stock, or commences a tender or exchange offer that, upon consummation, would result in a person or group owning 15% or more of the Company’s New Common Stock, subject to certain exceptions, including that for certain stockholders specified in the Rights Plan, the applicable beneficial ownership is 35% or more of the Company’s New Common Stock.

Under certain circumstances the new Rights are redeemable at a price of $0.0001 per Right.  Unless earlier exchanged, redeemed, amended or exercised, the Rights will expire on Jan. 6, 2020.

Source: www.worldoil.com