Key Energy Plans Bankruptcy Filing After Reaching Debt Pactby
Senior noteholders would own 95% stake after reorganization
Company expects to seek court protection by early November
Key Energy Services Inc. plans to file for bankruptcy protection by November after its creditors sign off on a restructuring plan that would give bondholders control of the Texas company.
Holders of senior notes, including Platinum Equity LLC, would own about 95 percent of the reorganized oilfield services company’s shares, according to a regulatory filing. Current equity holders would see their overall stake shrink to about 5 percent. A bankruptcy filing is expected in Delaware by Nov. 8 after a solicitation of votes, the Houston-based company said.
Key Energy follows peers such as C&J Energy Services Ltd. into bankruptcy court to restructure their debts after a two-year slump in energy prices. More than 80 North American oilfield servicers have declared bankruptcy since the start of 2015, according to data from Haynes and Boone LLP. Service providers are struggling as energy producers have cut spending on drilling and production.
Key Energy said earlier this year it was in discussions with lenders about a potential bankruptcy filing. Second-quarter revenue fell to $95 million from $197.5 million a year earlier. Platinum Equity and certain other holders and lenders have already agreed to support the plan, according to the filing.