Davis Polk is advising the agent for the lenders (“Term Lenders”) under a pre-petition secured term loan (“Term Loan”) in the chapter 11 restructuring of Key Energy Services, Inc. and certain of its subsidiaries (collectively, “Key Energy”). On August 24, 2016, Key Energy, certain Term Lenders, Platinum Equity, as the largest holder of the $675 million pre-petition senior notes (“Notes”), and an ad hoc group of crossover holders of both the Term Loan and Notes entered into a plan support agreement (the “PSA”) for a comprehensive recapitalization of Key Energy to be implemented pursuant to a prepackaged chapter 11 plan of reorganization (the “Plan”). Upon consummation of the Plan, Key Energy will (i) replace its existing $100 million ABL facility with a new ABL facility, (ii) reduce the Term Loan obligations to $250 million and replace the remaining Term Loans with a new Term Loan facility, (iii) cancel the Notes for five million shares of reorganized Key Energy plus certain backstop rights and (iv) cancel existing common stock in exchange of 543,927 shares of reorganized Key Energy plus certain backstop rights.

Pursuant to the PSA, Platinum and the crossover holders have agreed to backstop an $85 million rights offering (subject to increase by $25 million) for reorganized Key Energy’s shares of common stock. The proceeds of the rights offering will be used to repay the Term Loan and provide reorganized Key Energy with incremental working capital.

Key Energy offers clients a comprehensive array of onshore energy production services and solutions backed by decades of oilfield experience and industry knowledge. Key Energy is headquartered in Houston, Texas.

The Davis Polk insolvency and restructuring team includes partners Damian S. Schaible and Eli J. Vonnegut, associates Angela M. Libby, Sarah E. Levin and Brandon Une. The credit team includes partner Meyer C. Dworkin and associate Mayer J. Steinman. All members of the Davis Polk team are based in the New York office.

Copy link to share post