Davis Polk is advising an ad hoc group of secured term lenders (the “Ad Hoc Group”) in connection with an out-of-court restructuring of Key Energy Services, Inc. (“Key Energy”) and its subsidiaries (collectively, the “Company”). On January 24, 2020, the Company and the Ad Hoc Group, collectively holding more than 99.5% of the principal amount of outstanding term loans, entered into a restructuring support agreement (“RSA”) which contemplates an out-of-court restructuring of the company.

The RSA provides a pathway for Key Energy to implement a business transformation plan by reducing its funded debt and providing the Company with new liquidity. Approximately $242 million outstanding principal of term loans will be converted into (i) 97% of Key Energy’s common shares (subject to dilution) and (ii) $20 million of new term loans. An additional $30 million of term loans will be funded by the term lenders supporting the restructuring and an approximately $1.2 million senior secured term loan tranche will be allocated in respect of existing term loans held by lenders who are not supporting the restructuring. Under the RSA, the existing common stockholders are expected to retain 3% of the common stock of the Company (subject to dilution) and will receive warrants. The restructuring will also include an entry into an amended and restated ABL credit facility and certain changes to the Company’s governance, including changes to the board of directors and stockholders agreement.

Headquartered in Houston, Texas, Key Energy is the largest onshore, rig-based well servicing contractor based on the number of rigs owned. The company is publicly listed and provides a full range of well services to major oil companies and independent oil and natural gas production companies, include rig-based and coiled tubing-based well maintenance and workover services, well completion and recompletion services, fluid management services, fishing and rental services, and other ancillary oilfield services, and operates in most major oil and natural gas producing regions of the continental United States.

The Davis Polk capital markets team includes partner Derek Dostal and associates John H. Runne and Yushen Liu. The restructuring team includes partner Damian S. Schaible and associates Adam L. Shpeen and Omer Netzer. The finance team includes partner Meyer C. Dworkin and counsel Mayer J. Steinman and David Hahn. All members of the Davis Polk team are based in the New York.

Copy link to share post