Basic Energy Services, Inc (NYSE:BAS) has entered into a restructuring support agreement, with secured term loan lenders and senior note holders. As such, the company can now put into effect, a proposed plan of reorganization, which would significantly improve its balance sheet and also provide $125 million in liquidity. The agreement had been signed on October 23, 2016 and requires BAS and its subsidiaries to file for chapter 11, on or before October 25, 2016. The stock of BAS has significantly declined, since the announcement.
The company noted that its plan now had the support of 100% of its secured term lenders and an estimated 80% of note holders, with notes due in 2019 and 2022. The CEO of Basic Energy, Roe Patterson, stated that the step had been taken, after careful consideration by the management. He voiced his belief that this would ensure a bright future for the company and benefit its stakeholders. Mr. Patterson pointed out that these steps were aimed at fixing BAS’s capital structure, but requires the support of its existing lenders.
The CEO reaffirmed that Basic Energy would continue meeting its obligations to suppliers, employees and other parties. He also claimed that the fundamentals of their business were still strong and all they needed was additional capital strengthen current business lines and produce organic growth, as opportunities arise. Mr. Patterson even hinted at the possibility of BAS’s participation in merger and acquisition agreements, in the near future.
Earlier, the company had received an extension of waiver, from Asset-Based Lenders, which it is currently in default of. BAS stated that this was done in order to provide it with additional time to finalize the terms of its deleveraging transaction. The waiver had been granted through October 24, 2016. Meanwhile, Basic Energy claims that it has adequate liquidity available, to continue running operations. It should be noted here that the company’s restructuring plan is yet to be approved by the bankruptcy court.
Basic Energy Services, Inc (NYSE:BAS) closed at a share price of $0.346, at the end of the October 24 trading session, 51.44% lower than the session before, on a trade volume of 19.1 million.