Parker Drilling files for chapter 11 bankruptcy

HOUSTON -- Parker Drilling announced that it and its material U.S. subsidiaries have entered into a restructuring support agreement (RSA) with holders of the company's securities, including a significant amount of its 7.5% senior notes due 2020 and 6.75% senior notes due 2022, outstanding preferred stock and outstanding common stock. The transaction contemplated under the RSA is expected to strengthen the company's financial foundation and position it to capitalize on further opportunities in the market. 

To implement the terms of the RSA, Parker has voluntarily filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. Parker's non-U.S. subsidiaries and certain U.S. subsidiaries are excluded from the filing and will not be affected. Parker intends to seek confirmation of a pre-arranged Plan of Reorganization. Importantly, members of the Consenting Stakeholders have indicated their support for the proposed Plan.

The company anticipates that its cash flow and existing liquidity will be sufficient to support global operations during this period and has further augmented liquidity with access to $50 million in debtor-in-possession (DIP) financing. The lenders under the DIP financing have also committed to fund an exit facility of $50 million, which amount may be increased following emergence.

The Company's proposed Plan, which is subject to court approval, reduces approximately two-thirds of funded debt and injects $95 million of new, fully committed equity capital through a backstopped rights offering. It also contemplates the issuance of a new $210 million second-lien term loan due 2024 to satisfy the remaining existing notes. Current preferred equity holders, as well as common equity holders if the class votes to approve the plan, will receive reorganized equity and warrants.

"Our operational results have continued to improve this year, and we anticipate new opportunities for profitable growth across our drilling and rental tools businesses. The steps we are announcing today will ensure that we have the appropriate capital structure to take advantage of these opportunities to strategically grow our assets, our global footprint, and our suite of products and services," said Gary Rich, chairman, president and CEO.

"We are confident that by resolving our legacy balance sheet issues, we will enable Parker to continue executing a strategy to build greater scale in core markets and expand strategic offerings, such as our U.S. Well Services, while strengthening our drilling and rental tools businesses. We expect these efforts to drive additional efficiencies while providing greater flexibility and more options for customers over the long term.

"Throughout this process, our firm commitment remains to provide our customers with safe, reliable and efficient operations, as always. Customers should see no changes to our products and services, and we appreciate their continued support while we complete this restructuring," Rich continued. "I also want to thank our suppliers, whose partnership will remain vital during and after this process. We have worked closely with the consenting stakeholders and appreciate their clear commitment to the long-term success of the business.

"Finally, on behalf of the entire Board of Directors, I want to extend my sincere thanks to our talented employees, whose commitment to serving our customers with operational excellence and integrity has not waivered, despite a prolonged industry downturn. I am confident that the strength of our complementary business lines, combined with a solid financial platform, will position Parker to lead the industry as market conditions improve," Rich concluded.

The company intends to continue to pay employee wages and benefits as usual, and to pay trade creditors in full and in the ordinary course of business. Employees, customers and vendors should see minimal interruption through this process.

The existing management team is expected to remain in place, and the company expects to complete the restructuring process in the first quarter of 2019.