Nine Energy Service, the Houston-based oilfield completions vendor, has filed for Chapter 11 in a prepackaged case that aims to clean up its balance sheet while keeping the business running. According to company filings and a corporate release, the plan would eliminate roughly $320 million of first-lien debt, and the company says it expects to emerge from bankruptcy in about 45 days. Executives say operations will continue through the process, with payroll and vendor payments maintained under court supervision.
What the filing says
According to the company's Form 8-K filed with the SEC, Nine Energy and certain subsidiaries submitted voluntary petitions in the U.S. Bankruptcy Court for the Southern District of Texas to implement a prepackaged plan of reorganization. The Restructuring Support Agreement outlined in the filing involves an ad hoc group of holders of the company's 13.000% senior secured notes due 2028 along with the prepetition ABL lenders, and calls for canceling the existing secured notes and the company's common stock in exchange for new equity in the reorganized business. The document also lays out milestones for interim debtor-in-possession financing approval and target dates for disclosure statement approval and plan confirmation later this spring.
Company statement and financing
In a press release distributed through PR Newswire, Nine said it had secured a commitment for a $125 million debtor-in-possession asset-based loan from its existing ABL lender, with that same lender also committing to a $135 million exit ABL facility when the company emerges. The release states that the restructuring is expected to trim annual interest expense by about $40 million and allow Nine to keep serving customers without interruption. “We are taking an important strategic step to position the business for long-term success,” President and CEO Ann Fox said in the release.
Behind the restructuring
Industry reporting and court filings tie much of Nine's current predicament to heavy borrowing used to fund acquisitions and later refinancings that left the company with expensive first-lien debt. As reported by Bloomberg Law, those 13% notes originated from a prior deal to purchase Magnum Oil Tools and subsequent financings that pushed up the company’s interest burden. Local coverage in the Houston Business Journal adds that weaker oil prices and new tariffs on steel have tightened margins and raised costs, which in turn aggravated Nine’s liquidity pressures.
What it means for shareholders, workers and suppliers
The company's filings caution that holders of its common stock could suffer a significant or total loss, since the contemplated plan would cancel existing shares for no consideration. At the same time, Nine has filed customary “first-day” motions seeking authority to preserve payroll and employee benefits and to pay prepetition trade claims so that vendors remain unimpaired, according to its release. The company says customers and field crews should not see immediate disruption, as operations are expected to continue under debtor-in-possession status.
Timetable and where to follow the case
Nine began soliciting votes on the proposed plan before submitting its Chapter 11 petitions and has asked the court to administer the cases jointly. The company says it anticipates emerging from the process in roughly 45 days if the timeline holds. Bankruptcy pleadings and case documents are being posted to a claims site run by Nine’s noticing agent, Epiq, via a link the company provided for case materials. The matter is docketed in the U.S. Bankruptcy Court for the Southern District of Texas, and early filings and docket entries are available on public court trackers and case listings.
Legal outlook
Prepackaged Chapter 11 cases can move quickly when secured creditors and ABL lenders are already lined up behind a plan, though judges still must review disclosures and voting results. The company’s Form 8-K filed with the SEC details the milestones that the parties must hit for interim financing, disclosure statement approval and plan confirmation. If the court signs off on the plan as proposed, secured noteholders would receive equity in the reorganized company, current common shareholders would likely be wiped out, and the debtor-in-possession lender would hold super-priority claims for the life of the case.
