Regions Provides Financing to Support Forbes Energy Reorganization



Forbes Energy Services filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas-Corpus Christi Division on January 22, 2017 for itself and its principal subsidiaries pursuant to the terms of the previously disclosed Restructuring Support Agreement (the RSA) with certain holders of the company’s 9% senior unsecured notes due 2019.

The Chapter 11 filing contemplates the reorganization of the debtors pursuant to a prepackaged plan of reorganization. In accordance with the RSA, Forbes completed solicitation of the holders of the senior unsecured notes for acceptance of the plan on January 18, 2017. Holders of 87.14% in principal amount of the outstanding senior unsecured voted to accept the plan.

The company will continue to operate in the ordinary course of business during the proceeding and has filed various “first day” motions seeking approval of relief so as to operate without impact or interruption to Forbes’ valued employees, customers, vendors and other important parties.

Principal terms of the plan, among others, are summarized below:

  • The company’s loan and security agreement, dated September 9, 2011 and subsequently amended, with Regions Bank and the lenders party thereto will be terminated and a credit facility to be negotiated and entered into with Regions Bank on the effective date of the plan will cover letters of credit and bank product obligations.
  • The existing equity interests in the company, including common and preferred stock, will be extinguished without recovery
  • Holders of allowed general unsecured claims, including ordinary course trade vendors, but excluding holders of the senior unsecured notes, will be paid in full in the ordinary course of business or otherwise have their rights reinstated under the bankruptcy code
  • The senior unsecured notes will be cancelled and each holder of the senior unsecured notes will receive such holder’s pro rata share of $20 million in cash and 100% of the new common stock of the reorganized company, subject to dilution on account of shares issued or available for issuance under a management incentive plan to be implemented under the plan.
  • Certain holders of the senior unsecured notes will make available to the reorganized company a $50 million new first lien term loan facility, which will be backstopped by those certain holders of the senior unsecured notes who executed that certain backstop agreement dated December 21, 2016 by and among the company and such holders of the senior unsecured notes.

Pachulski Stang Ziehl & Jones is acting as legal restructuring counsel, Winstead is acting as corporate and securities counsel, and Alvarez & Marsal North America and Jefferies are acting as financial advisors for the company. Fried, Frank, Harris, Shriver & Jacobson is acting as legal counsel, and FTI Consulting is acting as financial advisor to the supporting noteholders.

Forbes Energy is an independent oilfield services contractor that provides a broad range of drilling-related and production-related services to oil and natural gas companies, primarily onshore in Texas and Pennsylvania.


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Terry Mulreany
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