Oklahoma-based Seventy Seven Energy Inc. said Tuesday that it has filed for Chapter 11 bankruptcy protection.
The company has filed a pre-packaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
The company said the pre-packaged plan provides for a “substantial deleveraging transaction” that calls for about $1.1 billion of its outstanding debt to be converted to equity.
In a disclosure statement, Seventy Seven said the restructuring plan calls for a new senior secured asset-based revolving loan and letter of credit facility that will have a maturity date of June 25, 2019 and a maximum commitment amount of $100 million.
The plan also calls for the conversion of $1.1. billion in aggregate principal amount of operating company notes and holding company notes to be converted into 100 percent of new holding company common shares.
As of March 31, the company had $1.56 billion in total long-term debt.
All trade creditors, suppliers and contractors will be paid in the ordinary course of business.
The Chapter 11 reorganization is expected to conclude within 60 days.
Seventy Seven said all of its commercial and operational contracts will remain in effect in accordance with their terms, preserving the rights of all parties.
Customer relationships will continue uninterrupted, the company added.
“The successful completion of the solicitation process and today’s filing represent the next step forward in our financial restructuring,” Chief Executive Officer Jerry Winchester said.
Seventy Seven was spun-off from Chesapeake Energy in 2014.