Basic Energy Services (BAS +2.6%) is upgraded to Buy from Hold with a $45 price target at Deutsche Bank, based on an improved outlook for the operating environment combined with a strengthened balance sheet post restructuring.
Deutsche Bank believes BAS has emerged from Chapter 11 with a sustainable cost structure and a significantly improved balance sheet.
The firm forecasts customer spending will tick up in 2017 after falling for two straight years, and thinks early spending will focus on production given the low risk, quick cash conversion and small capital outlay, and BAS's completion and production exposure will allow it to be an early cycle beneficiary.
Basic Energy Services (BAS +5.7%) is higher after obtaining court approval of its prepackaged restructuring and recapitalization plan that equitizes more than $800M of unsecured debt, eliminates $60M in annual cash interest and completes a new capital raise of $125M.
The plan provides for a debt-for-equity swap that will result in existing unsecured bond obligations being converted into equity; existing shareholders will receive common stock and warrants in the reorganized company.
BAS says it is targeting emergence from Chapter 11 before year-end.
Basic Energy Services (BAS -2.2%) is downgraded to Hold from Buy with a $0.50 price target, slashed from $2, at Deutsche Bank.
While BAS's Chapter 11 reorganization likely will create a sustainable path forward for a company the firm sees as an early cycle beneficiary, the move will nearly wipe out existing stockholders, who will be left with just 0.5% of pro-forma BAS equity.
Deutsche also thinks upstream spending has bottomed and expects the initial spend will focus on production given the low risk, quick cash conversion and little capital outlay; however, existing equityholders will not share in this.
Basic Energy Services (NYSE:BAS) -42.4% premarket after announcing a restructuring support agreement with lenders and debtholders under which the company would file for Chapter 11 bankruptcy on or before Oct. 25.
The group of lenders and noteholders have committed to provide up to $90M of liquidity via debtor-in-possession financing to help maintain the company's operations.
The plan would provide existing BAS shareholders with a recovery in the form of 0.5% of the company's equity, which would be 0.26% of the total outstanding equity upon conversion of mandatorily convertible notes.
Basic Energy Services (NYSE:BAS) surged 11.7% in today's trade after saying it was making "substantial" progress towards finalizing the terms of a deleveraging transaction with its creditors.
BAS says more than 81% of the bondholders of its 7.75% senior notes due 2019 again have agreed to postpone acting on a potential default while senior lenders also agreed to temporary waivers extending for another eight days through Oct. 24.
BAS says it believes it is "close to finalizing the terms of a financial restructuring plan that will leave the company well capitalized and positioned for strong growth."
BAS says it has continued to make progress in negotiations with creditors regarding a deleveraging transaction, and has reached an agreement with 81% of the holders of its 2019 notes to extend the forbearance period through Oct. 16.
Basic Energy Services (NYSE:BAS) +12.3% premarket after saying it obtained waivers to continue deleveraging negotiations with secured lenders and unsecured bondholders.
BAS says it entered into a forbearance agreement with ~81% of the holders of its 7.75% senior notes due 2019 regarding the previously announced 30-day grace period related to an $18.4M interest payment; the company says it will not make the payment.
BAS says it has ample liquidity to continue efficient and uninterrupted operations and expects to meet all obligations to suppliers, customers and employees.
BAS says it is best to use the grace period to continue to engage in discussions with its secured and unsecured debtholders regarding strategic alternatives to improve the company's long-term capital structure.
BAS shares continue to bump along all-time lows following Q2 results and warning that it was seeking refinancing or restructuring options.
Basic Energy Services (BAS -30.7%) plunges to all-time lows after reporting a Q2 loss of $1.34/share on 38% lower revenues of $120M.
BAS says it is evaluating potential strategic alternatives, such as refinancing or restructuring of its capital structure or available financing options, to address its liquidity position and high debt levels; BAS says if it is unable to find acceptable alternatives to its current capital structure to better fund future capital needs, its business, financial condition and results of operations "may be materially and adversely affected."
The company also lowers its expected FY 2016 capex to ~$30M from prior expectations of $40M.