C&J Energy Services (NYSE:CJES) -27.4% premarket after announcing a restructuring support agreement with key creditors through a Chapter 11 reorganization.
CJES says the restructuring will enable itto substantially deleverage its balance sheet, eliminating ~$1.4B of existing debt, while continuing daily operations in the normal course.
The RSA provides for debtor-in-possession financing through a $100M senior secured delayed-draw term loan facility, and CJES also plans to raise $200M of additional capital through a backstopped rights offering.
C&J Energy (CJES -7.2%) is lower following its announcement late yesterday of a second forbearance agreement with its creditors to extend its grace period until July 17.
The agreement is principle would convert $1.4B of its debt into new common equity shares, which would dilute the value of existing shares, and would bring new equity capital through a backstopped equity rights offering; the lenders also agree in principle to provide debtor-in-possession financing to bridge the company through the proposed restructuring transaction.
Raymond James director of energy research Marshall Adkins notes that CJES’s proposed restructuring would eliminate most of its debt and reduce Nabors Industries' interest in the company.
C&J Energy Services (CJES -1%) appoints current COO Don Gawick as its new President and CEO, replacing Randy McMullen; trading resumes after a halt.
Gawick is a 37-year veteran of the oilfield services industry, and was President and CEO of Casedhole Solutions, a wireline services company that CJES acquired in 2012; he will continue to perform his existing duties as COO.
McMullen stepped in to fill the President/CEO role following the unexpected death of Josh Comstock in March; McMullen also has left his position as CFO and as a board member, without an explanation from the company.
CJES also names Mark Cashiola as its new CFO; he joined CJES in 2011 and has served as Controller and Chief Accounting Officer.
C&J Energy (NYSE:CJES) says it received notice from the NYSE that it no longer satisfies the exchange's continued listing standard requiring the average closing price of at least $1.00/share over a 30 trading-day period.
CJES says it will notify the NYSE of its intent to cure the deficiency, and says it is "considering all available options" to regain compliance during the six-month period in which the company can regain compliance with the minimum share price criteria.
Earlier this week, CJES' lenders agreed to forbear from exercising default remedies or accelerating any indebtedness through June 30.
C&J Energy (CJES -55.7%) shares are sliced by more than half as investors ignore the smaller than expected reported Q1 loss and focus on the disclosure that the company had obtained a waiver regarding a loan covenant breach.
"We are in ongoing discussions with our lending group regarding alternatives to our current capital structure to better fund our future capital needs," CJES says.
CJES also said that since the end of Q1 it had used the remaining availability under its revolving credit facility, so there was no access to further extensions of credit; the company's cash balance as of May 6 was $137M.
Nabors Industries (NBR -9.8%) sinks ~10% after reporting a narrower than expected Q1 loss but total revenues that fell 70% Y/Y and fell far short of analyst expectations.
Adjusted earnings excluded $1.12/share of impairments from its investment in C&J Energy Services (CJES -2.4%); NBR owns 53% of CJES after selling its completion and production services business to the pressure pump operator in 2014.
NBR says its current rig count fell to 54, matching its forecast in the mid-50s, and CFO William Restrepo warns that the company expects further near-term reductions in rig counts both internationally and in the U.S. despite the recent upturn in oil prices, and expects margins to deteriorate.
NBR bounced slightly off its lows of the day after Morgan Stanley's Ole Storer maintained an Overweight rating in the stock with a $17 price target, saying today's selloff was unwarranted; Storer says NBR's international fleet build-out and its continued efforts to improve its marketing of technology position it well for a market recovery, adding that the company's balance sheet looks stable with neutral free cash flow at the current cyclical trough.