Parker Drilling emerges from bankruptcy; plan effective as of March 26

By Caroline Salls

Pittsburgh, March 26 – Parker Drilling Co. has completed its financial restructuring and emerged from Chapter 11 bankruptcy, according to a Tuesday news release.

As previously reported, Parker’s plan of reorganization was confirmed on March 7 by the U.S. Bankruptcy Court for the Southern District of Texas.

Parker said it moves forward with a stronger financial position, having reduced total debt by roughly two-thirds, to $210 million from $585 million, and securing access to $50 million in exit financing.

The company has also raised an additional $95 million through a fully backstopped equity rights offering.

Financing terms

The company’s first-lien revolving credit facility will bear interest at Libor plus an applicable margin that varies from 225 basis points to 275 bps.

Interest on a $210 million second-lien credit facility will accrue at a rate of 13%, with 11% to be paid in cash and 2% to be paid in kind.

The second-lien facility will mature on March 26, 2024.

“Our new capital structure allows us to pursue profitable growth opportunities and enhance our resiliency across industry cycles,” president and chief executive officer Gary Rich said in the release.

“Now, we have the right platform on which we can build scale in recovering markets and expand our suite of value-added services and technology-driven solutions to meet customers’ needs across the full drilling cycle.

“The process we concluded today opens new opportunities for our employees, customers, vendors and investors.”

Plan treatment

Under the plan, holders of claims arising from non-funded debt general unsecured obligations will receive payment in full in cash.

Holders of the 7½% senior notes due 2020 will receive their pro rata share of 34.3431% of the common stock of reorganized Parker, subject to dilution; $92,571,429 of a new second-lien term loan; the right to purchase 24.2915% of the new common stock under a rights offering; and cash sufficient to satisfy expenses owed to the trustee of the notes.

Holders of the 6¾% senior notes due 2022 will receive their pro rata share of 62.9069% of the new common stock, subject to dilution; $117,428,571 of the new second-lien term loan; the right to purchase 38.8664% of the new common stock under the rights offering; and cash sufficient to satisfy expenses owed to the trustee of the notes.

Holders of the 7¼% series A mandatory convertible preferred stock will receive their pro rata share of 1.1% of the new common stock, subject to dilution; the right to purchase 14.7369% of the new common stock under the rights offering; and 40% of the warrants to acquire an aggregate of 13.5% of the new common stock.

Holders of Parker’s existing common stock will receive their pro rata share of 1.65% of the new common stock, subject to dilution; the right to purchase 22.1052% of the new common stock in the rights offering; and 60% of the new warrants.

Shares of the company’s common stock will no longer trade on the OTC Pink Marketplace effective as of March 26. Parker said it intends to list its common stock on the New York Stock Exchange as soon as possible.

New board

According to an 8-K filed with the Securities and Exchange Commission, the reorganized company’s board of directors consists of seven members, comprised of two members of the pre-effective date board and five new members.

The board members are Patrick Bartels, Eugene Davis, Michael Faust, Barry L. McMahan, L. Spencer Wells, Gary G. Rich and Zaki Selim.

On the plan effective date, the board adopted a 2019 long-term incentive plan.

Of the share reserve equal to 9% of Parker’s shares as of the effective date, 50% will be granted to Parker’s key employees, including 148,222 restricted stock units and 222,333 options for president and chief executive officer Rich, 39,798 restricted stock units and 59,698 options for senior vice president and chief financial officer Michael W. Sumruld, 43,932 restricted stock units and 65,898 options for president of rental tools and well services Jon-Al Duplantier and 34,632 restricted stock units and 51,949 options for drilling operations president Bryan R. Collins.

Kirkland & Ellis LLP is acting as legal adviser to Parker in connection with the restructuring. Moelis & Co. is acting as Parker’s investment banker, and Alvarez & Marsal is acting as its financial adviser.

Parker Drilling is a Houston-based provider of drilling services and rental tools to the energy industry. The company filed bankruptcy on Dec. 12, 2018 under Chapter 11 case number 18-36958.

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