From The Wall Street Journal

Parker Drilling Co. , which provides drilling rigs and equipment to oil and gas drilling companies, filed for bankruptcy protection Wednesday after striking an agreement with senior bondholders on a deal to raise money and reduce its debt.

The company said it intends to file a chapter 11 plan of reorganization in the U.S. Bankruptcy Court in Houston that has backing from a group of senior bondholders and preferred stockholders. The Wall Street Journal reported in June that Parker Drilling had reached out to bondholders in an effort to reduce its debt.

Parker Drilling said it expects to complete its trip through bankruptcy during the first half of 2019. The company listed assets of roughly $937.2 million and debt totaling more than $695.4 million in its chapter 11 petition. The company’s existing equity holders include Saba Capital Management LP. Brigade Capital Management LP, Dimensional Fund Advisors LP and Whitebox Advisors LLC, the petition said. Certain Parker Drilling subsidiaries, including those located outside the U.S., are excluded from the bankruptcy filing and will not be affected, the company said.

The proposed balance-sheet restructuring, which must be reviewed by a judge, would raise $95 million through a rights offering backstopped by company bondholders who would own the business once it emerges from chapter 11, according to a copy of the agreement filed with the U.S. Securities and Exchange Commission. The deal has support from stakeholders holding more than 77% of Parker Drilling’s unsecured bond debt, court papers say.

The deal provides Parker Drilling with access to a $50 million debtor-in-possession loan and $50 million in bankruptcy exit financing, the company said. Parker Drilling said it also intends to issue a new $210 million junior term loan upon exiting chapter 11 in order to satisfy its existing bond obligations.

Parker Drilling has filed a series of motions in bankruptcy court to pay employee wages and benefits, insurance premiums and other ordinary business costs so that it can continue operating normally while under bankruptcy protection. The company said its existing customer and vendor contracts are expected to remain in place and serviced under the normal course of business during the chapter 11.

“Employees, customers and vendors should see minimal interruption through this process,” Parker Drilling said in a press release. The company said in a court filing that a sustained downturn in commodity prices has reduced the demand for the oil-field services it provides, resulting in idle rigs and increased pressure on the prices it can charge customers.

Parker Drilling’s bankruptcy case, No. 18-36958, has been assigned to Judge Marvin Isgur.

Parker Drilling has tapped Kirkland & Ellis LLP for legal advice. Moelis & Co. is serving as its investment banker and Alvarez & Marsal is serving as its financial adviser. Law firm Akin Gump Strauss Hauer & Feld LLP is representing the stakeholder group backing the restructuring agreement, while Houlihan Lokey Inc. is serving as the group’s financial adviser.

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