Seventy Seven Energy Filing for Bankruptcy, Converting Debt into Stock
"We'll take one prepackaged bankruptcy to go." That was the upshot of an announcement yesterday from oilfield services company Seventy Seven Energy (SSE)--the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago. In February MDN reported that for 2015 SSE revenue was down 45% and the company lost $221 million (see Seventy Seven Energy 2015: Revenue Down 45%, $221M Loss). In January SSE was threatened by the New York Stock Exchange with de-listing its stock (see Seventy Seven Energy’s Stock Threatened with Delisting from NYSE). One of SSE's ongoing problems is that Chesapeake Energy, itself not in all-that-great-a-shape, provides nearly three-fourths (70%) of SSE's revenue. In January SSE hired the "restructuring" experts at Lazard Freres to figure out how to stay in business (see Seventy Seven Energy Hires Turnaround Expert, Hopes to Stay Afloat). Their solution, as we learned yesterday, is a prepackaged bankruptcy where SSE gets the vast majority of debtholders to agree to converting the debt into stock ownership in the company. So SSE is giving away much of the company to its current debtors, hoping they can keep the doors open...
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