CHICAGO (Reuters) - U.S. oilfield services company Forbes Energy Services Ltd FESL.PK said it expected to “promptly” emerge from bankruptcy after filing a Chapter 11 plan on Monday with a prepackaged deal to exchange $280 million of debt for equity.
Dozens in the sector, whose services include drilling wells and hauling water for energy exploration companies, have sought protection from creditors as low energy prices have prompted producers to scale back on drilling.
In a filing with the U.S. Bankruptcy Court in Houston, Forbes said the slump had reduced demand for its activities, rendering it unable to make payments on some of its debt. It said holders of 87 percent of senior unsecured notes had voted to accept its restructuring plan.
The Alice, Texas, company operates around 173 well servicing rigs in Texas, Louisiana and Pennsylvania. It also transports and disposes of fluids used in drilling.
Forbes said it had ample liquidity to support the business during the Chapter 11 proceeding and also secured a $50 million facility to be funded by certain of bondholders to ensure adequate working capital after the bankruptcy.
Existing equity in the company, including common and preferred stock, would be canceled.
Competitors Key Energy Service Inc KEGXQ.PK and Basic Energy Services Inc BAS.N each filed for bankruptcy in the fourth quarter but emerged soon after.
Another competitor, Seventy Seven Energy Inc SVNT.PK, emerged from bankruptcy in August and recently announced an approximately $1.76 billion deal to be acquired by Patterson-UTI Energy Inc (PTEN.O).
Reporting by Tracy Rucinski; Editing by Lisa Von Ahn