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Seventy Seven Energy Inc. Enters Into Restructuring Support Agreement

The following excerpt is from the company's SEC filing.

$1.1 Billion of Existing Debt to be Converted into New Common Equity

Trade Creditors, Suppliers and Contractors to be Paid in Full in the Ordinary Course

Customer Contracts to Continue Uninterrupted

Oklahoma City, OK April 19, 2016 Seventy Seven Energy Inc. (the Company), today announced that it has entered into a Restructuring Support Agreement (the Agreement) with certain lenders (the Incremental Term Loan Lenders) representing 92.0% of the outstanding principal amount under the Companys Incremental Term Supplement (Tranche A) loan and certain noteholders (the Consenting 2019 Noteholders) collectively owning or controlling in excess of 57.7% of the aggregate outstanding principal amount of the Companys 6.625% senior notes due 2019 (the 2019 Notes). The terms of the Agreement provide for a substantial deleveraging of the Companys balance sheet by converting approximately $1.1 billion of the Companys bond debt into new common equity without interrupting the Companys daily operations. The Agreement outlines an expected restructuring through a prepackaged plan of reorganization (the Plan).

Todays announcement is a clear endorsement by the stakeholders of Seventy Seven Energy in the future of this company, Chief Executive Officer Jerry Winchester said. The exchange of debt for equity will provide us with a significantly deleveraged balance sheet, and we will emerge from this process as a stronger company. After a thorough evaluation of our options, we are confident this is the correct path that will enable us to take advantage of our operational strengths and strong asset base to proactively grow our business as market conditions improve.

A key component of the Plan is that all trade creditors, suppliers and contractors will be paid in the ordinary course of business. All of the Companys commercial and operational contracts will remain in effect in accordance with their terms preserving the rights of all parties, and customer relationships will continue uninterrupted. Employees can expect that operations will continue as usual and they will be paid in the ordinary course. The Company intends to commence a prepackaged Chapter 11 proceeding on or before May 26, in order to implement the Plan. The pre-packaged Chapter 11 filing will follow a solicitation process that is expected to commence on April 22.

The Companys 8-K filing today outlines certain terms of the Plan. Significant elements of the Plan include:

payment in full in the ordinary course of all trade creditors and other general unsecured creditors;

the exchange of the full $650.0 million of the 2019 Notes into either 96.75%, if the holders of the 2022 Notes vote as a...


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