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Weatherford Plans To File For Chapter 11 Bankruptcy Protection

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Oilfield services provider Weatherford International plc (WFT) said it expects to implement a financial restructuring through a "pre-packaged" Chapter 11 bankruptcy protection process and also reduce its long-term debt by more than $5.8 billion.

According to the company, the proposed restructuring contemplates $1.75 billion in new financing and up to $1.25 billion in additional post-emergence financing.

In a regulatory filing, Weatherford said it has entered into a restructuring support agreement or RSA with creditors that hold about 62 percent of the company's outstanding unsecured notes.

The company's unsecured note-holders will exchange about $7.4 billion of senior unsecured notes for about 99 percent of the equity in the reorganized company and $1.25 billion of new tranche B senior unsecured notes. The new unsecured notes that will be issued by the reorganized company will have a maturity period of seven years.

Weatherford noted that holders of its unsecured notes shall have the option to convert up to $500 million of the tranche B senior unsecured notes to new common stock.

The company said its existing secured funded debt and unsecured revolving credit facility debt will be repaid in full in cash in connection with the transaction.

Under the RSA, Weatherford will enter into two debtor-in-possession or DIP financing facilities to provide liquidity. This includes a DIP revolving credit facility of up to $750 million provided by banks or other lenders, and a DIP term loan facility of up to $1.0 billion, which will be fully backstopped by certain of the consenting creditors.

The RSA also contemplates a commitment of up to $1.25 billion in new tranche A senior unsecured notes, backstopped by certain of the consenting creditors. This would be used when Weatherford emerges from bankruptcy to repay the DIP financing, pre-petition revolving credit debt and case costs, as well as to recapitalize the company at exit.

Further, Weatherford said its existing equity will be cancelled and exchanged for 1 percent of the new common stock and three-year warrants to purchase 10 percent of the new common stock.

Weatherford will continue operating its businesses and facilities without disruption to its customers, vendors, partners or employees.

In addition, the company noted that all trade claims made against it, whether arising prior to or after the commencement of the Chapter 11 Cases, will be paid in full in the ordinary course of business.

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