HOUSTON, July 13, 2020 /PRNewswire/ -- Hi-Crush Inc.
(NYSE: HCR), ("Hi-Crush" or the "Company"), a fully-integrated
provider of proppant logistics solutions, today announced
it has entered into a Restructuring Support Agreement (the
"Agreement") with certain noteholders (the "Noteholders"),
collectively owning or controlling approximately 94% of the
aggregate outstanding amount of the Company's 9.5% Senior Unsecured
Notes due 2026 (the "2026 Notes"). To implement the terms of the
Agreement, the Company also announced that it has voluntarily filed
petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court for the Southern
District of Texas.
The terms of the Agreement provide for a comprehensive
restructuring of the Company's balance sheet (the "Prearranged
Plan") to be implemented through the commencement of Chapter 11
cases. The Prearranged Plan, if implemented, will result in the
elimination of approximately $450
million of unsecured note debt and an ongoing reduction in
annual interest expense of greater than $43
million. The Prearranged Plan also contemplates the
equitization of certain material general unsecured claims against
the Company. The Prearranged Plan provides the Company significant
additional liquidity and minimizes operational
disruptions.
During the Chapter 11 proceedings, the Company will continue to
operate its business in the normal course without disruption to its
vendors, customers, or employees, and will have sufficient
liquidity to meet its financial obligations during the
restructuring process. Through certain motions filed concurrent
with the Chapter 11 cases (the "First Day Motions"), Hi-Crush
estimates that substantially all trade vendors who will have an
ongoing business relationship with the Company will be paid for
goods and services in the normal course of business without
interruption. Working with the Noteholders, the Company expects to
complete the Chapter 11 process within 60 to 90 days.
In addition, the Company has received commitments from its
various pre-petition lenders for $65
million in Debtor-In-Possession and exit financing (the
"DIP/Exit Facilities"), subject to typical and customary terms,
which will be used to meet working capital needs during the
pendency of the case and long-term capital needs post
emergence. The DIP/Exit Facilities consist of, (i) a
$25 million Senior Secured Asset
Based Loan from its pre-petition secured lenders that will convert
to an exit facility upon the Company's emergence from the Chapter
11 Cases, and (ii) a $40 million DIP
loan from the participating Noteholders, scheduled to be refinanced
to $40 million of new Senior Secured
Convertible Notes (the "New Secured Convertible Notes") upon
emergence from the Chapter 11 Cases.
"We are very pleased to have reached this agreement with our
various lenders," said Mr. Robert E.
Rasmus, Chairman and Chief Executive Officer of Hi-Crush.
"The agreement will allow Hi-Crush to maintain normal operations
and continue delivering high quality services to our
customers. We will also significantly improve our balance
sheet and enhance our Company's financial flexibility over the near
and long-term. The exchange of debt for equity is a clear
indication of the high confidence our noteholders have in the
future of Hi-Crush. The agreement itself will simplify and
accelerate the restructuring process, and we expect to emerge from
this process in an even stronger market position, with an enhanced
ability to execute on our operational strategy and grow our
business over the long-term. We look forward to continuing to work
with all of our partners across the oil and gas industry."
The Prearranged Plan, First Day Motions, and DIP/Exit Facilities
are subject to court approval and, as such, final terms of any
restructuring transaction may differ. If approved, they
provide for the following:
- Payment of substantially all go-forward trade claims in the
ordinary course
- Cancellation of current equity
- Conversion of $450 million of
existing pre-petition debt into equity of the reorganized
company
- $40 million rights offering for
New Secured Convertible Notes subject to certain typical and
customary terms
The Company has set up a toll-free hotline to answer questions
regarding this transaction. The hotline can be accessed by calling
(866) 554-5810. Additional information regarding Hi-Crush Inc.'s
restructuring and Chapter 11 filing is available
at https://www.ir.hicrush.com/restructuring.
Advisors
Lazard is acting as financial advisor, Latham & Watkins LLP
is acting as legal counsel, and Alvarez & Marsal is acting as
restructuring advisor to Hi-Crush Inc. in connection with the
Prearranged Plan. Moelis & Company is acting as financial
advisor and Paul, Weiss, Rifkind, Wharton & Garrison is acting
as legal advisor to the Noteholders.
This press release does not constitute an offer to sell or
purchase any securities, which would be made only pursuant to
definitive documents and an applicable exemption from the
Securities Act of 1933, as amended.
Forward-Looking Statements
Some of the information in this news release may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements give our current expectations, and contain projections
of results of operations or of financial condition, or forecasts of
future events. Words such as "may," "should," "assume," "forecast,"
"position," "predict," "strategy," "expect," "intend," "hope,"
"plan," "estimate," "anticipate," "could," "believe," "project,"
"budget," "potential," "likely," or "continue," and similar
expressions are used to identify forward-looking statements. They
can be affected by assumptions used or by known or unknown risks or
uncertainties. Consequently, no forward-looking statements can be
guaranteed. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements in Hi-Crush's reports filed with the
Securities and Exchange Commission (the "SEC"), including those
described under Item 1A of Hi-Crush's Form 10-K for the year ended
December 31, 2019 and any subsequently filed 10-Q. Actual
results may vary materially. You are cautioned not to place
undue reliance on any forward-looking statements. You should
also understand that it is not possible to predict or identify all
such factors and should not consider the risk factors in our
reports filed with the SEC or the following list to be a complete
statement of all potential risks and uncertainties. Factors
that could cause our actual results to differ materially from the
results contemplated by such forward looking statements include:
the volume of frac sand we are able to sell; the price at which we
are able to sell frac sand; the outcome of any pending litigation,
claims or assessments, including unasserted claims; changes in the
price and availability of natural gas or electricity; changes in
prevailing economic conditions; difficulty collecting
receivables. All forward-looking statements are expressly
qualified in their entirety by the foregoing cautionary
statements. Hi-Crush's forward-looking statements speak only
as of the date made and Hi-Crush undertakes no obligation to update
or revise its forward-looking statements, whether as a result of
new information, future events or otherwise.
About Hi-Crush Inc.
Hi-Crush Inc. is a fully-integrated provider of proppant and
logistics services for hydraulic fracturing operations, offering
frac sand production, advanced wellsite storage systems, flexible
last mile services, and innovative software for real-time
visibility and management across the entire supply chain. Our
strategic suite of solutions provides operators and service
companies in all major U.S. oil and gas basins with the ability to
build safety, reliability and efficiency into every completion.
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SOURCE Hi-Crush Inc.