Expro pursues prepackaged plan of reorganisation

February 2018 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

February 2018 Issue

Leading international oilfield services company Expro has announced the next step in its financial restructuring – a prepackaged plan of reorganisation under Chapter 11 of the US Bankruptcy Code that will provide a clear and expedited path to emergence.

Previously, the UK-based Expro International Group had reached an agreement with its key lenders and shareholders to eliminate its entire $1.4bn of funded debt and $80m in annual interest payments through an equity conversion, which will fully deleverage its balance sheet. This, in turn, will provide a stronger and more sustainable capital structure to grow the business, and will be supported by an additional $200m equity commitment from its new shareholders.

According to Expro, the latest step in its reorganisation is an important milestone. Indeed, the prepackaged plan demonstrates overwhelming support from Expro’s lenders and shareholders for a consensual restructuring and a swift emergence. Solely focused on establishing a more sustainable capital structure and accessing growth capital, the Chapter 11 is not expected to impact Expro’s operations or relationships with employees, customers, business partners or suppliers.

“We are thrilled to have received overwhelming support from our lenders and shareholders as we work to achieve our end goal: creating a stronger financial foundation for the future,” said Mike Jardon, chief executive of Expro. “This process will allow Expro to deliver on its growth strategy, which includes our continued investment in customer-focused technology solutions that support the next generation of exploration, production, and development projects.”

Furthermore, the Chapter 11 process will make this agreement binding on all parties and provides the most efficient and effective means to deliver the company’s financial restructuring plan, which it expects to complete on schedule.

Under the reorganisation plan, Expro will be provided with access to up to $155m in debtor-in-possession financing, including bonding lines, which will provide working capital to ensure normal business operations continue during the financial restructuring process. “There will be no interruption to our business operations and relationships,” said Mr Jardon. “We are communicating with all of our key stakeholders to ensure they stay informed of our progress.”

Headquartered in Aberdeen and Reading in the UK, Expro provides services and products that measure, improve, control and process flow from high value oil and gas wells, from exploration and appraisal through to mature field production optimisation and enhancement. The firm employs nearly 4500 people in over 50 countries, operating in all the major hydrocarbon producing areas of the world. Expro manages its operations on a geographical basis, comprising the Europe, Sub-Saharan Africa, Asia, Middle East and North Africa, and North and Latin America regions.

In November 2017, Expro was awarded a five-year contract extension for surface well testing services across several assets in the UK North Sea. The £3m contract includes the clean-up of existing wells and the testing of a series of newly drilled wells. However, the firm recorded losses of £2.1m in the year to 31 March 2017 (an improvement on a £555.4m deficit a year earlier) and revenues were down 25 percent year-on-year at £523.5m as the downturn in the global oil and gas market continued.

The legal advisers for Expro during the reorganisation process are Paul, Weiss, Rifkind, Wharton & Garrison LLP and Freshfields LLP. The firm’s financial adviser is Lazard and its restructuring adviser is Alvarez & Marsal.

Mr Jardon concluded: “With the strong support of our lenders and shareholders, we are confident that our restructuring will move forward quickly and efficiently, and we greatly appreciate their support shown throughout.”

Fraser Tennant