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Nine Energy Service Inc., a Houston-based oil field vendor, filed for Chapter 11 bankruptcy on Sunday as it struggled with high leverage and a shrinking business amid a slowdown in drilling programs.
The deal will see a “complete equitization” of its $320 million first-lien notes due 2028, according to . The company first sold bonds to fund an acquisition of peer Magnum Oil Tools in 2018, and later refinanced that debt into the 13% first-lien notes.
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However, “the indebtedness issues originating from the Magnum acquisition were never entirely resolved and continue to weigh on the company’s balance sheet today,” the papers said. The move to refinance three years ago further added “expensive debt facilities.”
The company also has $68.5 million outstanding in an asset-based lending facility. The asset-based lenders, including White Oak, have committed to provide $125 million in debtor-in-possession financing, as well as an exit ABL facility when it emerges from Chapter 11.
“Today, we are taking an important strategic step to position the business for long-term success and ensure we have the appropriate capital structure to support us going forward,” Ann Fox, president and chief executive officer of Nine, said in a Sunday press release.
Nine, which helps develops horizontal wells for oil production, also faced industry headwinds, according to court papers. The reduction of newly deployed wells limited its growth, and oil prices have been volatile. The company’s clients included Exxon Mobil Corp., ConocoPhillips and Apache, according to its third-quarter investor presentation.
Nine went public in 2018 and raised about $170 million at the time. In 2024, regulators notified the company that it no longer met listing standards.
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