The talks that Basic Energy Services, Inc (NYSE:BAS) has been having with its lenders have paid off. The company announced that it secured forbearance agreement with several of its lenders.
The agreement related to missing interest payment to the lenders. Specifically, Basic Energy Services, Inc (NYSE:BAS) said that 81% of its credits have agreed to allow it 30-day grace period so that it can resolve the matter of missed interest payment.
The grace period runs until Sept. 28, BAS revealed in SEC filing.
The affected notes
The delayed interest payment relates to notes that mature in 2019. Besides allowing Basic Energy Services, Inc (NYSE:BAS) grace period to make the interest payment, the lenders have also made some waivers relating to the debt agreement, thus taking some burden off the shoulder of BAS.
The balance sheet of BAS showed debt of more than $1 billion at the end of 2Q2016, down slightly from $1.017 billion in the prior quarter but up sharply from $897.2 billion in the year-ago quarter.
In an investor update, Basic Energy Services, Inc (NYSE:BAS) CEO, Roe Patterson, thanked their lenders for their cooperation and support. Mr. Patterson acknowledges that it would have been tough for BAS to cope with its debt obligations if the lenders didn’t agree to the forbearance deal.
With the agreement in place, Mr. Patterson said that BAS can now pursue capital financial restructuring that will support its long-term business plan. In the end, The CEO sees long-term benefits not only for their lenders but also customers, employees and other stakeholders.
However, details of the restructuring plan were not revealed, but Mr. Patterson said the plans were on the way.
Depressed commodity prices
Basic Energy Services, Inc (NYSE:BAS) has been in state of struggle since oil prices began to collapse. However, the company is hoping that the kind of restructuring it plans for will help it weather the storm in the oil market and position it for more rapid growth when the market recovers.
BAS is predicting its earnings in 2016 to fall 15%. The company reported 2Q2016 revenue that declined more than 24% YoY.