Hi-Crush Inc. (NYSE: HCR), which supplies frac sand and other proppant and logistics services for hydraulic fracking operations, has filed for Chapter 11 bankruptcy protection.
Houston-based Hi-Crush, along with 21 affiliated companies, filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas on Sunday, after reaching a restructuring support agreement with holders of approximately 94% of its unsecured loans that were due in 2026.
The news was expected as the company stated in late June that it planned to file for bankruptcy protection even if it couldn’t reach an agreement with creditors.
In its filing, Hi-Crush lists its assets at around $953 million, its total debts at approximately $699 million and states it has up to 500 creditors.
An oil glut and slumping sales amid the COVID-19 pandemic have forced several oil-and-gas companies to file for bankruptcy protection in recent weeks.
Oil prices dropped to around $32 per barrel in March stemming from a price war between the Organization of Petroleum Exporting Countries (OPEC) and Russia, which has affected trucking companies as well.
Oklahoma-based Beaver Express, which hauled oilfield supplies for numerous companies, shuttered operations after 77 years.
Since March, Hi-Crush has cut its workforce by nearly 60% and idled facilities in Texas and Wisconsin.
Business as usual during reorganization
During the Chapter 11 proceedings, Hi-Crush said it will be business as usual without any disruption to its vendors, customers or employees. The company stated it will have sufficient liquidity to meet its financial obligations during the restructuring process.
“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,” Robert E. Rasmus, Chairman and Chief Executive Officer of Hi-Crush, said in a statement on Monday.
Rasmus said the restructuring is expected to take between 60 to 90 days and has received commitments from various prepetition lenders for $65 million in debtor-in-possession and exit financing.
“We will also significantly improve our balance sheet and enhance our company’s financial flexibility over the near- and long-term,” Rasmus said. “The exchange of debt for equity is a clear indication of the high confidence our noteholders have in the future of Hi-Crush.”
Read more articles by FreightWaves’ Clarissa Hawes
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