Hi-Crush Inc. (HCR) - Get Report shares were tumbling on Monday after the provider of proppant and logistics services for hydraulic-fracturing operations filed for protection from creditors under Chapter 11 of federal bankruptcy law in the Southern District of Texas.
Shares of the Houston company at last check slid 15% to 13 cents.
Hi-Crush said in a statement that 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."
The company said the bankruptcy plan would result in conversion of $450 million of prepetition debt into equity of the reorganized company, payment of substantially all go-forward trade claims in the ordinary course and a $40 million rights offering for new secured convertible notes.
The current shares of Hi-Crush would be canceled in the bankruptcy proceedings.
In addition, Hi-Crush said the bankruptcy would help implement a restructuring support agreement with its creditors holding nearly all its 9.5% senior unsecured notes due 2026 outstanding.
The company said it had received commitments from its various prepetition lenders for $65 million in debtor-In-possession and exit financing.
The company said it expected to complete the Chapter 11 process in 60 to 90 days.
Robert Rasmus, chairman and chief executive, said in the statement that the bankruptcy agreement would "significantly improve our balance sheet and enhance our company's financial flexibility over the near and long-term."
The energy sector has seen a number of bankruptcies as the coronavirus pandemic has virtually shut down worldwide travel and severely hurt demand for energy.