Superior Energy Services has announced that the merger of its US completions business with Forbes Energy Services is off.
The deal was originally announced in December 2019. The plan was to combine the entities in an all-stock transaction and then spin it off into a publicly-traded company. At the time of the merger announcement the Newco was projected to have proforma revenues of $831 million and adjusted EBITDA of $77 million.
Refinancing as part of the merger
Superior said that the rapidly declining demand for oilfield services made it impractical to complete this transaction. In addition the transaction was also dependent on refinancing $500 million of Superior’s debt that is due in 2021. The downturn made that more difficult.
The original agreement stated that Superior would pay a $5 million break-up fee to Forbes in the event the merger didn’t happen. The agreement has been revised so that there will be no break-up paid by either side.
Superior’s stock price is trading at 99 cents. On March 30, the company received a non-compliance notice from the NYSE because its market capitalization and stockholders’ equity were both below $50 million. Normally the company would have six months to regain compliance. However, due to the volatility in the financial markets caused by COVID-19, the NYSE is permitting 18 month cure period.
Adding to the problems that the company faced, on April 28, the company announced it would have to delay filing its quarterly report for Q1 (originally due by May 11). The company said this was due to disruptions caused by COVID-19 which resulted in stay home orders and office closures.
The company finally filed its 10-Q on May 21. In the filing it disclosed, that on March 31, 2020, it had been subject to a ransomware attack that temporarily disrupted access to some systems.