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FTS INTERNATIONAL: Files for Chapter 11 With Prepackaged Plan

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FTS International, Inc. (NYSE American: FTSI) on Sept. 21, 2020, announced that it has entered into a second amended and restated restructuring support agreement (the “RSA”) with creditors holding approximately 87.55% of the principal amount outstanding of the company’s secured debt (collectively, the “Consenting Creditors”) and intends to file voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas on September 22, 2020 (the “Court”).

To implement the restructuring set forth in the RSA, the Company commenced solicitation of votes on the Company’s prepackaged chapter 11 plan of reorganization (the “Plan”) from the holders of the Company’s 6.250% senior secured notes due 2022 (the “Secured Notes”) and the Company’s term loan facility (the “Term Loan”). The Company intends to commence solicitation of votes from the Company’s existing equity interests following a “first-day” hearing before the Court, expected to be held on or about September 24, 2020.

The Company will continue to operate in the ordinary course of business during the restructuring, supported by the Consenting Creditors’ agreement to allow the Company to use existing cash to fund the chapter 11 cases. As of close of business on September 18, 2020, the Company’s cash balance was $161 million. The Company intends to file a number of customary motions in the chapter 11 cases, including motions to allow the Company to continue to pay employee wages and benefits and make payments to its suppliers and other business partners.

Prepackaged Plan

According to a regulatory filing by FTS, under the Restructuring Support Agreement, the Consenting Creditors have agreed, subject to certain terms and conditions, to support a financial restructuring of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties, pursuant to the Plan and related disclosure statement, under which the Company Parties will file petitions for voluntary relief under chapter 11 of title 11 of the United States Code.

The Restructuring Support Agreement and the Plan contemplate, among other things:

* the Consenting Creditors’ consent to the use of cash collateral securing the Secured Debt Claims to fund the Chapter 11 Cases consistent with the terms set forth in the Plan and as otherwise acceptable to the Required Consenting Creditors;

* on the Effective Date, the Reorganized Debtors may enter into the New Revolving Exit Facility on terms acceptable to the Required Consenting Creditors;

* on the Effective Date, in full and final satisfaction, settlement, release, and discharge of and in exchange for each Allowed Secured Debt Claim, each Holder of an Allowed Secured Debt Claim shall receive its Pro Rata share of and interest in Pro Rata share of and interest in (i) the Cash Consideration and (ii) 90.1% of the New FTS Equity, subject to dilution on account of the Management Incentive Plan and the Warrants, minus the Class 4 Recovery Deduction;

* each Holder of an Allowed Other Unsecured Claim shall receive its Pro Rata share of and interest in the Unencumbered Plan Recovery at the applicable Debtor;

* each Holder of an Allowed Ongoing Business Claim shall receive, as applicable, either: (i) Reinstatement of such Allowed Ongoing Business Claim pursuant to section 1124 of the Bankruptcy Code; (ii) payment in full in cash on the later of (A) the Effective Date or as soon as reasonably practicable thereafter, or (B) the date such payment is due in the ordinary course of business in accordance with the terms and conditions of the particular transaction giving rise to such Allowed Ongoing Business Claim; or (iii) such other treatment rendering such Allowed Ongoing Business Claim Unimpaired;

* at the option of the Reorganized Debtors, Intercompany Claims and Intercompany Interests shall be either Reinstated or cancelled and released without any distribution; and

* FTS Common Interests will receive their Pro Rata share of and interest in (i) 9.9% of the New FTS Equity, subject to dilution on account of (i) the Management Incentive Plan and (ii) the Warrants.

A copy of the Disclosure Statement was included in the SEC filing, which is available at https://www.sec.gov/Archives/edgar/data/1529463/000110465920107047/tm2031377d1_ex99-1.htm

About FTS International

Headquartered in Fort Worth, Texas, FTS International Inc. is an independent hydraulic fracturing service company and one of the only vertically integrated service providers of its kind in North America.

As of March 31, 2020, the Company had $616 million in total assets, $587 million in total liabilities, and $29 million in total stockholders’ equity.

On Sept. 22, 2020, FTS International and two affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-34622) to seek confirmation of a prepackaged plan.

Kirkland & Ellis LLP and Winston & Strawn LLP are acting as legal counsel, Lazard Frères & Co., LLC is acting as financial advisor, and Alvarez & Marsal LLP is acting as restructuring advisor to the Company in connection with the restructuring. Epiq is the claims and solicitation agent.