ICD Takes a Strategic Approach to Optimize its Capital Structure and Position Business in a Stronger Financial Position to Strengthen Balance Sheet and Future Growth
 

  • Enters into Restructuring Support Agreement to eliminate $200 million of prepetition debt
  • Files voluntary petitions for pre-packaged chapter 11 cases to implement restructuring transactions
  • Operations expected to continue without interruption during chapter 11 cases


On December 3, 2024 Independence Contract Drilling, Inc. (the "Company" or "ICD") (OTCQX: ICDI) announced that it has entered into a plan of reorganization (the “Plan”) unanimously supported by all of the holders (“Noteholders”) of the Company’s Senior Secured PIK Toggle Notes Due 2026 (“Senior Secured Convertible Notes”).  The Plan is expected to substantially reduce ICD’s debt and provide increased financial flexibility, accelerate investments in the Company’s super-spec rig fleet, and position the Company for long-term success.  Under the terms of the Plan, almost all of the Senior Secured Convertible Notes, including accrued interest, will be equitized, and all other secured and unsecured creditors will be paid in the ordinary course without impairment. 
 

Chief Executive Officer Anthony Gallegos commented, "I am pleased we have reached agreement with the two holders of our Senior Secured Convertible Notes on a restructuring that materially strengthens ICD and de-levers our balance sheet.  I am excited that as part of the restructuring the noteholders, who have deep oilfield experience and have been investors in ICD for some time, will provide us with additional capital that will support rig reactivations and continued investments in technology and performance enhancing features for our rig fleet.   I believe this new capital supports our overall efforts and vision to deliver contract drilling services exceeding the expectations of our E&P customer base.  I am equally pleased that under the terms of the negotiated plan, we will continue to operate our business in the ordinary course, including payment of all vendors and employees.”
 

On December 2, 2024, ICD commenced a prepackaged Chapter 11 process to implement the Plan in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Court").  The Plan includes the following:
 

  • a debtor-in-possession (“DIP”) financing facility provided by the Noteholders consisting of up to $32.5 million to support the Company’s ongoing operations and obligations and repay outstanding revolving credit obligations, vendors and employees;
  • the Noteholders’ commitment to provide exit financing of $40 million to refinance outstanding DIP financing obligations and $7.5 million of Noteholder claims, and support ICD’s future operations and investments in its super-spec rig fleet;
  • the exchange of all remaining Noteholder claims (totaling approximately $199.3 million) for equity securities of the reorganized company, which will not be listed for public trading; and
  •  the cancellation of the Company’s common stock.


In connection with the implementation of the Plan, the Company filed other various “first day” motions with the Court, requesting customary relief that, once approved by the Court, will further facilitate the Company operating its businesses during the streamlined case and facilitate the payment of all vendors and employees in the ordinary course of business, including undisputed claims on both a pre-petition and post-petition basis.   


Additional information about the Company’s case, including access to Court filings and other documents related to the restructuring process, is available at https://cases.ra.kroll.com/ICD, a website administered by Kroll Restructuring Administration LLC, a third-party bankruptcy claims and noticing agent. The documents and other information on this website shall not be deemed incorporated by reference herein. Additional information is also available at www.icdrilling.com. 


Advisors   


Sidley Austin LLP is the Company's restructuring counsel, Riveron is the restructuring advisor, and Piper Sandler is the investment banker.    


Latham & Watkins LLP is legal counsel for the Noteholders.


About Independence Contract Drilling, Inc.


Independence Contract Drilling provides land-based contract drilling services for oil and natural gas producers in the United States. The Company constructs, owns and operates a fleet of pad-optimal ShaleDriller rigs that are specifically engineered and designed to accelerate its clients' production profiles and cash flows from their most technically demanding and economically impactful oil and gas properties. For more information, visit www.icdrilling.com.