Case Study

Bondholders had invested $300 million in bonds into Pioneer Energy Services, a large drilling operator based in San Antonio with broad operations in North America and Colombia, who subsequently filed bankruptcy. The bondholders had entered into a formalized backstop agreement when the economy suffered unprecedented setbacks of COVID-19 and the complete collapse of the oil market, including futures going negative for the first time in history. Considering these factors, the bondholders sought to re-negotiate the terms of the previously contemplated transaction.

MACCO was engaged as expert witness by legal counsel based in New York and locally out of Dallas to face off against some of the restructuring industry’s most prominent financial advisory and investment banking shops. The bondholders faced countless opposition from the debtor, secured lenders, and even non-objecting bondholders.

Despite the challenge, MACCO delivered an expedited and comprehensive expert witness report which covered the historical financial performance of the debtor, the current market developments, forecasts and already publicized impacts to peers, all finalized in less than two weeks. MACCO facilitated the development of an effective litigation strategy, the deposition of key executives and remained ready to deliver compelling testimony as necessary.

The original transaction contemplated $208 million in fresh capital being injected by MACCO’s client with the lenders being paid in full and walking away. Legal counsel, on behalf MACCO, successfully negotiated a revised transaction including a substantially reduced convertible debt rights offering. As opposed to the originally contemplated non-participation, the lenders contributed over 70% of the convertible offering and 96% of the secured bonds. In all MACCO’s client reduced their fresh capital commitment by $168 million, contributing only $40 million in fresh capital and forcing all parties to continue to have skin in the game.