Superior Plans to Spin off US Onshore Operations Into New Public Company

Updated 1 year 3 months ago

Superior Energy Services announced in December 2019 that it had entered into an agreement to divest its U.S. service rig, coiled tubing, wireline, pressure control, flowback, fluid management, and accommodations businesses and combine them with Forbes Energy Services to form a new publicly traded company. The divested operations represent 25% of Superior's revenues for 3Q 2019. At the closing of the transaction, Superior will receive 49.9% of the new company's voting Class A common stock and 100% of the non-voting Class B stock which represents a 65% economic interest. Forbes' shareholders will receive 50.1% of the voting stock.

In addition, certain lenders under Forbes' existing term loan will exchange their portion of the the term loan for approximately USD 30 million in newly issued mandatory convertible preferred shares, which will be entitled to cash dividends at a rate of 5% per annum, payable semi-annually. After giving effect to the conversion of the preferred shares, Superior would own a 52% economic interest and Forbes shareholders would own a 48% economic interest. The preferred shares will be subject to mandatory conversion into Class A stock at the third anniversary of the closing of the transaction. The new company will repay the balance of the Forbes term loan at closing. The transaction is expected to close in 1H 2020 and have been unanimously approved by the boards of Superior and Forbes.

Superior CEO Dave Dunlap will become CEO of the new company, and Brian Moore will be COO with headquarters in Houston. A transition services agreement with Superior will support the company for up to two years. Dunlap will also serve as Chairman of the new company which will operate under a new name and ticker symbol. Superior's CFO West Ballard will be promoted to CEO upon completion of the transaction, and Jamie Spexarth will assume the title of CFO. The new company expects to generate USD 23 million in cost savings within a year. Lazard served as the legal advisor for Superior with Latham & Watkins being a legal advisor. Forbes was advised by Simmons Energy and Fried, Frank, Harris, Shriver, & Jacobson.

In May 2020, Superior terminated the transaction with Forbes and announced its intention to spin off these businesses as a new publicly-traded company.