OFS International files bankruptcy, cites negative market conditions

By Sarah Lizee

Olympia, Wash., June 1 – OFS International, LLC filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Southern District of Texas, according to court documents.

Alexey Ratnikov, the company’s vice president and chief financial officer, said in a declaration that the company filed bankruptcy in order to stay the foreclosure of its real property, maintain its business as a going concern and obtain breathing room necessary to negotiate with its secured creditors on a financial restructuring.

Also on Monday, the company filed a $10 million fraudulent transfer adversary proceeding against a former equity holder.

“Like all companies providing oilfield services, the debtors’ business was severely impacted by the negative market conditions in the energy section and reduced commodity prices during 2020,” Ratnikov said.

“However, the debtors’ performance has started to improve. They believe that they have a viable business that can be reorganized and intend to confirm a Chapter 11 plan in these cases.”

In order to support the Chapter 11 cases, the debtors have secured up to $16.5 million in additional liquidity through post-petition financing to be provided by Sandton Capital Solutions Master Fund V, LP. The financing consists of a $12.5 million DIP revolving ABL facility and an up to $4 million DIP term loan.

Of the $4 million in term loans, $800,000 will be available in a first tranche upon entry of an interim order approving the financing, $700,000 will be available as a second tranche upon entry of a final order approving the financing, and an additional $2.5 million may be made available as a discretionary third tranche for working capital purchases acceptable to Sandton in its sole discretion, and depending upon borrowing base availability.

The DIP credit facilities provide for a creeping roll up of Sandton’s pre-petition secured debt.

The maturity date is Dec. 31. Interest is 11%, with 5% paid in kind and 6% in cash.

The company is also seeking court approval to use the cash collateral of Sandton.

In its petition, the company listed $10 million to $50 million in assets and $50 million to $100 million in liabilities.

Its largest unsecured creditors are PAO TMK, based in Moscow, with a $40.48 million trade debt claim, the U.S. Small Business Administration, based in Washington, D.C., with an $8.05 million bank loan claim, Arcelormittal Projects Americas LLC, based in Houston, with a $2.69 million trade debt claim, RDT Inc., based in Beasley, Tex., with a $1.33 million trade debt claim, Tubos Reunidos Indusrial SLU, based in Amurrio, Spain, with a $1.23 million trade debt claim, and TMK Gulf International Pipe Industry LLC, based in Azaiba, Oman, with a $1.03 million trade debt claim.

The Houston-based company provides oil company tubular goods and services. The Chapter 11 case number is 21-31784.

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