C&J Energy Services Inc. postponed a $650 million acquisition loan, the latest deal to be stalled as falling oil prices constrain the ability of junk-rated companies in the industry to obtain financing.
The Houston-based provider of hydraulic-fracturing services decided to delay the offering intended to fund the purchase of a unit of Nabors Industries Ltd. due to “uncertainty of current market conditions,” according to an e-mailed statement from the company.
Lead arranger Citigroup Inc. expects to begin marketing the debt again early next month, according to a person with knowledge of the matter, who asked not to be identified without authorization to speak publicly.
Two other energy-related companies deferred loans this week after a plunge in oil prices made their high-yield, high-risk debt more difficult to sell. Brent and West Texas Intermediate crudes closed at the lowest level in more than five years after Saudi Arabia offered its oil customers in Asia the biggest discount on record, signaling it’s defending market share.
“Given the pricing and other terms available under the committed financing arrangements, coupled with uncertainty of current market conditions, we decided to withdraw the loan from the market for now but we may be back once conditions improve,” C&J said in the statement. “The transaction is fully financed and the decision made to temporarily delay the term loan B process in no way impacts our ability to finance or complete the deal.”
C&J said in June it agreed to buy Nabors’s completion and production services business in the U.S. and Canada in a cash- and-stock deal then valued at about $2.86 billion. C&J obtained a $1.3 billion commitment from Citigroup to finance the cash portion of the transaction and refinance debt, according to the statement. The oil-services provider also plans to sell bonds in January to fund the acquisition, according to the person.
C&J said in the e-mailed statement that it “remains on track to close the transaction with Nabors’ completion and production services business in January of 2015.”
Citigroup began marketing the loan to investors last month, according to data compiled by Bloomberg. Robert Julavits, a spokesman for Citigroup, declined to comment.
C&J’s shares fell to a record low of $13.49 today in New York. The stock has tumbled 60 percent from this year’s peak of $33.78 at the end of June.
Earlier this week, New Atlas, a newly formed unit of oil and natural-gas producer Atlas Energy Group, put on hold a $155 million loan it was seeking to refinance debt, according to five people with knowledge of the deal, who asked not be identified because the decision is private.
EnTrans International LLC, a maker of fracking equipment, delayed selling a $250 million bond, according to three other people familiar with that transaction.