US service rig, coiled tubing, wireline, pressure control, flowback, fluid management and accommodations service lines business of Superior Energy Services, Inc. (OTCPK:SPNV) agreed to acquire Forbes Energy Services Ltd. (OTCPK:FLSS) from a group of shareholders in a reverse merger transaction on December 17, 2019. US service rig, coiled tubing, wireline, pressure control, flowback, fluid management and accommodations service lines business of Superior Energy Services, Inc. (US business) entered into a definitive agreement to acquire Forbes Energy Services from a group of shareholders in a reverse merger transaction on December 18, 2019. The combined business will reorganize under a new publically traded platform (Newco) formed by Forbes Energy Services Ltd and the US business. Under the merger agreement, holders of Forbes common stock and holders of Forbes' outstanding convertible PIK notes, which have an outstanding balance, inclusive of accrued interest, of approximately $54 million, will receive, in the aggregate, 50.1% of the voting Class A common stock of combined business representing a 35% economic interest in combined business, subject to potential adjustment within certain parameters based on the net debt position of Forbes. An aggregate of 1.5% of the shares of common stock of combined company to be received by holders of Forbes common stock and convertible PIK notes will be allocated to the outstanding shares of common stock and 98.5% will be allocated to the convertible PIK notes. Superior Energy will receive 49.9% of Newco's issued and outstanding voting class A common stock and 100% of Newco's issued and outstanding non-voting class B common stock, which will collectively represent an approximate 65% economic interest in Newco. After giving effect to the conversion of the preferred shares, Superior Energy would own a 52% economic interest and Forbes shareholders would own a 48% economic interest in Newco. The preferred shares will be subject to mandatory conversion into class A stock at the third anniversary of the closing of the transaction. Newco will repay the balance of the Forbes term loan at closing.

The merged entity will be known as Arita Energy, Inc. Arita's class A common stock is expected to be listed on the OTCQX Best Market. The agreement will be terminated if the merger is not consummated by May 31, 2020. In case of termination, Forbes will pay a termination fee of $1 million and Superior Energy will pay a fee of $3 million or $5 million. Dave D. Dunlap, Chief Executive Officer and President of Superior Energy, will act as Chairman and Chief Executive Officer of combined business, Brian Moore, Executive Vice President of Corporate Services of Superior Energy, will act as Chief Operating Officer of combined business and Justin Boyd, Superior's current President of U.S. Onshore Services, will become Vice President of Operations of the combined business. The Board of Directors of combined business will consist of Dave D. Dunlap plus three independent directors, two of whom will be designated by Superior Energy and one of whom will be designated by Forbes. Newco headquarters will be located in Houston.

The transaction is subject to subject to the approval by Forbes' stockholders and other customary regulatory approvals, expiration or termination of review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, effectiveness of registration statement on Form S-4, consummation of the exchange financing, commitment from lenders to fund a new asset-based credit facility, the consummation of an exchange offer by SESI, L.L.C. ("SESI"), a wholly owned subsidiary of Superior Energy, involving offer to exchange $635 million of its $800 million aggregate principal amount of its outstanding 7.125% senior notes due 2021 for $635 million of newly issued 7.125% senior notes due 2021, the entering into of an asset-based loan facility of combined business, Arita borrowing under an up to $150 million asset-based revolving credit facility, Arita having availability of not less than $40 million under credit facility, which shall not be reduced by any borrowing under the credit facility on the closing date to fund fees in accordance with the terms of the financing letters, and other customary closing conditions. In addition the Boards of Directors of Superior Energy Services and Forbes shall have received opinions from an appraisal firm of national standing to the effect that, immediately following the effective time, and after giving effect to the transactions contemplated hereby and by the other transaction agreements, Superior Energy Services will be solvent, the reorganization shall have been consummated in all material respects in accordance with the terms and conditions of the separation agreement, without the amendment, modification or waiver of any term or condition thereof, Superior Energy Services and Forbes shall have received the written opinion of Latham & Watkins LLP and Fried, Frank, Harris, Shriver & Jacobson LLP respectively, to the effect that for U.S. federal income tax purposes, the mergers, Forbes' term loan contribution and Forbe's PIK contribution will together qualify as a transaction described in Section 351 of the Code, each of the Forbes PIK exchange, the Forbes PIK contribution and the Forbes term loan contribution shall have been consummated in all material respects in accordance with the applicable terms and conditions of the exchange and contribution agreement, which shall not have been amended, modified or waived in any material respect, Forbes net debt shall not be greater than $5 million and net debt of US business shall not be greater than $230 million.

The transaction has been unanimously approved by a special committee of Forbes directors and by the Boards of Directors of each of Forbes and Superior Energy on December 17, 2019. In connection with the transaction, Ascribe Capital LLC and Solace Capital Partners, L.P., which collectively hold approximately 40% of the outstanding Forbes common stock and approximately 92% of Forbes' convertible PIK notes, have entered into a voting agreement with Superior Energy, pursuant to which, subject to the terms of the voting agreement, they have agreed to exchange a portion of their convertible PIK notes for Forbes common stock and, after giving effect to this exchange, to vote shares of common stock representing 51% of the outstanding Forbes common stock in favor of the merger. The transaction is expected to close in the first quarter of 2020. As of February 19, 2020, transaction is expected to close in the second quarter of 2020. Simmons Energy | A Division of Piper Jaffray acted as financial advisor and fairness opinion provider and R. Clyde Parker, Jr. of Winstead PC acted as legal advisor to Forbes special committee. Warren S. de Wied of Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal advisor to Forbes and Brian E. Hamilton of Sullivan & Cromwell LLP acted as legal advisor to Ascribe Capital LLC and Solace Capital, shareholders of Forbes. Lazard Frères & Co. LLC acted as financial advisor and fairness opinion provider and Nick Dhesi, Ryan Maierson, Jesse Myers and John Greer of Latham & Watkins LLP acted as legal advisors to Superior Energy Services, Inc. Forbes agreed to pay Simmons a retainer fee of $0.1 million, a fee of $0.5 million upon the delivery of its written opinion and a fee of $3.5 million contingent upon the successful consummation of a transaction against which the retainer fee and opinion fee will be credited.