Note

- Debt and Capital Lease Obligations

Long term debt and capital lease obligations consisted of the following as of

December

31,

2016

and

2015

(in thousands):

	As of December 31,
	2016			2015

Revolving Credit Facility	$	284,400		$	121,000
Five-Year Term Loans, net of original issue discount and deferred financing costs of $34,336 as of December 31, 2015		569,250			536,353
Seven-Year Term Loans, net of original issue discount and deferred financing costs of $52,032 as of December 31, 2015		480,150			429,330
Capital leases		—			34,873
Total debt and capital lease obligations		1,333,800			1,121,556
Less: liabilities subject to compromise		(1,333,800	)		—
Less: current portion of long-term debt and capital lease obligations		—			(13,433	)
Long-term debt and capital lease obligations	$	—		$	1,108,123

DIP Facility	$	25,000			—

July

20,

2016,

the Debtors filed Bankruptcy Petitions in the Bankruptcy Court seeking relief under Chapter

of the Bankruptcy Code under the caption “

In re: CJ Holding Co., et al., Case No.

33590

.” The filing of the Bankruptcy Petitions constituted an event of default with respect to the Company's Credit Agreement. As a result, the Company’s pre-petition secured indebtedness under the Credit Agreement became immediately due and payable and any efforts to enforce such payment obligations were automatically stayed as a result of the Chapter

Proceeding. As of

December

31,

2016,

$1.3

billion of debt under the Company's Credit Agreement was classified as liabilities subject to compromise.

Additional information regarding the Chapter

Proceeding is included in Note

- Chapter

Proceeding and Emergence.

New Credit Facility

January

2017,

in connection with the emergence from bankruptcy, the Company entered into a revolving credit and security agreement (the "New Credit Facility") with PNC Bank, National Association, as administrative agent (the "Lender").

The New Credit Facility allows the Borrowers to incur revolving loans in an aggregate amount up to the lesser of

$100

million and a borrowing base, which borrowing base is based upon the value of the Borrowers’ accounts receivable and inventory, subject to eligibility criteria and customary reserves which

may

be modified in the Lender’s permitted discretion. The New Credit Facility also contains an availability block, which will reduce the amount otherwise available to be borrowed under the New Credit Facility by

$20

million until the later of the delivery of financial statements for the fiscal year ending

December

31,

2017

and the date on which the Company achieves a fixed charge coverage ratio of

1.10:1.0.

The New Credit Facility also provides for the issuance of letters of credit, which would reduce borrowing capacity thereunder. The maturity date of the New Credit Facility is

January

2021.

If at any time the amount of loans and other extensions of credit outstanding under the New Credit Facility exceed the borrowing base, the Borrowers

may

be required, among other things, to prepay outstanding loans immediately.

The Borrowers’ obligations under the New Credit Facility are secured by liens on a substantial portion of the Borrowers’ personal property, subject to certain exclusions and limitations. Upon the occurrence of certain events, additional collateral, including a portion of the Borrowers’ real properties,

may

also be required to be pledged. Each of the Borrowers is jointly and severally liable for the obligations of the other Borrowers under the New Credit Facility.

At the Borrowers’ election, interest on borrowings under the New Credit Facility will be determined by reference to either LIBOR plus an applicable margin of

4.0%

per annum or an “alternate base rate” plus an applicable margin of

3.0%

per annum. Beginning after the fiscal year ending on or about

December

31,

2017,

these margins will be subject to a step-down of

0.5%

in the event that the Company achieves a fixed charge coverage ratio of

1.15:1.0

or greater. Interest will be payable quarterly for loans bearing interest based on the alternative base rate and on the last day of the interest period applicable to LIBOR-based loans. The Borrowers will also be required to pay a fee on the unused portion of the New Credit Facility equal to

1.0%

per annum in the event that utilization is less than

50.0%

of the total commitment and

0.75%

per annum in the event that utilization is greater than or equal to

50.0%

of the total commitment.

A termination fee of

1.0%

of the maximum amount available will be payable if the loans are repaid in full and the New Credit Facility is terminated prior to the

first

anniversary of the Plan Effective Date.

The New Credit Facility contains covenants that limit the Borrowers’ and their subsidiaries’ ability to incur additional indebtedness, grant liens, make loans or investments, make distributions, merge into or consolidate with other persons, make capital expenditures or engage in certain asset dispositions including a sale of all or substantially all of the Company’s assets.

The New Credit Facility also contains certain financial covenants:

•

on or prior to

August

31,

2017,

a monthly minimum liquidity covenant equal to

$100

million; and

•

beginning on

September

30,

2017,

a monthly minimum fixed charge coverage ratio of

1.0:1.0,

tested only if (a) as of any month-end on or prior to

December

31,

2017,

liquidity is less than

$50

million, and (b) as of any month-end thereafter, liquidity is less than

$40

million.

DIP Facility

In connection with the commencement of the Chapter

Proceeding, the Company filed a motion seeking Bankruptcy Court approval of debtor-in-possession financing on the terms set forth in a contemplated

$100

million Superpriority Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”). On

July

25,

2016,

the Bankruptcy Court entered an order approving, on an interim basis, the financing to be provided pursuant to the DIP Facility, and on

July

29,

2016,

the DIP Credit Agreement was entered into by and among the Company, the other Debtors, the DIP Lenders and Cortland Capital Market Services LLC, as administrative agent on

July

29,

2016,

the Company accessed

$25

million under the DIP Facility. On

September

25,

2016,

the Bankruptcy Court entered a final order (the “Final DIP Order”) authorizing the Debtors’ entry into the DIP Facility. In addition to approving the terms of the DIP Facility described above, the Final DIP Order contained a number of significant bankruptcy related provisions.

The borrowers under the DIP Facility were the Company and CJ Holding Co. All obligations under the DIP Facility were guaranteed by the Company’s subsidiaries that were debtors in the Bankruptcy cases. Borrowings under the DIP Credit Agreement were generally secured by superpriority priming liens on substantially all of the assets of the borrowers and guarantors.

Amounts outstanding under the DIP Facility bore interest based on, at the option of the borrower, the London Interbank Offered Rate (“LIBOR”) or an alternative base rate, plus an applicable margin equal to

9.0%

in the case of LIBOR loans and

8.0%

in the case of base rate loans. The alternative base rate was equal to the highest of (i) the published ‘prime rate’, (ii) the Federal Funds Effective Rate (as defined in the DIP Credit Agreement) plus

0.5%

and (iii) LIBOR plus

1.0%.

The DIP Facility also required that the Company pay various fees to the DIP Lenders, including a commitment fee equal to

5.0%

of the unused commitments thereunder. The DIP Facility could be prepaid from time to time without premium or penalty, except for a

2.0%

prepayment penalty payable in the event the DIP facility was refinanced or replaced with the proceeds of another financing during the pendency of the Bankruptcy cases. The DIP Facility was scheduled to mature on

March

31,

2017.

The Company was required under the terms of the DIP Credit Agreement to comply with various covenants and milestones, including the requirement to deliver periodic

-week budgets. The DIP Credit Agreement contained a covenant requiring our actual receipts and expenditures to remain within a certain variance of the amounts set forth in such budgets.

The DIP Credit Agreement also contained customary restrictive covenants (in each case, subject to exceptions) that limited, among other things, the Company's ability to create, incur, assume or suffer to exist liens or indebtedness, sell or otherwise dispose of assets, make certain restricted payments and investments, enter into transactions with affiliates, make capital expenditures and prepay certain indebtedness. The activities of the Company's subsidiaries that were not debtors in the Bankruptcy cases were extremely limited pursuant to the DIP Credit Agreement.

In accordance with the Restructuring Plan, on the Plan Effective Date, the Company repaid all amounts outstanding under the DIP Facility with the proceeds from the Rights Offering and the DIP Facility was canceled and discharged.

Credit Agreement

March

24,

2015,

in connection with the closing of the Nabors Merger, the Company entered into a new credit agreement with Bank of America N.A., as administrative agent and other lending parties (the “Original Credit Agreement”). At the closing, the Original Credit Agreement provided for senior secured credit facilities in an aggregate principal amount of

$1.66

billion, consisting of (i) a revolving credit facility (“Revolving Credit Facility” or the “Revolver”) in the aggregate principal amount of

$600.0

million and (ii) a term loan B facility (“Term Loan B”) in the aggregate principal amount of

$1.06

billion. The Company simultaneously repaid all amounts outstanding and terminated Old C&J’s prior credit agreement; no penalties were due in connection with such repayment and termination. The borrowers under the Revolver are the Company and certain wholly-owned subsidiaries of the Company, specifically, CJ Lux Holdings S.à. r.l. and CJ Holding Co. The borrower under the Term Loan B is CJ Holding Co. All obligations under the Original Credit Agreement are guaranteed by the Company’s wholly-owned domestic subsidiaries, other than immaterial subsidiaries.

September

29,

2015,

the Company obtained and entered into a waiver and amendments to the Original Credit Agreement (as amended by the amendments, the "Amended Credit Agreement"). The Amended Credit Agreement, among other things, suspended the quarterly maximum Total Leverage Ratio (defined below) and quarterly minimum Interest Coverage Ratio (defined below) covenants set forth in the Original Credit Agreement. The suspension of these financial covenants commenced with the fiscal quarter ending

September

30,

2015

and would last through the fiscal quarter ending

June

30,

2017.

Upon reinstatement of these covenants as of the quarter ending

September

30,

2017,

the required levels initially would be more lenient than those in effect under the terms of the Original Credit Agreement and would gradually adjust to those prior levels over the subsequent fiscal quarters (see

Other Information

below). The effectiveness of the covenant suspension was also subject to certain conditions that, among other things, would reduce the capacity of the Company to make investments and restricted payments through the quarter ending

December

31,

2017.

May

10,

2016,

the Company obtained a temporary limited waiver agreement from certain of the lenders pursuant to which, effective as of

March

31,

2016,

such lenders agreed to not consider a breach of the Minimum Cumulative Consolidated EBITDA Covenant measured as of

March

31,

2016

an event of default through

May

31,

2016.

Minimum Cumulative Consolidated EBITDA is defined as total earnings (loss) before net interest expense, income taxes, depreciation and amortization, other income (expense), and net gain or loss on disposal of assets, and excludes, among other things, stock based compensation expense, acquisition-related costs, and non-routine items.

May

31,

2016,

the Company obtained and entered into the Forbearance Agreement with certain of the lenders pursuant to which, among other things, such lenders agreed not to pursue default remedies against the Company with respect to its breach of the Minimum Cumulative Consolidated EBITDA Covenant or certain specified payment defaults.

June

30,

2016,

this forbearance was extended through

July

17,

2016

pursuant to the Second Forbearance Agreement, and prior to the termination of the Second Forbearance Agreement, this forbearance period was once again extended through

July

20,

2016.

The Second Forbearance Agreement provided that the forbearance would terminate upon the occurrence of certain events, including the failure of the Company to enter into the Restructuring Support Agreement on or prior to

July

2016.

July

2016,

the Company entered into the Restructuring Support Agreement with the Supporting Lenders. The Restructuring Support Agreement contemplated the implementation of a restructuring of the Company through a debt-to-equity conversion and Rights Offering, which transaction was effectuated through the Restructuring Plan.

July

20,

2016,

the Debtors filed Bankruptcy Petitions in the Bankruptcy Court seeking relief under Chapter

11.

Additional information, including definitions of capitalized defined terms, regarding the Chapter

Proceeding is included in Note

- Chapter

Proceeding and Emergence.

Revolving Credit Facility

The Revolver was scheduled to mature on

March

24,

2020

(except that if any

Five

-Year Term Loans (as defined herein) had not been repaid prior to

September

24,

2019,

the Revolver was scheduled to mature on

September

24,

2019).

Borrowings under the Revolver are non-amortizing. Amounts outstanding under the Revolver bore interest based on, at the option of the borrower, LIBOR or an alternative base rate, plus an applicable margin determined pursuant to a pricing grid based on the ratio of consolidated total indebtedness of C&J and its subsidiaries to Consolidated EBITDA of C&J and its subsidiaries for the most recent

four

fiscal quarter period for which financial statements are available (the “Total Leverage Ratio”).

July

20,

2016,

the Debtors filed the Bankruptcy Petitions which constituted an event of default under the Credit Agreement and accelerated the Revolver indebtedness to become immediately due and payable; however, any efforts to enforce such payment obligations were automatically stayed as a result of the Chapter

Proceeding. On the Plan Effective Date, pursuant

to the Restructuring Support Agreement entered into on

July

2016,

holders of the Revolver received their pro rata share of

100.0%

of the New Equity in the reorganized company, subject to dilution from the issuance of New Equity on account of the Management Incentive Plan, the Rights Offering, the Backstop Fee and the New Warrants as discussed further in Note

- Chapter

Proceeding and Emergence.

Term Loan B Facility

Borrowings under the Term Loan B are comprised of

two

tranches: a tranche consisting of

$575.0

million in aggregate principal amount of term loans maturing on

March

24,

2020

(the “Five-Year Term Loans”) and a tranche consisting of a

$485.0

million in aggregate principal amount of term loans maturing on

March

24,

2022

(the “Seven-Year Term Loans”). The Company was required to make quarterly amortization payments in an amount equal to

1.0%

per annum, with the remaining balance payable on the applicable maturity date. As of

December

31,

2016

and

2015,

the Company had borrowings outstanding under the Five-Year Term Loans and the Seven-Year Term Loans of

$569.3

million and

$480.2

million and

$570.7

million and

$481.4

million, respectively.

Five-Year Term Loans outstanding under the Term Loan B bore interest based on, at the option of the Company, (i) LIBOR subject to a floor of

1.0%

per annum, plus a margin of

5.5%,

or (ii) an alternative base rate, plus a margin of

4.5%.

Seven

-Year Term Loans outstanding under the Term Loan B bore interest based on, at the option of the Company, (i) LIBOR subject to a floor of

1.0%

per annum, plus a margin of

6.25%,

or (ii) an alternative base rate, plus a margin of

5.25%.

The alternative base rate

s equal to the highest of (i) the Administrative Agent’s prime rate, (ii) the Federal Funds Effective Rate plus

0.5%,

or (iii) LIBOR plus

1.0%.

July

20,

2016,

the Debtors filed the Bankruptcy Petitions which constituted an event of default under the Credit Agreement and accelerated the Term Loan B Facility indebtedness to become immediately due and payable; however, any efforts to enforce such payment obligations were automatically stayed as a result of the Chapter

Proceeding. On the Plan Effective Date, pursuant

to the Restructuring Support Agreement entered into on

July

2016,

holders of the Term Loan B Facility debt received their pro rata share of

100.0%

- Chapter

Proceeding and Emergence.

Capital Lease Obligations

October

2016,

the Company entered into amended lease agreements related to the Company’s corporate headquarters and its R&T facility, both originally entered into during

2013

and accounted for as capital leases. The Company determined that both amended lease agreements qualify as a new operating lease under ASC

840

Leases

, which resulted in accounting for the amended leases as a sale-leaseback pursuant to the requirements of ASC

840.

The conversion from capital lease to operating lease accounting treatment resulted in the deferral of

$6.3

million of gain.

As of

December

31,

2016,

the Company had no capital lease obligations.

Interest Expense

As of

June

30,

2016,

based on the negotiations between the Company and the lenders, it became evident that the restructuring of the Company's capital structure would not include a restructuring of the Company's Revolving Credit Facility, the Five-Year Term Loans and the Seven-Year Term Loans, and these debt obligations, as demand obligations, would not be paid in the ordinary course of business over the term of these loans. As a result, during the

second

quarter of

2016,

the Company accelerated the amortization of the associated original issue discount and deferred financing costs, fully amortizing these amounts as of

June

30,

2016.

In addition, the Company has not accrued interest that it believes is not probable of being treated as an allowed claim in the Chapter

Proceeding. For the year ended

December

31,

2016,

the Company did not accrue interest totaling

$60.5

million under the Credit Agreement subsequent to the Petition Date. For the year ended

December

31,

2016,

interest expense consisted of the following (in thousands):

	Years Ended December 31,
	2016			2015

Revolving Credit Facility	$	8,504		$	7,058
Five-Year Term Loans		23,330			29,302
Seven-Year Term Loans		21,762			27,557
DIP Facility		2,087			—
Capital leases		1,206			1,005
Accretion of original issue discount		4,193			6,187
Amortization of deferred financing costs		4,590			10,926
Original issue discount accelerated amortization		48,221			—
Deferred financing costs accelerated amortization		43,720			—
Interest income and other		(148	)		51
Interest expense, net	$	157,465		$	82,086