Under the plan, US private equity firm Centerbridge Partners may take up to a 41.6% stake in the company.

Funding sources include a $120 million loan already drawn today, which effectively replaced Boart’s revolving credit facility.

A second loan for up to $105 million remains subject to a tender offer of up to $105 million for senior secured notes.

Other elements of the package include a $6 million initial equity placement, a $21 million follow-on placement and a $76 to $84 million rights issues as well as equitisation of $16 million of senior unsecured notes currently held by Centerbridge.

The deal is expected to increase Boart’s total liquidity to about $240 million, reduce net debt by about $120 million and preserve opportunities for shareholders to continue to invest in the driller alongside Centerbridge.

Centerbridge will pay a 15% premium across the placements while other shareholders will be able to exercise without the premium at the company’s volume-weighted average price through the rights offer.

“As we’ve said since announcing this strategic review back in February, doing nothing is just not an option,” Boart president and chief executive Richard O’Brien said this morning.

“The bank covenants under our former revolving credit facility were almost certainly going to blow up in June of next year.

“The strategic review process we have undertaken with the assistance of Goldman Sachs has been thorough, it’s been comprehensive and I can tell you it’s been almost non-stop.

“We truly have left no stone unturned as we examined all of the options available to the company. And while we had other options, none of them provided the comprehensive solution that the Centerbridge-led recapitalisation provides.”

Boart said the recap plan better positioned it to sustain operations through a cycle of low drill rig utilisation rates as resources companies cut budgets by scaling back exploration programs.

Announcement of the plan coincided with release of the company’ third-quarter financial results, which marked a net loss after tax of $38.3 million.

This compares to a loss of $114.7 million in the prior quarter and a $39.4 million loss in the year-ago period.

Revenues were up 6.8% over the quarter to $239.3 million, but this reflected a 14% fall compared to the same period last year.

The number of employees has fallen more than 45% over the last two years to just under 6000.

Average rig utilisation in the company’s drilling services division was 40% for the quarter, a slight improvement from 39% in the prior quarter and up from 37% a year ago.

Boart’s called for utilisation rates to remain for the balance of 2014, citing a “substantial” excess in global rig supply.

O’Brien, however, said the company would continue its efforts to operate as both a global and local service provider as the new funding scheme unfolds.

“We believe that this Centerbridge-led recapitalisation repositions Boart Longyear for a much brighter future,” he said.

“We will over time create a stronger business with the organisational capability to better manage our working capital and capital investment throughout the business cycle, while ensuring we’re able to deliver safe, efficient drilling services to our drilling services customers and innovative customer oriented products.