Bankruptcy Related Disclosures

Commitment Agreement and Restructuring Support Agreement

On June 16, 2017, the Debtors entered into a Commitment Agreement with certain of their creditors (the "Commitment Parties"). The Commitment Parties are the holders (or the investment advisors or managers for the holders) of term loans (the "Credit Facilities") made to the Company under a Credit and Guaranty Agreement dated December 8, 2016, as amended, by and among the Company, its subsidiaries, the lenders party thereto and Cantor Fitzgerald Securities, as Administrative and Collateral Agent (the "Credit Facilities Agreement").

The Commitment Agreement was entered into pursuant to a Restructuring Support Agreement dated April 6, 2017, as amended, by and among the Debtors and certain of their creditors, including the Commitment Parties (the "RSA"). The RSA provides for a consensual restructuring of the debt and equity of the Company, which the Company seeks to effect by means of the Plan.

Under the Commitment Agreement, the Commitment Parties have agreed, subject to the terms and conditions set forth in the Commitment Agreement, to purchase new notes to be issued by the reorganized Company under the Plan (the “New Money Notes”) for an aggregate purchase price of up to $40,000 (the "New Money Amount"), subject to decrease based on the Company’s Opening Liquidity (as defined in the Commitment Agreement) as of the effective date of the Plan (the "Effective Date"). The New Money Notes will be on the same terms as the new notes issued by the Company under the Plan to holders of certain other classes of claims.

The New Money Notes will be issued at a price of $0.8 in cash for each $1 in principal amount of New Money Notes. The Commitment Agreement provides for the payment by the Company, in consideration for the Commitment Parties’ agreements in the Commitment Agreement, of a put option payment equal to $2,000, which shall be payable in cash upon the earlier of the Effective Date or the termination of the Commitment Agreement in accordance with its terms. In addition, the Company has agreed to reimburse the reasonable fees and expenses incurred by the legal and financial advisors to the Commitment Parties.

Under the Commitment Agreement, the Debtors are required to meet the same milestones as set forth in the RSA, including that they obtain orders of the Bankruptcy Court confirming the Plan on or before the sixtieth day after filing voluntary chapter 11 petitions with the Bankruptcy Court. Further, the Commitment Agreement may be terminated if the Effective Date has not occurred by August 31, 2017, if the RSA is terminated, and upon other specified events.

Chapter 11 Bankruptcy Filing

On June 18, 2017 (the "Petition Date"), pursuant to the terms of the RSA, the Debtors commenced voluntary chapter 11 proceedings under the Bankruptcy Code with the Bankruptcy Court. The chapter 11 cases have been consolidated for procedural purposes only and are being administered jointly under the caption In re Keystone Tube Company, LLC., et al. (Case No. 17-11330).

The filing of the bankruptcy petitions constituted a default or event of default that accelerated the Company’s obligations under (i) the Credit Facilities Agreement, (ii) the Indenture dated February 8, 2016 (the "Senior Notes Indenture") and the 12.75% Senior Secured Notes due 2018 issued pursuant thereto (the "New Secured Notes"), and (iii) the Indenture dated May 19, 2016 (the "Convertible Notes Indenture") and the 5.25% Convertible Senior Secured Notes due 2019 issued pursuant thereto (the "New Convertible Notes"). The Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture provide that, as a result of the filing of the bankruptcy petitions, all outstanding indebtedness due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are automatically stayed as a result of the bankruptcy petitions, and the creditors’ rights of enforcement in respect of the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are subject to the applicable provisions of the RSA and the Bankruptcy Code.

No trustee has been appointed in the chapter 11 cases, and the Debtors continue to operate their business as “debtors in possession” subject to the supervision and orders of the Bankruptcy Court in accordance with the Bankruptcy Code. It is expected that the Company will continue its operations without interruption during the pendency of the chapter 11 cases. To maintain and continue ordinary course operations without interruption, the Company received approval from the Bankruptcy Court of a variety of “first day” motions seeking certain relief and authorizing the Company to maintain its operations and pay trade claims in the ordinary course.

Proposed Plan of Reorganization and Confirmation of the Plan

Pursuant to the terms of the RSA, on the Petition Date, the Debtors filed the Plan with the Bankruptcy Court. The Plan implements a new senior secured exit financing facility and the issuance of the New Money Notes to refinance or exchange the existing first lien Credit Facilities and to provide working capital for the reorganized Company. The terms of the Plan provide that the new senior secured exit financing facility shall be in the form of an asset-based revolving credit facility (the "New ABL Facility") entered into on or before the Effective Date. On June 2, 2017, the Company entered into a commitment letter with PNC Bank, National Association (“PNC”), which contemplates a $125,000 New ABL Facility to be entered into upon the Effective Date. If the Debtors are unable to enter into the New ABL Facility on or before the Effective Date, then, on the Effective Date, the Debtors shall enter into a new first lien senior secured term loan credit facility (the "New Roll-Up Facility").

The Plan also deleverages the Company's balance sheet by exchanging $177,019 aggregate principal amount of New Secured Notes and $22,323 aggregate principal amount of New Convertible Notes for an 80% share of new common stock in the reorganized Company, subject to dilution, and certain convertible new second lien secured notes in an aggregate principal amount of $115,000 (the "Exchange Notes"), together with certain cash distributions. All of the existing equity interests in the Company will be extinguished, but holders of such equity interests will have the opportunity to receive a 20% share of new common stock in the reorganized Company, subject to dilution, as part of a settlement encompassed in the Plan.

Allowed general unsecured claims and claims that are unimpaired under the Plan will be paid in full in cash.

On August 2, 2017, the Bankruptcy Court entered an order (the "Confirmation Order") approving and confirming the Plan. The Plan is expected to become effective on or around August 31, 2017. Refer to Note 16 - Subsequent Events.

Financial Reporting Under Reorganization

The condensed consolidated financial statements included herein have been prepared to reflect the application of FASB Accounting Standards Codification ("ASC") No. 852, "Reorganizations". ASC No. 852 requires that the financial statements, for periods subsequent to the chapter 11 filing, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in reorganization items, net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. In addition, liabilities subject to compromise in the chapter 11 cases are distinguished from liabilities of non-filing entities, liabilities not expected to be compromised, and postpetition liabilities in the Company’s Condensed Consolidated Balance Sheet at June 30, 2017. Liabilities subject to compromise are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less.

Liabilities Subject to Compromise

The Company’s Condensed Consolidated Balance Sheet includes amounts classified as liabilities subject to compromise ("LSTC"), which represent the Company's estimate of prepetition liabilities and other expected allowed claims to be addressed in the chapter 11 cases and may be subject to future adjustment as the chapter 11 cases proceed. The following table presents LSTC as reported in the Company’s Condensed Consolidated Balance Sheet at June 30, 2017:



	June 30, 2017
Debt:
12.75% Senior Secured Notes due December 15, 2018	$	177,019
5.25% Convertible Notes due December 30, 2019	22,323
Total debt	199,342
Accrued interest payable	12,021
Liabilities subject to compromise	$	211,363

Effective on the Petition Date, the Company discontinued recording interest expense on outstanding prepetition debt classified as LSTC. For both the three months and six months ended June 30, 2017, interest expense reported in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss does not include $791 of contractual interest on prepetition debt classified as LSTC.

Reorganization Items, Net

Expenses and income directly associated with the chapter 11 proceedings are reported separately in reorganization items, net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. Reorganization items, net also include adjustments to reflect the carrying value of LSTC at their estimated allowed claim amounts, as such adjustments are determined. The following table summarizes the components of reorganization items, net for the three months and six months ended June 30, 2017:



	Three Months and Six Months Ended June 30, 2017
Legal and other professional fees	$	652
Write-off of unamortized debt issuance costs, discounts and embedded conversion option	4,850
Reorganization items, net	$	5,502