Nuverra Environmental Solutions, Inc. (OTCMKTS:NESC) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
Restructuring Support Agreement
On April9, 2017, Nuverra Environmental Solutions, Inc. (the
Company) and its subsidiaries (the Company and the subsidiaries,
collectively, Nuverra) entered into a Restructuring Support
Agreement (the RSA) with holders of over 80% (the Supporting
Noteholders) of the Companys outstanding 12.5%/10.0% Senior
Secured Second Lien Notes due 2021 (the 2021 Notes). Under the
RSA, the Supporting Noteholders have agreed, subject to certain
terms and conditions, to support a financial restructuring of
Nuverra (the Restructuring) to a prepackaged plan of
reorganization (the Plan) to be filed in a case commenced under
chapter 11 of the United States Bankruptcy Code. Nuverra expects
to commence a solicitation of votes for the Plan no later than
April20, 2017 and expects to commence the chapter 11 cases on or
before April24, 2017.
The Plan will be based on the restructuring term sheet attached
to and incorporated into the RSA (the Term Sheet), which
includes:
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debtor in possession financing (the DIP Facilities), consisting of a super-priority, secured, debtor-in-possession revolving credit facility (the DIP Revolving Facility) provided by the lenders under the Companys asset-based revolving credit facility (the ABL Facility) and a super-priority, secured, debtor-in-possession term loan facility (the DIP Term Loan) provided by one or more of the lenders under the Companys term loan (the Term Loan); |
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a rights offering (the Rights Offering) in connection with the consummation of the Restructuring, to which the Company will distribute freely transferrable rights (the Rights) to permit the holders thereof to acquire, in the aggregate, $150million of newly issued common stock of the reorganized company at an enterprise valuation of $400million (the Plan Value); |
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exit financing, to the extent necessary after the Rights Offering, to fund required disbursements under the Plan, through a new first lien, senior secured exit facility in the form of an asset backed revolver, term loan or combination thereof; |
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cash payment in full of all administrative expense claims, priority tax claims, priority claims, DIP Revolving Facility claims, and ABL Facility claims; |
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satisfaction in full of all DIP Term Loan claims and Term Loan claims (collectively, the Term Loan Claims) as follows: (i)conversion of the first $75million of Term Loan Claims into newly issued common stock of the reorganized company at Plan Value, subject to dilution by a new management incentive plan, the Rights Offering, and the conversion of the remainder of the Term Loan Claims, and (ii)the remaining Term Loan Claims, if any, to be paid in cash from the proceeds of the Rights Offering in excess of $50million after repayment of the ABL Facility claims and other expenses, with any remaining balance thereafter to be converted to newly issued common stock of the reorganized company at Plan Value (subject to dilution); |
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receipt by the holders of the 2021 Notes, in full satisfaction of their claims, of (a)their pro rata share of 99.75% of the reorganized companys newly issued common stock, subject to dilution by |
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a new management incentive plan, the Rights Offering, and the conversion of the Term Loan Claims, and (b) 50% of the Rights (which will be exercisable for up to two years following the completion of the Restructuring); |
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receipt by the holders of the Companys 9.875% Senior Notes due 2018 (the 2018 Notes) in full satisfaction of their claims of (a)their pro rata share of 0.25% of the reorganized companys newly issued common stock, subject to dilution by a new management incentive plan, the Rights Offering, and the conversion of the Term Loan Claims, and (b)a portion of 50% of the Rights to be determined by Nuverra (which will be exercisable prior to the completion of the Restructuring); |
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existing equity interests shall receive no distribution; provided, however that, subject to agreement among the Supporting Noteholders and Nuverra, existing equity holders may receive a portion of the Rights; |
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payment of all undisputed, non-contingent customer, vendor or other trade obligations; and |
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continuation as a public reporting company under the Securities Exchange Act of 1934 and best efforts to have the new common stock listed on the New York Stock Exchange. |
In accordance with the RSA, the Supporting Noteholders agreed,
among other things, to: (i)provide interim financing to Nuverra
in the aggregate amount of $9,130,000 until the filing of the
chapter 11 cases; (ii)support and take all necessary actions in
furtherance of the Restructuring; (iii)vote all of its claims
against Nuverra in favor of the Plan; (iv)not direct or take any
action inconsistent with the Plan or the Supporting Noteholders
obligations; (v)not take any action that would, or is intended to
in any material respect, interfere with, delay, or postpone the
consummation of the Restructuring; and (vi)not transfer claims
held by each Supporting Noteholder except with respect to limited
and customary exceptions, generally requiring any transferee to
become party to the RSA.
In accordance with the RSA, Nuverra agreed, among other things,
to: (i)use its best efforts to launch the solicitation of votes
to approve the Plan, file the Plan, and seek confirmation of the
Plan; (ii)use its best efforts to obtain orders from the
bankruptcy court regarding the Restructuring; (iii)act in good
faith and use its best efforts to support and complete the
transactions contemplated in the Term Sheet; (iv)use its best
efforts to obtain all required regulatory approvals and
third-party approvals of the Restructuring; (v)not take any
actions inconsistent with the RSA, Term Sheet, DIP Facilities,
and the Plan; (vi)operate its business in the ordinary course
consistent with past practice and preserve its businesses and
assets; and (vii)support and take all actions that are necessary
and appropriate to facilitate the confirmation of the Plan and
the consummation of the Restructuring.
The RSA may be terminated upon the occurrence of certain events,
including the failure to meet specified milestones related to the
solicitation of votes to approve the Plan, commencement of the
chapter 11 cases, confirmation of the Plan, consummation of the
Plan, and the entry of orders relating to the DIP Facilities.
The information in this Form 8-K is not intended to be, and
should not in any way be construed as, a solicitation of votes on
the Plan, nor should the information contained herein or in the
RSA be relied on for any purpose with respect to the Plan. The
foregoing description of the RSA, including the Term Sheet, is
only a summary and does not purport to be a complete description
of the terms and conditions under the RSA and the Term Sheet, and
such description is qualified in its entirety by reference to the
full text of the RSA (to which the Term Sheet is attached), a
copy of which is filed as Exhibit 10.1 to this Current Report on
Form 8-K and is incorporated by reference into this Item 1.01.
Term Loan Credit Agreement Amendments
Sixth Amendment to Term Loan
On April6, 2017 (the Sixth Amendment Effective Date), the Company
entered into a Sixth Amendment (Increase Amendment) to Term Loan
Credit Agreement (the Sixth Term Loan Agreement Amendment) by and
among the lenders named therein (the Term Loan Lenders),
Wilmington Savings Fund Society, FSB (Wilmington), as
administrative agent, Wells Fargo, as collateral agent, the
Company, and the guarantors named therein, which further amends
the Term Loan Credit Agreement, dated April15, 2016, by and among
Wilmington, the Term Loan Lenders, and the Company (the Term Loan
Agreement) by increasing the Term Loan Lenders commitment, and
the principal amount borrowed by the Company, under the Term Loan
Agreement from $59,200,000 to $60,300,000 (the Sixth Amendment
Additional Term Commitment).
to the Sixth Term Loan Agreement Amendment, the Company is
required to use a portion of the net cash proceeds of the Sixth
Amendment Additional Term Commitment of $1million to pay the
fees, costs and expenses incurred in connection with the Sixth
Term Loan Agreement Amendment. The remaining net cash proceeds,
subject to satisfaction of certain release conditions, will be
available for general operating, working capital and other
general corporate purposes. The Company intends to use the
additional liquidity provided by the Sixth Amendment Additional
Term Commitment to fund its business operations until the filing
of the Plan.
As a condition to the effectiveness of the Sixth Term Loan
Agreement Amendment, the Company was required to enter into a
letter agreement with the agent under the ABL Facility providing,
among other things, that the agent under the ABL Facility would
not exercise any remedies with respect to the Sixth Amendment
Additional Term Commitment deposited in the Companys Master
Account, subject to the terms of such letter agreement.
The Sixth Term Loan Agreement Amendment requires the Company,
among other things, to (i)on or before April7, 2017, enter into
the RSA and other documentation requested by the Lenders in
connection with the Restructuring; and (ii)within 5 days of the
Sixth Amendment Effective Date, cause mortgage title policies to
be issued for all real property collateral under the Companys
Term Loan Agreement and to pay all premiums for such title
policies.
to the Sixth Term Loan Agreement Amendment, the Term Loan Lenders
consented to the sale of the property situated in the Southeast
Quarter of the Northwest Quarter of Section3, Township 1 North,
Range 5 East, Sixth Judicial District of Amite County,
Mississippi.
Seventh Amendment to Term Loan
On April10, 2017 (the Seventh Amendment Effective Date), the
Company entered into a Seventh Amendment (Increase Amendment) to
Term Loan Credit Agreement (the Seventh Term Loan Agreement
Amendment) by and among the Term Loan Lenders, Wilmington, as
administrative agent, Wells Fargo, as collateral agent, the
Company, and the guarantors named therein, which further amends
the Term Loan Agreement by increasing the Term Loan Lenders
commitment, and the principal amount borrowed by the Company,
under the Term Loan Agreement from $60,300,000 to $65,800,000
(the Seventh Amendment Additional Term Commitment). The Seventh
Amendment Additional Term Commitment is in partial satisfaction
of the requirement to fund Supplemental Term Loans (as defined
the Fifth Amendment to Term Loan Credit Agreement).
to the Seventh Term Loan Agreement Amendment, the Company is
required to use a portion of the net cash proceeds of the Seventh
Amendment Additional Term Commitment of $5million to pay the
fees, costs and expenses incurred in connection with the Seventh
Term Loan Agreement Amendment. The remaining net cash proceeds,
subject to satisfaction of certain release conditions, will be
available for general operating, working capital and other
general corporate purposes. The Company intends to use the
additional liquidity provided by the Seventh Amendment Additional
Term Commitment to fund its business operations until the filing
of the Plan.
As a condition to the effectiveness of the Seventh Term Loan
Agreement Amendment, the Company was required to enter into a
letter agreement with the agent under the ABL Facility providing,
among other things, that the agent under the ABL Facility would
not exercise any remedies with respect to the Seventh Amendment
Additional Term Commitment deposited in the Companys Master
Account, subject to the terms of such letter agreement.
The Seventh Term Loan Agreement Amendment requires the Company,
among other things, to (i)comply with the terms and conditions of
the RSA; and (ii)within 5 days of the Seventh Amendment Effective
Date, cause mortgage title policies to be issued for all real
property collateral under the Companys Term Loan Agreement and to
pay all premiums for such title policies.
The foregoing descriptions of the Sixth Term Loan Agreement
Amendment and Seventh Term Loan Agreement Amendment are only
summaries and do not purport to be a complete description of the
terms and conditions under the Sixth Term Loan Agreement
Amendment and Seventh Term Loan Agreement Amendment, and such
descriptions are qualified in their entirety by reference to the
full text of the Sixth Term Loan Agreement Amendment and Seventh
Term Loan Agreement Amendment, copies of which are filed as
Exhibits 10.2, and 10.3, respectively, to this Current Report on
Form 8-K and are incorporated by reference into this Item 1.01.
Letter Agreements Regarding Additional Term
Loans
Sixth Amendment Letter Agreement
On April6, 2017, in connection with the Sixth Term Loan Agreement
Amendment, the Company and Wells Fargo entered into a letter
agreement regarding the Sixth Amendment Additional Term
Commitment (the Sixth Amendment Letter Agreement). to the Sixth
Amendment Letter Agreement, Wells Fargo agreed to not exercise
any remedies with respect to the cash proceeds received from the
Sixth Amendment Additional Term Commitment that are deposited in
the Companys Master Account, subject to the terms of such Sixth
Amendment Letter Agreement. In addition, the Sixth Amendment
Letter Agreement provides that in the event Wells Fargo or the
lenders under the ABL Facility foreclose or otherwise obtain
direct control over the Sixth Amendment Additional Term
Commitment, such Sixth Amendment Additional Term Commitment shall
be deemed to be held in trust by Wells Fargo or the lenders under
the ABL Facility for the benefit of the Term Loan Lenders.
Seventh Amendment Letter Agreement
On April10, 2017, in connection with the Seventh Term Loan
Agreement Amendment, the Company and Wells Fargo entered into a
letter agreement regarding the Seventh Amendment Additional Term
Commitment (the Seventh Amendment Letter Agreement). to the
Seventh Amendment Letter Agreement, Wells Fargo agreed to not
exercise any remedies with respect to the cash proceeds received
from the Seventh Amendment Additional Term Commitment that are
deposited in the Companys Master Account, subject to the terms of
such Seventh Amendment Letter Agreement. In addition, the Seventh
Amendment Letter Agreement provides that in the event Wells Fargo
or the lenders under the ABL Facility foreclose or otherwise
obtain direct control over the Seventh Amendment Additional Term
Commitment, such Seventh Amendment Additional Term Commitment
shall be deemed to be held in trust by Wells Fargo or the lenders
under the ABL Facility for the benefit of the Term Loan Lenders.
The foregoing descriptions of the Sixth Amendment Letter
Agreement and Seventh Amendment Letter Agreement are only
summaries and do not purport to be a complete description of the
terms and conditions under the Sixth Amendment Letter Agreement
and Seventh Amendment Letter Agreement, and such descriptions are
qualified in their entirety by reference to the full text of the
Sixth Amendment Letter Agreement and Seventh Amendment Letter
Agreement, copies of which are filed as Exhibits 10.4 and 10.5,
respectively, to this Current Report on Form 8-K and are
incorporated by reference into this Item 1.01.
Intercreditor Agreement Amendments
Fourth Intercreditor Agreement Amendments
On April6, 2017, in connection with the Sixth Term Loan Agreement
Amendment, the Company acknowledged and agreed to the terms and
conditions under Amendment No.4 to Intercreditor Agreement (the
Fourth Pari Passu Intercreditor Agreement Amendment), dated
April6, 2017 by and among Wells Fargo, as pari passu collateral
agent, Wells Fargo, as revolving credit agreement agent under the
ABL Facility, and Wilmington, as administrative agent under the
Term Loan Agreement, which further amends the Intercreditor
Agreement, dated as of April15, 2016, between Wells Fargo, as
pari passu collateral agent, Wells Fargo, as administrative agent
under the ABL Facility, and Wilmington, as administrative agent
under the Term Loan Agreement (the Pari Passu Intercreditor
Agreement). On April6, 2017, in connection with the Sixth Term
Loan Agreement Amendment, the Company acknowledged and agreed to
the terms and conditions under Amendment No.4 to Intercreditor
Agreement (the Second Lien Intercreditor Agreement Fourth
Amendment), dated April6, 2017, by and among Wells Fargo, as
revolving credit agreement agent under the ABL Facility,
Wilmington, as administrative agent under the Term Loan
Agreement, and Wilmington, as second lien agent under the Second
Lien Intercreditor Agreement, which further amends the
Intercreditor Agreement, dated as of April15, 2016, between Wells
Fargo, as administrative agent under the ABL Facility,
Wilmington, as administrative agent under the Term Loan
Agreement, and Wilmington, as collateral agent under the
indenture governing the 2021 Notes (the Second Lien Intercreditor
Agreement). The Fourth Pari Passu Intercreditor Agreement
Amendment and the Second Lien Intercreditor Agreement Fourth
Amendment permit the Sixth Amendment Additional Term Commitment
by amending the Term Loan Cap to increase it from $65,120,000 to
$66,330,000. The Term Loan Cap is higher than the commitment
under the Term Loan, as it includes, in addition to the Lenders
commitment under the Term Loan Agreement, origination fees paid
in kind and a 10% cushion.
Fifth Intercreditor Agreement Amendments
On April10, 2017, in connection with the Seventh Term Loan
Agreement Amendment, the Company acknowledged and agreed to the
terms and conditions under Amendment No.5 to Intercreditor
Agreement (the Fifth Pari Passu Intercreditor Agreement
Amendment), dated April7, 2017 by and among Wells Fargo, as pari
passu collateral agent, Wells Fargo, as revolving credit
agreement agent under the ABL Facility, and Wilmington, as
administrative agent under the Term Loan Agreement, which further
amends the Pari Passu Intercreditor Agreement. On April10, 2017,
in connection with the Seventh Term Loan Agreement Amendment, the
Company acknowledged and agreed to the terms and conditions under
Amendment No.5 to Intercreditor Agreement (the Second Lien
Intercreditor Agreement Fifth Amendment), dated April7, 2017, by
and among Wells Fargo, as revolving credit agreement agent under
the ABL Facility, Wilmington, as administrative agent under the
Term Loan Agreement, and Wilmington, as second lien agent under
the Second Lien Intercreditor Agreement, which further amends the
Second Lien Intercreditor Agreement. The Fifth Pari Passu
Intercreditor Agreement Amendment and the Second Lien
Intercreditor Agreement Fifth Amendment permit the Seventh
Amendment Additional Term Commitment by amending the Term Loan
Cap to increase it from to $66,330,000 to $72,380,000. The Term
Loan Cap is higher than the commitment under the Term Loan, as it
includes, in addition to the Lenders commitment under the Term
Loan Agreement, origination fees paid in kind and a 10% cushion.
The foregoing descriptions of the Fourth Pari Passu Intercreditor
Agreement Amendment, Second Lien Intercreditor Agreement Fourth
Amendment, Fifth Pari Passu Intercreditor Agreement Amendment,
and Second Lien Intercreditor Agreement Fifth Amendment are only
a summaries and do not purport to be a complete description of
the terms and conditions under the Fourth Pari Passu
Intercreditor Agreement Amendment, Second Lien Intercreditor
Agreement Fourth Amendment, Fifth Pari Passu Intercreditor
Agreement Amendment, and Second Lien Intercreditor Agreement
Fifth Amendment, and such descriptions are qualified in their
entirety by reference to the full text of the Fourth Pari Passu
Intercreditor Agreement Amendment, Second Lien Intercreditor
Agreement Fourth Amendment, Fifth Pari Passu Intercreditor
Agreement Amendment, and Second Lien Intercreditor Agreement
Fifth Amendment, copies of which are filed as Exhibits 4.1, 4.2,
4.3, and 4.4, respectively, to this Current Report on Form 8-K
and are incorporated by reference into this Item 1.01.
| Item2.03. |
Creation of a Direct Financial Obligation or an Obligation Under an off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 is incorporated by
reference into this Item 2.03.
| Item7.01. | Regulation FD. |
On April12, 2017, the Company issued a press release announcing
the signing of the RSA, a copy of which is attached hereto as
Exhibit 99.1 and incorporated herein by reference. The
information contained in the press release is being furnished and
shall not be deemed filed for purposes of Section18 of the
Securities Exchange Act of 1934, as amended (the Exchange Act),
or otherwise subject to the liability of such section, nor shall
such information be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
| Item9.01. | Financial Statements and Exhibits. |
(d)
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Exhibit Number |
Description |
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| 4.1 |
Amendment No.4 toIntercreditor Agreement, dated April6, 2017, by and among Wells Fargo, as pari passu collateral agent, Wells Fargo, as revolving credit agreement agent under the ABL Facility, and Wilmington, as administrative agent under the Term Loan Agreement |
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| 4.2 |
Amendment No.4 toIntercreditor Agreement, dated April6, 2017, by and among Wells Fargo, as revolving credit agreement agent under the ABL Facility, Wilmington, as administrative agent under the Term Loan Agreement, and Wilmington, as second lien agent under the Second LienIntercreditor Agreement |
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| 4.3 |
Amendment No.5 toIntercreditor Agreement, dated April10, 2017, by and among Wells Fargo, as pari passu collateral agent, Wells Fargo, as revolving credit agreement agent under the ABL Facility, and Wilmington, as administrative agent under the Term Loan Agreement |
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| 4.4 |
Amendment No.5 toIntercreditor Agreement, dated April10, 2017, by and among Wells Fargo, as revolving credit agreement agent under the ABL Facility, Wilmington, as administrative agent under the Term Loan Agreement, and Wilmington, as second lien agent under the Second LienIntercreditor Agreement |
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| 10.1 |
Restructuring Support Agreement, dated as of April9, 2017, by and among the Company and its subsidiaries, and the Supporting Noteholders |
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| 10.2 |
Sixth Amendment (Increase Amendment) to Term Loan Credit Agreement, dated April6, 2017, by and among the Term Loan Lenders, Wilmington, Wells Fargo, the Company and the guarantors named therein |
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10.3 |
Seventh Amendment (Increase Amendment) to Term Loan Credit Agreement, dated April10, 2017, by and among the Term Loan Lenders, Wilmington, Wells Fargo, the Company and the guarantors named therein |
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10.4 |
Letter Agreement, dated April6, 2017, between the Company and Wells Fargo |
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10.5 |
Letter Agreement, dated April10, 2017, between the Company and Wells Fargo |
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99.1 |
Press Release, dated April12, 2017 |
About Nuverra Environmental Solutions, Inc. (OTCMKTS:NESC)
Nuverra Environmental Solutions, Inc. (Nuverra) provides environmental solutions to customers focused on the development and production of oil and natural gas from shale formations. The Company’s environmental solutions include delivery, collection, treatment, recycling, disposal of water, wastewater, waste fluids, hydrocarbons, and restricted solids that are part of the drilling, completion, and production of shale oil and natural gas. The Company operates through three segments, which include the Northeast division comprising the Marcellus and Utica Shale areas; the Southern division comprising the Haynesville, Eagle Ford and Permian Basin Shale areas, and the Rocky Mountain division comprising the Bakken Shale area. Nuverra operates in select shale areas in the United States, including oil shale areas consisting of the Bakken, Eagle Ford and Permian Shale areas, and natural gas shale areas in Haynesville, Marcellus and Utica. Nuverra Environmental Solutions, Inc. (OTCMKTS:NESC) Recent Trading Information
Nuverra Environmental Solutions, Inc. (OTCMKTS:NESC) closed its last trading session down -0.067 at 0.185 with shares trading hands.
