CARBO Ceramics Inc. (NYSE:CRR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Amended and Restated Credit Agreement
On March 2, 2017, CARBO Ceramics Inc. (the Company) entered into
an Amended and Restated Credit Agreement (the New Credit
Agreement) with Wilks Brothers, LLC (Wilks) to replace its
current term loan with Wells Fargo Bank, National Association
(Wells Fargo) and provide the Company with additional liquidity
for a longer term.The New Credit Agreement is a $65.0 million
facility maturing on December 31, 2022, that consists of a
$52,651,000 term loan made at closing to pay off Wells Fargo and
an additional term loan of $12,349,000 to be made in a single
advance to the Company upon the satisfaction of certain
post-closing conditions.The Companys obligations bear interest at
9.00% and are guaranteed by its two domestic operating
subsidiaries.No principal repayments are required until maturity
(except in unusual circumstances), and there are no financial
covenants.In lieu of making cash interest payments, the Company
has the option during the first two years of the loan to make
interest payments as payment-in-kind, or PIK, by applying an
11.00% rate to the interest payment due (instead of the 9.00%
cash interest rate) and capitalizing the resulting amount to the
outstanding principal balance of the loan.
The loan cannot be prepaid during the first three years without
making the lenders whole for interest that would have been
payable over the entire remaining term of the loan.The Companys
obligations under the New Credit Agreement are secured by: (i) a
pledge of all accounts receivable and inventory, (ii) cash in
certain accounts, (iii) domestic distribution assets residing on
owned real property, (iv) the Companys Marshfield, Wisconsin and
Toomsboro, Georgia plant facilities and equipment, and (v)
certain real property interests in mines and minerals.Other liens
previously in favor of Wells Fargo were released.
On March 2, 2017, in connection with the New Credit Agreement,
the unsecured Promissory Notes in favor of two of the Companys
Directors in the aggregate amount of $25.0 million were amended
to provide for payment-in-kind, or PIK, interest payments until
the lenders under the New Credit Agreement receive two
consecutive semi-annual cash interest payments.
The foregoing description of the New Credit Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the New Credit Agreement, attached
hereto as Exhibit 10.1, which is incorporated herein by
reference.
Stockholder Agreement and Registration Rights Agreement
In connection with entry into the New Credit Agreement and the
issuance of the Warrant (as described below), the Company entered
into a letter agreement (the Letter Agreement), dated as of March
2, 2017, by and among the Company, Wilks, and certain directors
and officers of the Company holding approximately 14.8% of the
Companys outstanding common shares (collectively, the Supporting
Stockholders).Under the terms of the Letter Agreement, Wilks has
agreed to not acquire, offer to acquire or agree to acquire any
of the Companys common stock, par value $0.01 per share (the
Common Stock) if the acquisition would result in Wilks and its
affiliates owning more than 15% of the Common Stock then
outstanding.Wilks and the Company also agreed to certain other
customary standstill provisions, which remain in effect until six
months after the Wilks and its affiliates own less than 5% of the
Common Stock.
In addition, the Company has agreed to submit a proposal seeking
the approval (the Stockholder Approval), by an affirmative vote
of the holders of a majority of the votes cast of the Common
Stock, of the issuance of 523,022 shares of Common Stock to the
Wilks upon exercise of the Warrant.The New York Stock Exchange
requires the approval of the Companys stockholders of the
issuance of an amount of shares of the Common Stock, or
securities convertible into Common Stock, that exceeds more than
1% of the Common Stock outstanding, to a stockholder of the
Company who holds more than 5% of the Common Stock outstanding
before such issuance, such as Wilks.Under the Letter Agreement,
the Supporting Stockholders have agreed to vote in favor of the
Stockholder Approval.
The Company has also granted Wilks certain registration rights to
a Registration Rights Agreement (the Registration Rights
Agreement), dated as of March 2, 2017, with respect to the shares
of Common Stock issuable upon exercise of the Warrant, which
rights include demand rights and piggy-back registration rights,
subject to certain exceptions and limitations.
The foregoing description of the Letter Agreement and
Registration Rights Agreement does not purport to be complete and
is qualified in its entirety by reference to the full text of the
respective agreements, attached hereto as Exhibits 10.2, and
10.3, respectively, which are incorporated herein by reference.
Warrant
On March 2, 2017, in connection with entry into the New Credit
Agreement, the Company issued a Warrant (the Warrant) to
Wilks.Subject to the terms of the Warrant, the Warrant entitles
the holder thereof to purchase up to 523,022 shares of the Common
Stock, at an exercise price of $14.91 per share, payable in
cash.The Warrant expires at 11:59 p.m., New York City time, on
December 31, 2022.Until receipt of the Stockholder Approval, the
holder of the Warrant shall not be entitled to exercise the
Warrant to the extent that the number of shares of Common Stock
to be purchased upon such exercise, plus the number of shares of
Common Stock purchased on any prior exercise of the Warrant,
exceeds 271,414 shares of Common Stock (which amount represents
approximately 1% of the number of shares of Common Stock
currently outstanding).No fractional shares of Common Stock will
be issued in connection with an exercise of the Warrant.
The exercise price and number of shares of Common Stock issuable
upon exercise of the Warrant are subject to adjustment as
provided in the Warrant in the event of stock dividends, stock
splits or combinations, distributions of securities to the
Companys stockholders, or similar events affecting the Common
Stock.In addition, if, at any time the Warrant is outstanding,
the Company consummates a reclassification, recapitalization or
reorganization, or a merger or similar business combination, or
the sale of all or substantially all of our assets, in each case
in which the Companys Common Stock is converted into or exchanged
for other securities or other consideration, the holder of the
Warrant will have the right to receive, for each share of Common
Stock that would have been issuable upon exercise of the Warrant
immediately prior to the occurrence of such transaction, at the
option of the holder, the number of shares of securities of the
successor or acquiring corporation or of the Company, if it is
the surviving corporation, and any additional consideration
receivable as a result of such transaction by a holder of the
number of shares of Common Stock for which the Warrant was
exercisable immediately prior to such transaction.
The foregoing description of the Warrant does not purport to be
complete and is qualified in its entirety by reference to the
full text of the Warrant, attached hereto as Exhibit 10.4, which
is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement
On March 2, 2017, the Companys existing credit facility, dated as
of January 29, 2010 (as thereafter amended, the Old Credit
Agreement), among the Company and Wells Fargo Bank, National
Association, and the Lenders named therein (Wells), was assigned
to Wilks and amended and restated as the New Credit Agreement.As
a result of the transaction, Wells was paid in full at closing,
and certain related documents in favor of Wells were assigned to
Wilks at closing.
Item 3.02 Unregistered Sales of Equity Securities
The applicable information set forth in Item 1.01 of this Current
Report on Form 8-K is incorporated by reference in this Item
3.02.The Warrant was offered and sold without registration under
the Securities Act, in reliance on the exemptions provided by
Section 4(a)(2) of the Securities Act.
Item 9.01. Financial Statements and Exhibits.
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(d) |
Exhibits. |
to General Instruction B.2 of Form 8-K, the following exhibits
are furnished with this Form 8-K.
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10.1 |
Amended and Restated Credit Agreement, dated as of March |
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10.2 |
Letter Agreement, dated as of March 2, 2017, by and |
|
10.3 |
Registration Rights Agreement, dated as of March 2, 2017, |
|
10.4 |
Warrant, dated as of March 2, 2017, issued by Carbo |
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10.5 |
Second Amended and Restated Pledge and Security |
About CARBO Ceramics Inc. (NYSE:CRR)
Carbo Ceramics Inc. is an oilfield services technology company. The Company supplies ceramic proppant. The Company also sells sand and resin-coated proppants. Additionally, it provides fracture simulation software, fracture design and consulting services, and a range of technologies for spill prevention, containment and related countermeasures. Its products and services are used in the hydraulic fracturing of natural gas and oil wells. It manufactures various ceramic proppants, including KRYPTOSPHERETM HD, which is a ceramic proppant engineered to deliver conductivity and durability in closure stress wells; KRYPTOSPHERE LD, which is a lower density proppant compared to KRYPTOSPHERE HD; CARBOHSP and CARBOPROP, which are high and intermediate density ceramic proppants, and CARBOLITE, CARBOECONOPROP and CARBOHYDROPROP, which are low-density ceramic proppants. It offers CARBO NORTHERN WHITE, which is a frac sand; CARBONRT, a detectable proppant, and SCALEGUARD, a porous ceramic proppant. CARBO Ceramics Inc. (NYSE:CRR) Recent Trading Information
CARBO Ceramics Inc. (NYSE:CRR) closed its last trading session down -0.29 at 13.12 with 906,545 shares trading hands.