NABORS INDUSTRIES LTD. (NYSE:NBR) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on January16, 2018 Nabors Industries,Inc. (“NII”), a wholly owned subsidiary of Nabors Industries Ltd. (“NIL”), and NIL entered into a purchase agreement under which NII agreed to sell $800,000,000 aggregate principal amount of its 5.75% Senior Notes due 2025 (the “Notes”) to Goldman Sachs& Co. LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Morgan Stanley& Co. LLC, Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner& Smith Incorporated, HSBC Securities (USA) Inc., Mizuho Securities USA LLC, MUFG Securities Americas Inc., PNC Capital Markets LLC, BBVA Securities Inc., SMBC Nikko Securities America,Inc., ANZ Securities,Inc., and Intrepid Partners, LLC (collectively, the “Initial Purchasers”). The Notes are fully and unconditionally guaranteed by NIL. The closing of the sale of the Notes occurred on January23, 2018. NII received net proceeds, after deducting estimated offering commissions and estimated net expenses, of approximately $788,600,000. Nabors intends to use the net proceeds from this offering to repay indebtedness of Nabors and its subsidiaries, including all of NII’s outstanding 6.15% senior notes due February2018. Nabors intends to initially use the net proceeds from this offering to prepay amounts currently outstanding under NII’s unsecured revolving credit facility and subsequently draw on the unsecured revolving credit facility to pay NII’s outstanding 6.15% senior notes due February2018 at maturity. The revolving credit facility matures in 2020 and the weighted average interest rate on borrowing under the revolving credit facility was 2.59% as of September30, 2017.
NII sold the Notes to the Initial Purchasers in reliance on the exemption from registration provided by Section4(a)(2)of the Securities Act of 1933, as amended (the “Securities Act”). The Initial Purchasers then sold the Notes to (i)qualified institutional buyers to the exemption from registration provided by Rule144A and (ii) to Regulation S under the Securities Act. NII relied on these exemptions from registration based in part on representations made by the Initial Purchasers in the Purchase Agreement.
The Notes are governed by an indenture, dated as of January23, 2018 (the “Indenture”), among NII, as issuer, NIL, as guarantor, Wilmington Trust, National Association, as trustee and Citibank, N.A., as securities administrator.
The Notes will bear interest at a rate of 5.75% per year payable semi-annually in arrears in cash on February1 and August1, beginning on August1, 2018. The Notes will mature on February1, 2025.
The Indenture includes covenants customary for transactions of this type that, subject to significant exceptions, limit the ability of NIL and its subsidiaries to, among other things, incur certain liens or enter into sale and leaseback transactions. In the event of a Change of Control Triggering Event (as defined in the Indenture) with respect to the Notes, the holders of the Notes may require NII to purchase all or a portion of their Notes at a purchase price equal to 101% of the principal amount of the Notes so purchased, plus accrued and unpaid interest, if any. The Notes are redeemable in whole or in part at any time at the option of NII at the redemption prices specified in the Indenture, plus accrued and unpaid interest.
The Notes will rank equal in right of payment to all of NII’s other existing and future senior unsubordinated indebtedness. The Notes will rank senior in right of payment to all of NII’s existing and future senior subordinated and subordinated indebtedness. NIL’s guarantee of the Notes will be unsecured and will rank equal in right of payment to all of NIL’s unsecured and unsubordinated indebtedness from time to time outstanding.
A copy of the Indenture is included in this Form8-K as Exhibit4.1 and incorporated herein by reference. The summary description of the Indenture in this report is qualified in its entirety by reference to Exhibit4.1.
On January23, 2018, NII, NIL, and Goldman Sachs& Co. LLC, as a representative of the Initial Purchasers, entered into a registration rights agreement for the Notes (the “Registration Rights Agreement”), which requires NII and NIL to file a registration statement with the Securities and Exchange Commission to register an offer to exchange the Notes for registered notes of the same series with substantially identical terms (other than restrictions on transfer and provisions for additional interest) by November19, 2018.
