NEWPARK RESOURCES, INC. (NYSE:NR) Files An 8-K Other Events
Item 8.01Other Items
As previously disclosed, in connection with the 4.00% Convertible Senior Notes due 2021 (the “Notes”) issued by Newpark Resources, Inc. (the “Company”) on December 5, 2016, the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”) entered into that certain Indenture dated as of December5, 2016 (the “Indenture”).
The Indenture requires the Company to notify the Trustee upon the occurrence of the Resale Restriction Termination Date, which is the later of (i) the date that is one year after the last date of the original issuance of the Notes, or such shorter period of time as permitted by Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and (ii) such later date, if any, as may be required by applicable law. The Resale Restriction Termination Date occurred on December 5, 2017, and the Company did not provide written notice thereof to the Trustee and the Notes continued to bear a restrictive legend and be assigned a restricted CUSIP number.
As a result, additional interest began to accrue on the Notes at a rate of 0.5% per annum starting on December 6, 2017 and will continue to accrue until such time that the Notes (i) do not bear a restrictive legend, (ii) are assigned an unrestricted CUSIP number and (iii) are freely tradable to Rule 144 by holders other than the Company’s affiliates or holders that were the Company’s affiliates at any time during the three months immediately preceding any such transfer. Interest on the Notes (including any additional interest described above) is due and payable semi-annually in arrears on each June 1 and December 1. After recently becoming aware of this failure to remove the restrictive legend from the Notes and assign an unrestrictive CUSIP number to the Notes and the resulting accrual of additional interest, the Company (a) instructed the Trustee to remove the restrictive legend from the Notes, (b) obtained an unrestricted CUSIP number for the Notes and (c) applied to the Depository Trust Company (the “DTC”) to effect a mandatory exchange of the Restricted Global Note for an Unrestricted Global Note, so that the Notes will become freely tradeable. The Company expects that such exchange will be completed on or about January 25, 2019 (the “Exchange Date”), and consequently, the accrual of additional interest on the Notes will cease on the Exchange Date.
While the Company made regular interest payments on each of June 1, 2018 and December1, 2018, the Company did not pay the additional interest as described above on those payment dates. The failure to pay the additional interest due on the applicable due date and the continuance of such failure for 30 days resulted in an event of default under the Indenture (the “Indenture Event of Default”). For so long as the Indenture Event of Default is continuing and has not been cured, either the Trustee or the holders of at least 25% in principal amount of the Notes are entitled to elect to accelerate the maturity of the Notes.
As discussed above, the Company has (i) obtained an unrestricted CUSIP number for the Global Note representing the Notes, and (ii) delivered to the DTC an application to exchange the Global Note with the restricted CUSIP number (Restricted CUSIP No. 651718AD0) for a Global Note with the new unrestricted CUSIP number (Unrestricted CUSIP No. 651718AE8) to DTC’s mandatory exchange procedures and will consummate the exchange on or about the Exchange Date.
The Company has established a special payment date of January 18, 2019 (the “Special Payment Date”) for the payment of all overdue additional interest (which was due and payable on June 1, 2018 and December 1, 2018), together with interest thereon at a rate of 5.50% per annum, as required by the terms of the Indenture and the Notes. The Company has also established a special record date of the close of business on January 17, 2019 (the “Special Record Date”) to establish the persons in whose names the Notes are registered for purposes of receiving such payment. The Company has deposited with the Trustee a total of $504,792.59, which is the aggregate amount of the payment to be paid on January 18, 2019. The Company will pay the
final portion of additional interest accruing from December 1, 2018 to the Exchange Date on June 1, 2019 in accordance with the terms of the Notes and the Indenture.
The occurrence of the Indenture Event of Default (and the events giving rise to the same) results in certain defaults, and/or other violations (collectively, the “Violations”) under the Company’s Amended and Restated Credit Agreement dated October17, 2017 (the “Credit Agreement”) and related documents, which Violations, in turn, result in, or constitute, certain Defaults and Events of Default (as each such term is defined in the Credit Agreement) under the Credit Agreement. The Company has provided notice to Bank of America, N.A., as Administrative Agent under the Credit Agreement, as well as the lenders, notice of the Indenture Event of Default and Defaults and Events of Defaults under the Credit Agreement. For so long as such Events of Default under the Credit Agreement are continuing and have not been cured, the Administrative Agent is required at the request of, or may with the consent of, the Required Lenders (as defined in the Credit Agreement) exercise remedies under the Credit Agreement, including acceleration of outstanding loans under the Credit Agreement. The Company has requested, and the Administrative Agent and lenders have agreed to provide, a limited waiver with respect to the Violations under the Credit Agreement. The Company expects the Administrative Agent and the lenders to execute and deliver the limited waiver on or shortly after the Special Payment Date. While no assurances can be given that such limited waiver will be obtained, the Company believes that it will receive such limited waiver and the Company will provide notice thereof upon receipt of such limited waiver.
About NEWPARK RESOURCES, INC. (NYSE:NR)
Newpark Resources, Inc. is an oil and gas supplier. The Company provides products and services to the oil and gas exploration (E&P) industry. The Company operates its business through two segments: Fluids Systems, and Mats and Integrated Services. The Company’s Fluids Systems segment offers customized solutions, including technical drilling projects involving subsurface conditions, such as horizontal, directional, geologically deep or deep water drilling. It offers drilling fluids solutions to E&P customers in North America; Europe, the Middle East and Africa (EMEA); Latin America, and Asia Pacific. The Mats and Integrated Services segment provides composite mat rentals, well site construction and related site services to oil and gas customers at well, production, transportation and refinery locations in the United States. The Company manufactures DURA-BASE Advanced Composite Mats for use in its rental operations, as well as for third-party sales.
