Nuverra Environmental Solutions, Inc. (OTCMKTS:NESC) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
Term Loan Credit Agreement Amendment
On April3, 2017 (the Effective Date), Nuverra Environmental
Solutions, Inc. (the Company) entered into a Fifth Amendment
(Increase Amendment) to Term Loan Credit Agreement (the Term Loan
Agreement Amendment) by and among the lenders named therein (the
Lenders), Wilmington Savings Fund Society, FSB (Wilmington), as
administrative agent, Wells Fargo Bank, National Association
(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 Lenders, and the Company (the Term Loan Agreement) by
increasing the Lenders commitment, and the principal amount
borrowed by the Company, under the Term Loan Agreement from
$58,100,000 to $59,200,000 (the Additional Term Commitment) and
amending the EBITDA financial maintenance covenant.
to the Term Loan Agreement Amendment, the Company is required to
use a portion of the net cash proceeds of the Additional Term
Commitment of $1.1million to pay the fees, costs and expenses
incurred in connection with the 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.
As a condition to the effectiveness of the Term Loan Agreement
Amendment, the Company was required to enter into a letter
agreement with the agent under the Companys asset-based lending
facility (the ABL Facility) providing that the agent under the
ABL Facility would not exercise any remedies with respect to the
Additional Term Commitment deposited in the Companys Master
Account (as defined in the ABL Facility).
The Term Loan Agreement Amendment requires the Company to (i)on
or before April7, 2017, enter into a restructuring support
agreement (the RSA) and other documentation required by the
Lenders in connection with the restructuring of the indebtedness
of the Company and its subsidiaries; (ii)appoint Robert D.
Albergotti to serve as the Chief Restructuring Officer of the
Company; and (iii)within five days of the Effective Date, cause
mortgage title policies to be issued for all real property
collateral under the Companys ABL Facility and to pay all
premiums for such title policies.
In addition, each Lender agreed to provide additional term loans
to the Company for the purpose of providing the Company with
sufficient liquidity to continue to fund its operations and
implement the restructuring transactions contemplated by the RSA.
The foregoing description of the Term Loan Agreement Amendment is
only a summary and does not purport to be a complete description
of the terms and conditions under the Term Loan Agreement
Amendment, and such description is qualified in its entirety by
reference to the full text of the Term Loan Agreement Amendment,
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.
Letter Agreement Regarding Additional Term
Commitment
On April3, 2017, in connection with the Term Loan Agreement
Amendment, the Company and Wells Fargo entered into a letter
agreement regarding the Additional Term Commitment (the Letter
Agreement). to the Letter Agreement, Wells Fargo agreed to not
exercise any remedies with respect to the cash proceeds received
from the Additional Term Commitment or any additional Term Loans
that are deposited in the Companys Master Account. In addition,
the Letter Agreement provides
that in the event Wells Fargo or the lenders under the ABL
Facility foreclose or otherwise obtain direct control over the
Additional Term Commitment, such 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 description of the Letter Agreement is only a
summary and does not purport to be a complete description of the
terms and conditions under the Letter Agreement, and such
description is qualified in its entirety by reference to the full
text of the Letter Agreement, a copy of which is filed as Exhibit
10.2 to this Current Report on Form 8-K and is incorporated by
reference into this Item1.01.
Intercreditor Agreement Amendments
On April3, 2017, in connection with the Term Loan Agreement
Amendment, the Company acknowledged and agreed to the terms and
conditions under Amendment No.3 to Intercreditor Agreement (the
Pari Passu Intercreditor Agreement Amendment), dated April3,
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. On April3, 2017, in connection with the Term
Loan Agreement Amendment, the Company acknowledged and agreed to
the terms and conditions under Amendment No.3 to Intercreditor
Agreement (the Second Lien Intercreditor Agreement Amendment),
dated April3, 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
Companys 12.5%/10.0% Senior Secured Second Lien Notes due 2021
(the 2021 Notes). The Pari Passu Intercreditor Agreement
Amendment and the Second Lien Intercreditor Agreement Amendment
permit the Additional Term Commitment by amending the Term Loan
Cap (as defined therein) to increase it from $63,910,000 to
$65,120,000. 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 Pari Passu Intercreditor
Agreement Amendment and Second Lien Intercreditor Agreement
Amendment are only summaries and do not purport to be a complete
description of the terms and conditions under the Pari Passu
Intercreditor Agreement Amendment and Second Lien Intercreditor
Agreement Amendment, and such descriptions are qualified in their
entirety by reference to the full text of the Pari Passu
Intercreditor Agreement Amendment and Second Lien Intercreditor
Agreement Amendment, copies of which are filed as Exhibits 4.1
and 4.2, 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.
| Item8.01. | Other Events. |
On April3, 2017, the Company received a letter from Wells Fargo
notifying the Company that the maturity date of the ABL Facility
occurred on March31, 2017, and that, as a result, all commitments
under the ABL Facility are automatically terminated and all
obligations under the ABL Facility are currently due and payable,
and have been due and payable since March31, 2017. As the Company
has not repaid all outstanding obligations under the ABL
Facility, the letter notified the Company that it is in default
under the ABL Facility. As a result, the lenders under the ABL
Facility are entitled to exercise their rights and remedies under
the ABL Facility, the other Loan Documents (as defined in the ABL
Facility), and applicable law. In addition, the default under the
ABL Facility constitutes an event of cross-default under the Term
Loan Agreement and indentures governing the Companys 9.875%
Senior Notes due 2018 (the 2018 Notes) and 2021 Notes. Wells
Fargo and the other lenders under the ABL Facility are
considering their rights and remedies and have not determined
whether they will exercise such rights and remedies; however,
they may choose to do so at any time. The Company does not
currently have sufficient liquidity to repay the obligations
under the ABL Facility, Term Loan, or indentures governing the
2018 Notes and 2021 Notes. As such, the holders of the Companys
indebtedness may initiate foreclosure actions at any time and it
is possible that the Company may become subject to bankruptcy
proceedings. The Company anticipates it will have sufficient
liquidity from the Additional Term Commitment and the additional
Term Loans to fund its operations, but there can be no assurances
to that effect. The Company continues to engage in discussions
with its debtholders regarding strategic restructuring
transactions aimed at recapitalizing the Company to address its
liquidity, capital structure, and debt service obligations.
| Item9.01. | Financial Statements and Exhibits. |
(d)
|
Exhibit Number |
Description |
|
| 4.1 |
Amendment No.3 toIntercreditor Agreement, dated April3, 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 |
|
| 4.2 |
Amendment No.3 toIntercreditor Agreement, dated April3, 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 |
|
| 10.1 |
Fifth Amendment (Increase Amendment) to Term Loan Credit Agreement, dated April3, 2017, by and among the Lenders, Wilmington, Wells Fargo, the Company and the guarantors named therein |
|
| 10.2 |
Letter Agreement, dated April3, 2017, between the Company and Wells Fargo |
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 up +0.001 at 0.252 with shares trading hands.