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 April18, 2017 (the Eighth Amendment Effective Date), Nuverra
Environmental Solutions, Inc. (the Company) entered into an
Eighth Amendment (Increase Amendment) to Term Loan Credit
Agreement (the Eighth 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 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 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 $65,800,000 to
$69,320,000 (the Eighth Amendment Additional Term Commitment).
The Eighth Amendment Additional Term Commitment is in partial
satisfaction of the requirement to fund Supplemental Term Loans
(as defined in the Fifth Amendment to Term Loan Credit
Agreement).
to the Eighth Term Loan Agreement Amendment, the Company is
required to use a portion of the net cash proceeds of the Eighth
Amendment Additional Term Commitment of $3.52 million to pay the
fees, costs and expenses incurred in connection with the Eighth
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 Eighth Amendment Additional
Term Commitment to fund its business operations until the filing
of a prepackaged plan of reorganization under chapter 11 of the
United States Bankruptcy Code.
As a condition to the effectiveness of the Eighth 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, among other
things, that the agent under the ABL Facility would not exercise
any remedies with respect to the Eighth Amendment Additional Term
Commitment deposited in the Companys Master Account (as defined
in the ABL Facility), subject to the terms of such letter
agreement.
The Eighth Term Loan Agreement Amendment requires the Company,
among other things, to (i)comply with the terms and conditions of
the previously disclosed Restructuring Support Agreement; and
(ii)within 5 days of the Eighth 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 description of the Eighth Term Loan Agreement
Amendment is only a summary and does not purport to be a complete
description of the terms and conditions under the Eighth Term
Loan Agreement Amendment, and such description is qualified in
its entirety by reference to the full text of the Eighth 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 Item1.01.
Letter Agreement Regarding Eighth Amendment
Additional Term Commitment
On April18, 2017, in connection with the Eighth Term Loan
Agreement Amendment, the Company and Wells Fargo entered into a
letter agreement regarding the Eighth Amendment Additional Term
Commitment (the Eighth Amendment Letter Agreement). to the Eighth
Amendment Letter Agreement, Wells Fargo agreed to not exercise
any remedies with respect to the cash proceeds received from the
Eighth Amendment Additional Term Commitment that are deposited in
the Companys Master
Account, subject to the terms of such Eighth Amendment Letter
Agreement. In addition, the Eighth 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 Eighth Amendment Additional Term Commitment, such Eighth
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 description of the Eighth Amendment Letter
Agreement is only a summary and does not purport to be a complete
description of the terms and conditions under the Eighth
Amendment Letter Agreement, and such description is qualified in
its entirety by reference to the full text of the Eighth
Amendment 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 April18, 2017, in connection with the Eighth Term Loan
Agreement Amendment, the Company acknowledged and agreed to the
terms and conditions under Amendment No.6 to Intercreditor
Agreement (the Sixth Pari Passu Intercreditor Agreement
Amendment), dated April18, 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
April18, 2017, in connection with the Eighth Term Loan Agreement
Amendment, the Company acknowledged and agreed to the terms and
conditions under Amendment No.6 to Intercreditor Agreement (the
Second Lien Intercreditor Agreement Sixth Amendment), dated
April18, 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 Sixth Pari Passu Intercreditor Agreement
Amendment and the Second Lien Intercreditor Agreement Sixth
Amendment permit the Eighth Amendment Additional Term Commitment
by increasing the Term Loan Cap (as defined therein) from
$72,380,000 to $76,252,000. The Term Loan Cap is higher than the
commitment under the Term Loan Agreement, 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 Sixth Pari Passu Intercreditor
Agreement Amendment and Second Lien Intercreditor Agreement Sixth
Amendment are only summaries and do not purport to be a complete
description of the terms and conditions under the Sixth Pari
Passu Intercreditor Agreement Amendment and Second Lien
Intercreditor Agreement Sixth Amendment, and such descriptions
are qualified in their entirety by reference to the full text of
the Sixth Pari Passu Intercreditor Agreement Amendment and Second
Lien Intercreditor Agreement Sixth 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
Item1.01.
| Item2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
The information set forth in Item1.01 is incorporated by
reference into this Item2.03.
| Item8.01. | Other Events. |
On April17, 2017, the Company elected to exercise its 30-day
grace periods and defer making the approximately $2 million in
cash interest payments due April17, 2017 on its 9.875% Senior
Notes due 2018 (the 2018 Notes), and the approximately $9 million
in cash interest payments due April17, 2017 on its 12.5%/10.0%
Senior Secured Second Lien Notes due 2021 (the 2021 Notes). Under
the indenture governing the 2018 Notes (the 2018 Notes Indenture)
and the indenture governing the 2021 Notes (the 2021 Notes
Indenture), the Company has a 30-day grace period following the
April17, 2017 interest payment date to make the interest payments
before an event of default would occur.
The occurrence of an event of default under the 2018 Notes
Indenture would also constitute an event of default under the
Companys ABL Facility, Term Loan Agreement, and 2021 Notes
Indenture, and the occurrence of an event of default under the
2021 Notes Indenture would also constitute an event of default
under the Companys ABL Facility, Term Loan Agreement, and 2018
Notes Indenture. As previously disclosed, the Company is in
default under its ABL Facility and such default constitutes an
event of cross-default under the Term Loan Agreement, 2018 Notes
Indenture, and 2021 Notes Indenture. The lenders under the ABL
Facility and Term Loan Agreement and the trustees and noteholders
under the 2018 Notes Indenture and 2021 Notes Indenture have not
yet exercised their rights and remedies in respect of such
defaults; however, they may choose to do so at any time. The
Company does not have sufficient liquidity to repay the
obligations under the ABL Facility, Term Loan Agreement, 2018
Notes Indenture, or 2021 Notes Indenture. As such, the holders of
the Companys indebtedness may initiate foreclosure actions at any
time. As previously disclosed, the Company intends to file a
prepackaged plan of reorganization under chapter 11 of the United
States Bankruptcy Code in order to restructure its outstanding
indebtedness, as described in the Restructuring Support
Agreement, dated as of April 9, 2017, by and among the Company
and its subsidiaries and the holders of over 80% of the 2021
Notes, and filed as Exhibit 10.1 to the Companys Current Report
on Form 8-K dated April 12, 2017.
| Item9.01. | Financial Statements and Exhibits. |
| (d) |
|
Exhibit Number |
Description |
|
| 4.1 |
Amendment No. 6 to Intercreditor Agreement, dated April 18, 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. 6 to Intercreditor Agreement, dated April 18, 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 |
|
| 10.1 |
Eight Amendment (Increase Amendment) to Term Loan Credit Agreement, dated April 18, 2017, by and among the Term Loan Lenders, Wilmington, Wells Fargo, the Company, and the guarantors named therein |
|
| 10.2 |
Letter Agreement, dated April 18, 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 down -0.0050 at 0.0600 with shares trading hands.