PROPETRO HOLDING CORP. (NYSE:PUMP) Files An 8-K Entry into a Material Definitive Agreement
Item1.01 Entry into a Material Definitive Agreement.
On March22, 2017 (the Closing Date), ProPetro Holding
Corp. (the Company, we, us, our and
similar terms) completed its initial public offering (the
Offering) of 25,000,000 shares of the Companys common
stock, $0.001 par value (the Common Stock), 13,250,000 of
which were sold by the Company and 11,750,000 of which were sold
by certain selling stockholders, at a price to the public of
$14.00 per share ($13.181 per share, net of the underwriting
discount) to a Registration Statement on FormS-1, as amended
(File No.333-215940) (the Registration Statement),
initially filed by the Company with the U.S. Securities and
Exchange Commission (the Commission) on February8, 2017 to
the Securities Act of 1933, as amended (the Securities
Act). The material provisions of the Offering are described
in the prospectus, dated March16, 2017 (the Prospectus),
filed by the Company with the Commission on March20, 2017 to
Rule424(b)(4)under the Securities Act. The selling stockholders
described in the Prospectus granted the underwriters an option
for a period of 30 days to purchase up to an aggregate additional
3,750,000 shares of Common Stock at the initial offering price.
Stockholders Agreement
On the Closing Date, we entered into a stockholders agreement
(the Stockholders Agreement) with Energy Capital Partners
II, LP, Energy Capital Partners II-A, LP, Energy Capital Partners
II-B, LP, energy Capital Partners II-C (Direct IP), LP, Energy
Capital Partners II-D, LP and Energy Capital Partners II (Midland
Co-Invest), LP (collectively, Energy Capital Partners)
that provides Energy Capital Partners certain rights to designate
nominees for election to our board of directors (the
Board). The Stockholders Agreement provides that, for so
long as Energy Capital Partners beneficially owns at least 50% of
our Common Stock then-outstanding, it will be entitled to
designate such number of directors that would constitute a
majority of the Board; for so long as Energy Capital Partners
beneficially owns at least 30% of our Common Stock then
outstanding, it will be entitled to designate one director fewer
than the number of directors that would constitute a majority of
the Board; for so long as Energy Capital Partners beneficially
owns at least 20% of our Common Stock then-outstanding, it will
be entitled to designate the greater of three directors and 25%
of the total number of directors constituting the Board (rounded
up to the next whole number; for so long as Energy Capital
Partners beneficially owns at least 10% of our Common Stock
then-outstanding, it will be entitled to designate the greater of
two directors and 15% of the total number of directors
constituting the Board (rounded up to the next whole number); and
for so long as Energy Capital Partners beneficially owns at least
5% of our Common Stock then outstanding, it will be entitled to
designate one director.
Energy Capital Partners will be entitled to designate the
replacement for any of its Board designees whose Board service
terminates prior to the end of the directors term regardless of
their beneficial ownership at such time. Energy Capital Partners
will also have the right, but not the obligation, to designate at
least one of their nominees as a member to each of the committees
of our Board for so long as they are allowed to designate at
least one director, subject to compliance with applicable law and
stock exchange rules.
For so long as Energy Capital Partners holds at least 30% of our
outstanding Common Stock, we and our subsidiaries will not,
without the approval of Energy Capital Partners, (i)effect any
transaction or series of related transactions involving a change
of control of the Company (or enter into an agreement to take
such action), (ii)issue additional shares of equity securities in
the Company or any of the Companys subsidiaries (excluding any
stockholder approved equity compensation plans or intra-company
issuances among the Company and its subsidiaries) or (iii)change
the size of the Board.
The foregoing description of the Stockholders Agreement is not
complete and is qualified in its entirety by reference to the
full text of the Stockholders Agreement, which is filed as
Exhibit4.1 to this Current Report on Form8-K and is incorporated
into this Item1.01 by reference.
Indemnification Agreements
On the Closing Date, we entered into indemnification agreements
(the Indemnification Agreements) with each of our
directors and officers. Each Indemnification Agreement provides,
among other things, for indemnification to the fullest extent
permitted by law and our Bylaws against any and all expenses,
judgments, fines, penalties and amounts paid in settlement of any
claim. The Indemnification Agreements provide for the
advancement or payment of all expenses to the indemnitee and
for the reimbursement to us if it is found that such indemnitee
is not entitled to such indemnification under applicable law
and our Bylaws.
A copy of the form of Indemnification Agreement was filed as
Exhibit10.1 to the Registration Statement and is incorporated
herein by reference, and the foregoing description of the
Indemnification Agreements is qualified in its entirety by
reference thereto.
New Credit Agreement
On the Closing Date, we and ProPetro Services,Inc. (the
Borrower) entered into a $150.0 million asset-based
revolving credit facility (the Facility) with Barclays
Bank PLC (as administrative agent) and the lenders party
thereto (the New Credit Agreement).
The applicable margin on the Facility is determined by
reference to a three-tier pricing grid based on availability
under the Facility. The Borrower, at its option, may elect for
loans drawn under the Facility to be based on either LIBOR or
base rate, plus the applicable margin. The applicable margin on
the Facility ranges from 1.75% to 2.25% (in the case of LIBOR
loans) and 0.75% to 1.25% (in the case of base rate loans). The
Facility does not contain a LIBOR floor.
The Borrower is required to pay an unused line fee on
unutilized commitments under the Facility. The unused line fee
is determined by reference to a two-tier grid based on
availability under the Facility. The unused line fee ranges
from 0.25% to 0.375% depending on the Borrowers usage of the
Facility.
The Facility contains a springing fixed charge coverage ratio
(the FCCR). The FCCR is tested only if availability
under the Facility falls below certain specified levels. If
tested, the Borrower would need to demonstrate compliance with
a 1.0x FCCR, on a quarterly basis, until such time as the
Borrower has availability under the Facility in excess of
certain specified levels for at least thirty consecutive days.
The Facility matures five years from the Closing Date.
The Facility is guaranteed by any domestic subsidiaries of the
Borrower, subject to certain qualifications and exceptions. The
Facility is secured by a first priority lien on, and security
interest in, (i)substantially all assets and equity interests
held by the Borrower and (ii)the equity interests we hold in
the Borrower, subject to certain exceptions and excluded
assets.
The Facility contains various covenants that restrict, among
other things and subject to certain exceptions, our ability, as
well as the ability of the Borrower and certain of its present
and future subsidiaries to incur certain liens, incur
indebtedness, change the nature of its business, undertake
mergers and other fundamental changes, dispose of certain
assets, make investments and restricted payments, amend its
organizational documents or accounting policies, make early
prepayments of certain debt, enter into dividend or lien
blockers, enter into certain transactions with affiliates and,
solely in our case, carry out certain activities. Failure to
comply with these covenants and restrictions could result in an
event of default under the Facility. In such an event, we could
not request borrowings under the Facility, and all amounts
outstanding under the Facility, together with accrued interest,
could then be declared immediately due and payable.
The foregoing description is not complete and is qualified in
its entirety by reference to the full text of the New Credit
Agreement, which is filed as Exhibit10.2 to this Current Report
on Form8-K and incorporated herein by reference.
Item3.03 Material Modification to Rights of Security
Holders.
The descriptions of the Stockholders Agreement contained in
Item1.01 is incorporated into this Item3.03 by reference.
Item9.01 Financial Statements and Exhibits.
(d)Exhibits
|
ExhibitNo. |
|
Description |
|
4.1* |
Stockholders Agreement, dated as of March22, 2017, by and |
|
|
10.1 |
Formof Indemnification Agreement (incorporated by |
|
|
10.2* |
Credit Agreement, dated as of March 22, 2017 by and among |
* Filed herewith
About PROPETRO HOLDING CORP. (NYSE:PUMP)
ProPetro Holding Corp. is an oilfield services company. The Company provides hydraulic fracturing and other complementary services to upstream oil and gas companies, which are engaged in the exploration and production (E&P) of North American unconventional oil and natural gas resources. The Company operates through seven segments: hydraulic fracturing, cementing, acidizing, coil tubing, flowback, surface drilling and Permian drilling. Its pressure pumping segment includes cementing and acidizing operations. The Company’s operations are focused in the Permian Basin. As of December 31, 2016, the Company’s fleet consisted of 10 hydraulic fracturing units with an aggregate of 420,000 hydraulic horsepower (HHP). PROPETRO HOLDING CORP. (NYSE:PUMP) Recent Trading Information
PROPETRO HOLDING CORP. (NYSE:PUMP) closed its last trading session up +0.39 at 12.86 with 1,440,122 shares trading hands.