Item 1.01.
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Entry into a Material Definitive Agreement.
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Term Loan Credit Agreement Amendment
On April 3, 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 April 15, 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.
Pursuant 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 $1.1 million 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 April 7, 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 April 3, 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). Pursuant 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 Item 1.01.
Intercreditor Agreement Amendments
On
April 3, 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 April 3, 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 April 15, 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 April 3, 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 April 3, 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 April 15, 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.