|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
On September 13, 2019, certain subsidiaries
of Nabors Industries Ltd. (the “Company”) entered into a $250 million accounts receivables purchase facility (the “Facility”)
pursuant to (i) a Receivables Purchase Agreement (the “Purchase Agreement”) entered into among Nabors A.R.F., LLC (“NARF”),
a special purpose entity that is an indirect wholly owned subsidiary of the Company, as seller, Nabors Industries, Inc. (“Nabors
Delaware”), the purchasers party thereto (together, the “Purchasers”), and Wells Fargo Bank, N.A., as Administrative
Agent, and (ii) a Receivables Sale Agreement (the “Sale Agreement”) among NARF, certain operating subsidiaries of the
Company (collectively, the “Originators”), and Nabors Delaware.
Under the Sale Agreement, each of the Originators
has sold or contributed, and will on an ongoing basis continue to sell or contribute to NARF, in exchange for cash and subordinated
notes, all of each such Originator’s right, title and interest in and to its trade receivables. Under the Purchase Agreement,
NARF may from time to time sell undivided interests in certain of its receivables to the Purchasers in exchange for cash. Amounts
paid by the Purchasers to NARF for the purchase of the receivables will accrue Yield for the Purchasers at a Yield Rate equal to
the LIBOR Market Index Rate (“LMIR”) plus the Applicable Margin; provided that on any day while an Event of Termination
has occurred and is continuing, the Yield Rate shall be a rate per annum equal to the sum of 2.00% per annum plus the greater of
(i) the Yield Rate as set forth above and (ii) the sum of the Alternative Base Rate in effect on such day plus the Applicable Margin.
The Alternative Base Rate is the highest of (i) the Prime Rate, (ii) 0.50% per annum above the latest Federal Funds Rate, and (iii)
1.00% per annum above LMIR.
Nabors Delaware, or one or more of its subsidiaries
on its behalf, acts as servicer of the receivables and, as such, administers, collects, and otherwise enforces the receivables.
The servicer is compensated for doing so on terms that are generally consistent with what would be charged by an unrelated servicer.
The indemnification obligations of Nabors
Delaware and the Originators to NARF or the Administrative Agent and the Purchasers (as applicable) under the Purchase Agreement
and the Sale Agreement are guaranteed by the Company pursuant to an Indemnification Agreement (the “Indemnification Agreement”)
by and between the Company and the Administrative Agent; provided, however, that the Company is not responsible under the Indemnification
Guarantee for the failure of any obligations to the extent such failure results from receivables being uncollectible on account
of insolvency, bankruptcy or lack of creditworthiness of the underlying obligor or any other financial or credit condition resulting
in the inability of such obligor to pay any amount in respect of receivables. The Facility is for an initial term of 23 months,
and may be extended by mutual agreement of the parties.
The Indemnification Agreement, the Purchase
Agreement and the Sale Agreement collectively are referred to herein as the Facility Agreements. The Originators, Nabors Delaware,
NARF, and the Company provide customary representations, warranties and covenants under the Facility Agreements. The purchase by
the Purchasers of certain receivables under the Facility are subject to the satisfaction of eligibility criteria, limits and reserves.
The Purchase Agreement requires customary fees and conditions. The Purchase Agreement also provides for certain Events of Termination
upon the occurrence of which the Administrative Agent may declare the Termination Date to have occurred and exercise certain customary
remedies.
Capitalized terms used herein but not defined
herein shall have the meanings given such terms in the Facility Agreements, copies of which are filed as Exhibits 10.1, 10.2, and
10.3, respectively, to this Current Report on Form 8-K. The foregoing description of the Facility and the Facility Agreements does
not purport to be complete and is qualified in its entirety by reference to the full text of the Facility Agreements, each of which
is incorporated by reference herein.