Item 1.01 Entry into a Material Definitive Agreement.
On October 31, 2018, KLX Energy Services Holdings, Inc. (the Company) issued $250 million principal amount of 11.500% Senior Secured Notes due 2025 (the Notes) pursuant to an Indenture, dated as of October 31, 2018, among the Company, KLX Energy Services LLC, KLX RE Holdings LLC and Wilmington Trust, National Association, as trustee and collateral agent (the Indenture). The Notes were issued in connection with an offering exempt from registration under the Securities Act of 1933, as amended, in reliance on Rule 144A and Regulation S thereunder.
The Notes were issued in part to fund the cash portion and related fees and expenses of the previously announced acquisition of Motley Services, LLC (Motley), which will close during the first week of November, subject to antitrust regulatory clearance (the Acquisition).
The Notes will mature on November 1, 2025. The Notes bear interest at a rate of 11.500% per annum, payable semi-annually in arrears on May 1 and November 1, commencing May 1, 2019.
The Notes are initially senior unsecured obligations of the Company but, no later than 15 business days following the closing of the Acquisition, will be senior secured obligations of the Company secured by a first priority security interest on substantially all of the Companys assets (other than collateral securing the Companys asset-based revolving credit facility (the Credit Facility) on a first priority basis) and a second priority security interest on the collateral which secures the Credit Facility on a first priority basis, subject in each case to certain excluded assets.
The Notes are fully and unconditionally guaranteed by each of KLX Energy Services LLC and KLX RE Holdings LLC and, no later than 15 days following the closing of the Acquisition, will be guaranteed by Motley and its subsidiaries. The guarantees are initially senior unsecured obligations of the guarantors but, no later than 15 business days following the Acquisition, will be senior secured obligations of the guarantors secured by a first priority security interest on substantially all of the guarantors assets (other than collateral securing the Credit Facility on a first priority basis) and a second priority security interest on the guarantors assets which secure the Credit Facility on a first priority basis, subject in each case to certain excluded assets.
At any time prior to November 1, 2021, the Company may, from time to time, redeem up to 35% of the aggregate principal amount of the Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 111.500% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, provided that at least 65% of the aggregate principal amount of Notes issued under the Indenture remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering.
At any time prior to November 1, 2021, the Company may, on any one or more occasions, redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a make-whole premium plus accrued and unpaid interest, if any, to, but excluding the date of redemption.
On and after November 1, 2021, the Company may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption if redeemed during the 12-month period beginning on November 1 of the years indicated below:
Year
|
|
Redemption Price
|
|
2021
|
|
108.625
|
%
|
2022
|
|
105.750
|
%
|
2023
|
|
102.875
|
%
|
2024
|
|
100.000
|
%
|
If the Company experiences certain changes of control, each holder of Notes may require the Company to repurchase all or a portion of its Notes for cash at a price equal to 101% of the principal amount of such Notes, plus any accrued but unpaid interest, if any, to, but excluding, the date of repurchase.
The Indenture contains customary affirmative and negative covenants restricting, among other things, the Companys ability to incur indebtedness and liens, pay dividends or make other distributions, make certain other restricted payments or investments, sell assets, agree to payment restrictions affecting restricted subsidiaries, enter
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