Forum Energy Technologies, Inc. Announces Commencement of Exchange Offer & Consent Solicitation for 6.250% Senior Notes due 2...
July 06 2020 - 6:16AM
Business Wire
Forum Energy Technologies, Inc. (“Forum” or the “Company”)
(NYSE: FET) today announced it has commenced an offer to exchange
its existing notes for new 9.00% convertible secured notes due
2025. The new notes will pay interest at the rate of 9.00% (as
compared to the rate of 6.25% on the existing notes). Of such
interest, 6.25% will be payable in cash and 2.75% will be payable
in cash or additional notes, at the Company’s option. The new notes
will mature five years from issuance (as compared to the maturity
of October 1, 2021 on the existing notes). The new notes will be
secured by a first lien on substantially all of the Company’s
assets, except for revolving credit facility collateral, which will
secure the new notes on a second lien basis (while the existing
notes will remain unsecured). The new notes will also be
convertible into common stock as described in more detail
below.
Investors who participate in the exchange offer will receive
$1,000 principal amount of new notes for each $1,000 principal
amount of existing notes tendered; provided, that the tenders are
submitted by 5:00 p.m. ET on July 17, 2020, unless extended. In
addition, Holders who submit tenders by 5:00 p.m. ET on July 17,
2020 will receive a pro rata portion of a total payment of
$3,500,000 in cash. Holders who tender after July 17, 2020 will not
be eligible to receive any cash fee and will only receive $950 of
new notes per $1,000 of existing notes. Holders who participate in
the exchange offer will also be giving their consents to eliminate
certain restrictive covenants and events of default in the existing
notes. The exchange offer will expire on July 31, 2020, unless
extended. Accrued and unpaid interest on the existing notes that
are exchanged will be paid in cash.
The exchange offer is conditioned on minimum participation of at
least 95% of the outstanding existing notes. Unless this minimum
condition is satisfied or waived, the Company will not be obligated
to consummate the exchange. Holders of approximately $217 million
principal amount, or 66.14%, of the Company’s $328 million of
existing 6.25% Senior Notes due 2021 have agreed to support the
exchange offer by the Company.
Any existing notes that remain outstanding after closing of the
exchange offer will be effectively subordinated to the new notes
with respect to substantially all the assets of the Company. In
addition, the covenants for the existing notes will be eliminated
upon the receipt of the requisite majority consents.
A portion of the new notes equal to $150 million total principal
amount (or 46% of the new notes minimum aggregate principal amount,
subject to certain adjustments) will be mandatorily convertible
into common stock on a pro rata basis at a conversion price of
$1.35 per share, subject, however, to the condition that the
average of the daily trading prices for the common stock over the
preceding 20-trading day period is at least $1.50 per share. The
conversion price of $1.35 per share represents a premium of 178.4%
to the closing price of the Company’s common stock on July 2, 2020.
Investors in the new notes will also have optional conversion
rights in the event that the Company elects to redeem the new notes
in cash and at the final maturity of the new notes. The conversion
of the new notes into more than 20% of the Company’s common stock
will require shareholder approval. A failure to obtain such
approval by June 30, 2021 will constitute an event of default under
the new notes.
The description above includes only a summary of certain key
terms of the exchange offer. The complete terms and conditions of
the exchange offer are contained in a registration statement on
Form S-4 for the new notes, including a prospectus, which is
subject to change, filed today by the Company with the Securities
and Exchange Commission, which registration statement is not yet
effective. Investors are urged to carefully read the prospectus
before making any decision with respect to the exchange offer.
BofA Securities, Wells Fargo Securities, LLC, Citigroup Global
Markets Inc. and J.P. Morgan Securities LLC are acting as the
dealer managers for the exchange offer. The exchange offer is being
made, and the new notes are being offered and issued, only to
holders of existing notes. Copies of the prospectus pursuant to
which the exchange offer is being made may be obtained from D.F.
King & Co., Inc., the information agent and exchange agent for
the exchange offer, at (866) 864-7961 (toll-free) or (212) 269-5550
(for banks and brokers), email forum@dfking.com or access the
website www.dfking.com/forum. Questions regarding the terms and
conditions of the exchange offer should be directed to BofA
Securities at (980) 388-3646 or debt_advisory@bofa.com.
The Company will also pay a retail broker’s fee of $2.50 in cash
per $1,000 principal amount of tendered notes, subject to a cap of
$1,000 in cash per investor and subject to completion of the
required documentation.
None of the Company, the dealer managers, the trustee with
respect to the existing notes and the new notes, the information
and exchange agent or any affiliate of any of them makes any
recommendation as to whether holders of the existing notes should
exchange their existing notes for new notes in the exchange offer,
and no one has been authorized by any of them to make such a
recommendation. Holders must make their own decision as to whether
to tender existing notes and, if so, the principal amount of
existing notes to tender.
A registration statement relating to these securities has been
filed with the Securities and Exchange Commission but has not yet
become effective. These securities may not be sold nor may offers
to buy be accepted prior to the time the registration statement
becomes effective. This press release is for informational purposes
only and is not an offer to purchase or a solicitation of an offer
to purchase or sell any securities, nor shall there be any sale of
any securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such
jurisdiction.
About Forum
Forum Energy Technologies, Inc. is a global oilfield products
company, serving the drilling, downhole, subsea, completions and
production sectors of the oil and natural gas industry. The
Company’s products include highly engineered capital equipment as
well as products that are consumed in the drilling, well
construction, production and transportation of oil and natural gas.
Forum is headquartered in Houston, TX with manufacturing and
distribution facilities strategically located around the globe. For
more information, please visit www.f-e-t.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20200706005218/en/
Investor Contact Lyle Williams 713.351.7920
lyle.williams@f-e-t.com
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