Item 1.01
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Entry into a Material Definitive Agreement
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Amendment to Strategic Transaction
As previously disclosed, on December 18, 2019, Superior Energy Services, Inc., a Delaware corporation (“Superior Energy”), entered into an Agreement and Plan of Merger (the “Original Agreement”) with New NAM, Inc., a Delaware corporation (“NAM”), Forbes Energy Services Ltd., a Delaware corporation (“Forbes”), Spieth Newco, Inc., a Delaware corporation (“Holdco”), Spieth Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Holdco (“NAM Merger Sub”), and Fowler Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Holdco (“Fowler Merger Sub” and, together with NAM Merger Sub, the “Merger Subs”), pursuant to which, among other things, NAM Merger Sub will merge with and into NAM, with NAM surviving such merger as a direct, wholly owned subsidiary of Holdco, and Fowler Merger Sub will merge with and into Forbes, with Forbes surviving such merger as a direct, wholly owned subsidiary of Holdco (collectively, the “Mergers”), all on the terms and subject to the conditions of the Merger Agreement.
On February 20, 2020, the parties to the Original Agreement entered into Amendment No. 1 to Agreement and Plan of Merger (the “Amendment” and, the Original Agreement as amended by the Amendment, the “Merger Agreement”).
The Original Agreement provided that, as a condition to the closing of the Mergers, no less than $250 million of Superior Energy’s outstanding 7.125% Senior Notes due 2021 be exchanged for $250 million of new senior secured lien notes of Holdco (“Holdco Bonds”), which Holdco Bonds will be issued substantially on the terms set forth in the Original Agreement. The Amendment amends, among other things, certain covenants contained within the Original Agreement to permit for the exchange of the Holdco Bonds to be less than $250 million on the terms and subject to the conditions set forth in certain indentures specified in the Amendment, and to permit NAM to consummate the Mergers with cash and cash equivalents in the aggregate amount of not less than $13 million, instead of $20 million. All other material terms of the Merger Agreement remain substantially the same.
The Amendment is included as Exhibit 2.1 hereto and is incorporated herein by reference. The foregoing summary has been included to provide investors and security holders with information regarding the terms of the Amendment and is qualified in its entirety by the terms and conditions of the Amendment. It is not intended to provide any other factual information about Superior Energy or its subsidiaries and affiliates.
Closing of Exchange Offer and Consent Solicitation
On February 24, 2020 (the “Closing Date”), SESI, L.L.C. (“SESI” or the “Issuer”), a wholly owned subsidiary of Superior Energy, consummated certain transactions contemplated by the previously announced offer to exchange (the “Exchange Offer”) up to $635 million aggregate principal amount of SESI’s outstanding 7.125% Senior Notes due 2021 (the “Original Notes”) for up to $635 million of newly issued 7.125% Senior Notes due 2021 (the “New Notes”) and solicitation of consents to proposed amendments with respect to the Original Notes (the “Consent Solicitation”). At the expiration of the Exchange Offer, $617,940,000 in aggregate principal amount, or 77.24%, of the outstanding Original Notes were validly tendered and not withdrawn.
Indenture and Senior Notes due 2021
General
On the Closing Date, $617,940,000 in aggregate principal amount of New Notes were issued to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside of the United States in compliance with Regulation S under the Securities Act. The New Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws.
The New Notes were issued pursuant to an Indenture, dated as of February 24, 2020 (the “New Notes Indenture”), among the Issuer, the guarantors specified therein and UMB Bank, N.A., as trustee (in such capacity, the “New Notes Trustee”). SESI’s obligations under the New Notes and the New Notes Indenture are fully and unconditionally guaranteed by each of the guarantors under the indenture dated as of December 6, 2011 governing the Original Notes (as amended and supplemented, the “Original Notes Indenture”).
Maturity and Interest Payments
The New Notes will mature on December 15, 2021. Interest on the New Notes will accrue at 7.125% per annum and will be paid semi-annually, in arrears, on June 15 and December 15 of each year, beginning June 15, 2020.
Redemption
SESI may redeem the New Notes at its option, in whole at any time or in part from time to time, upon no less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the New Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
Automatic Exchange
When the Mergers are consummated, the New Notes will automatically exchange into: (i) $243.283 million aggregate principal amount of Holdco’s 9.750% Senior Second Lien Secured Notes due 2025; (ii) $243.283 million aggregate principal amount of SESI’s 8.750% Senior Second Lien Secured Notes due 2026; and $131.374 million in cash. If the Mergers are not consummated in accordance with the Merger Agreement, the New Notes will automatically exchange for an equal principal amount of Original Notes issued under the Original Notes Indenture as “Additional Notes.”
Certain Covenants
The New Notes Indenture contains covenants that limit Superior Energy’s, the Issuer’s and their subsidiaries’ ability to, among other things: (i) consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; (ii) pay for certain consents to the New Notes Indenture; and (iii) create liens to secure debt. These covenants are subject to a number of important limitations and exceptions. Additionally, upon the occurrence of specified change of control events, each holder of New Notes may require that SESI repurchase such holder’s New Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the purchase date. The New Notes Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding New Notes to be due and payable immediately.
The foregoing description of the New Notes Indenture does not purport to be complete and is qualified in its entirety by reference to the New Notes Indenture, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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The information set forth under the heading “Indenture and Senior Notes due 2021” in Item 1.01 above is incorporated by reference into this Item 2.03.