HOUSTON, Jan. 27, 2020 /PRNewswire/ -- Superior
Energy Services, Inc. ("Superior Energy") (NYSE: SPN) today
announced that its wholly owned subsidiary, SESI, L.L.C. ("SESI" or
the "Issuer"), has reached an agreement in principle with a
steering committee (the "Steering Committee") of holders of 34.210%
of SESI's $800 million aggregate
principal amount of outstanding 7.125% Senior Notes due 2021 (the
"Original Notes"). The Steering Committee is also working together
with other noteholders (collectively with the Steering Committee,
the "Ad Hoc Group") and the Ad Hoc Group owns 61.369% of the
aggregate principal amount of outstanding Original Notes. SESI has
agreed to amend certain terms of its previously announced offer to
exchange up to $500 million of the
Original Notes for up to $500 million
of newly issued 7.125% Senior Notes due 2021 (the "New Notes") and
cash (as to be amended as described below, the "Exchange Offer"),
upon the terms and subject to the conditions set forth in SESI's
offering memorandum and consent solicitation statement, dated as of
January 6, 2020 (as amended by the
press releases dated January 16, 2020
and January 22, 2020, and as may be
further amended or supplemented from time to time, the "Offering
Memorandum and Consent Solicitation Statement"). All capitalized
terms used but not defined in this press release have the meanings
given to them in Superior Energy's press release announcing the
commencement of the Exchange Offer and Consent Solicitation, dated
January 6, 2020 or the Offering
Memorandum and Consent Solicitation Statement, as applicable.
In accordance with the agreement in principle, SESI will amend
the Exchange Offer, through a forthcoming amendment to the Offering
Memorandum and Consent Solicitation Statement (the "Expected
Amendment"), to:
- Provide that SESI is offering to exchange up to $635 million (the "Exchange Offer Maximum
Amount") of its $800 million
aggregate principal amount of outstanding Original Notes for up to
$635 million of New Notes as
described in the table below:
CUSIP/ISIN
|
Title of
Original Notes
|
Outstanding
Principal Amount
|
Title of New
Notes
|
Interest Rate
of New Notes
|
Total
Consideration (per $1,000 of Original Notes)*
|
Consent
Payment
|
78412FAP9/
US78412FAP99
|
7.125% Senior Notes
due 2021 issued by the Issuer
|
$800,000,000
|
7.125% Senior Notes
due 2021 issued by the Issuer
|
7.125%
|
$1,000 principal
amount of New Notes
|
Cash payment per
$1,000 of Original Notes**
|
* Subject to
proration.
|
** Eligible holders
who validly tender their Original Notes prior to the Expiration
Time will be entitled to receive an aggregate cash payment of $6.35
million divided by the total amount of Original Notes validly
tendered and accepted for exchange in the Exchange Offer (the
"Total Consent Payment").
|
- Provide for an extension of the Expiration Time to the tenth
business day after the date of the Expected Amendment;
- Provide that the Exchange Offer is conditioned upon the valid
tender, by the Expiration Time, of at least $635 million aggregate principal amount of
Original Notes and, therefore, the receipt of consents from
eligible holders of over a majority of the aggregate principal
amount of the Original Notes outstanding to amend (the "Proposed
Amendment") the liens covenant in the indenture governing the
Original Notes to permit the issuance of the Superior Secured Notes
as defined and described below;
- Provide that at the settlement of the Combination Exchange,
assuming the Exchange Offer is fully subscribed, eligible holders
will receive, in exchange for $635
million aggregate principal amount of New Notes held by such
holders at the Combination Exchange Date and accepted for exchange
on a pro rata basis: (i) $250 million
principal amount of Senior Second Lien Secured Notes to be issued
by Spieth Newco, Inc. ("Newco" and such notes, the "Newco Secured
Notes"), (ii) $250 million principal
amount of Senior Second Lien Secured Notes to be issued by SESI
(the "Superior Secured Notes"), (iii) $135
million in cash and (iv) $6.35
million in cash constituting the Total Consent Payment;
- Increase the interest rate of the Newco Secured Notes in
connection with the Combination Exchange from 8.000% to 9.750%,
decrease the tenor of the Newco Secured Notes from seven years to
five years and provide that the aggregate principal amount of Newco
Secured Notes to be issued in connection with the Combination
Exchange is $250 million;
- Increase the interest rate of the Superior Secured Notes in
connection with the Combination Exchange from 8.000% to 8.750%,
decrease the tenor of the Superior Secured Notes from seven years
to six years and provide that the aggregate principal amount of
Superior Secured Notes to be issued in connection with the
Combination Exchange is $250
million;
- Provide that, subject to certain exceptions and exclusions, so
long as the aggregate principal amount of outstanding Newco Secured
Notes exceeds $150 million, and in
the event that during any semi-annual period commencing on
July 1, 2020, excess cash flow (to be
described in the Expected Amendment) for such period is positive,
Newco will be required, on March 15
and September 15 of each year
beginning with March 15, 2021, to
make an offer to all holders of Newco Secured Notes to purchase the
maximum principal amount of Newco Secured Notes that may be
purchased with an amount equal to 75% of excess cash flow for the
semi-annual period then ended until the aggregate principal amount
of outstanding Newco Secured Notes is less than $150.0 million and Newco has a total leverage
ratio of less than 2.0 to 1.0; and
- Provide that if any of SESI's 7.750% Senior Notes due 2024 (the
"2024 Notes") are outstanding 91 days prior to September 15, 2024 (the "Springing Maturity
Date"), then the Superior Secured Notes will mature on the
Springing Maturity Date.
In addition to the above proposed amended terms, the Expected
Amendment will describe certain amended restrictive covenants
related to the Newco Secured Notes and the Superior Secured Notes,
including but not limited to the following (capitalized terms used
below but not otherwise defined herein are to be defined in the
Expected Amendment):
Superior Secured Notes
- Indebtedness – The debt covenant will apply to Superior
Energy, SESI and SESI's Restricted Subsidiaries.
-
- Ratio Debt – SESI and Restricted Subsidiaries will be
able to incur indebtedness so long as Consolidated Coverage Ratio
exceeds 2.0 to 1.0; a sublimit of $35
million for non-guarantors will apply.
- Credit Facilities – Not to exceed the greater of (a)
$200 million and (b) the Borrowing
Base as defined in the Remainco Credit Agreement or any successor
Remainco Credit Agreement that refinances the existing Remainco
Credit Agreement with bona fide ABL lenders, with a good faith
determination of Borrowing Base in accordance with customary
practice.
- Acquisition Debt – Permitted if SESI could incur
$1.00 under Consolidated Coverage
Ratio test on pro forma basis or pro forma Consolidated Coverage
Ratio is greater than or equal to such ratio prior to such
acquisition.
- Capital lease obligations – Equal to the greater of
$100 million and a percentage of
Consolidated Tangible Assets.
- Foreign Subsidiaries' debt – $35
million.
- General basket – $75
million.
- Restricted Payments –
-
- General – Repayments of Original Notes at any time or
repayments of 2024 Notes within 18 months of their stated maturity
will be deemed not to be Restricted Payments. The covenant will
otherwise limit SESI's ability to redeem or repurchase junior or
unsecured debt more than one year prior to stated maturity.
- Builder basket – Subject to (a) 2.0 to 1.0
Consolidated Coverage Ratio, (b) 2.0 to 1.0 Total Leverage Ratio
and (c) no Default or Event of Default. Standard 50% of
Consolidated Net Income builder basket commencing January 1, 2020.
- Employee stock repurchases – $5 million in any fiscal year with unlimited
carryover subject to a $25 million
cap.
- General basket – $50
million, subject to no Default.
- Junior Debt Repurchases – redemptions or
repurchases more than one year prior to stated maturity of the
greater of $150 million and, if
SESI's Total Secured Leverage Ratio is less than or equal to 1.50
to 1.00 on pro forma basis, $200
million.
- Permitted Liens – Limited to indebtedness under the
Credit Facilities debt basket, Superior Secured Notes issued on the
issue date and $250 million of
indebtedness secured by liens junior to the liens securing the
Superior Secured Notes (solely to refinance existing
junior/unsecured notes).
- Asset Sales –
-
- Debt repayment – $75
million basket for repayment of 2024 Notes, with an
additional $75 million basket
provided that SESI's Total Secured Leverage Ratio is 0.25x inside
closing Total Secured Leverage. Basket for repayment of any and all
outstanding Original Notes.
- Sales of non-collateral assets (including shares of Newco
stock) – Either SESI must receive 75% cash or the fair market
value of all non-cash consideration for all dispositions since the
issue date must not exceed an aggregate cap of 5% of SESI's
Consolidated Tangible Assets.
- Sales of collateral –SESI must receive 75%
cash provided that replacement assets constituting collateral are
deemed to count towards the 75% cash requirement.
Newco Secured Notes
- Indebtedness –
-
- General – The debt covenant will apply to Newco and
Newco's Restricted Subsidiaries.
- Ratio Debt – Newco and its Restricted Subsidiaries will
be able to incur unsecured indebtedness so long as Newco's
Consolidated Interest Coverage Ratio exceeds 2.0 to 1.0. A sublimit
of $25 million for debt incurrence by
non-guarantors will apply.
- Credit Facilities – Newco and its Restricted
Subsidiaries will be permitted to incur indebtedness of the greater
of (a) $150 million and (b) the
Borrowing Base as defined in the Forbes RCF Credit Agreement or any
successor Newco ABL Credit Agreement that refinances the existing
Forbes RCF Credit Agreement with bona fide ABL lenders and with a
good faith determination of Borrowing Base in accordance with
customary practice.
- Pari passu Second Lien Debt – An amount such that
Newco's Total Second Lien Leverage Ratio is less than or equal to
1.5 to 1.0.
- Junior Lien Debt – Greater of $100 million and an amount such that Total
Secured Leverage Ratio is less than or equal to 2.5 to 1.0; to be
secured by liens junior to the liens securing the Newco Secured
Notes.
- Purchase Money Indebtedness – Greater of
$25 million and 5% of Newco's
Consolidated Net Tangible Assets.
- General Basket – Greater of $50 million and 10% of Newco's Consolidated Net
Tangible Assets.
- Acquisition Indebtedness – Permitted so long as
either Newco could incur $1.00 under
Consolidated Interest Coverage Ratio test on pro forma basis or pro
forma Consolidated Interest Coverage Ratio of Newco and its
Restricted Subs is greater than or equal to its Consolidated
Interest Coverage Ratio prior to such acquisition.
- Restricted Payments – Newco's restricted payments
builder basket will comprise 50% of its Consolidated Net Income for
the period from January 1, 2020
(minus 100% of deficit), subject to (a) Newco's reduction of the
aggregate principal amount of outstanding Newco Secured Notes to
less than $150 million (b) Newco
having a total leverage ratio of less than 2.0 to 1.0, (c) Newco
having 2.0 to 1.0 Consolidated Interest Coverage Ratio and (d) no
Default or Event of Default.
- Permitted Liens – Definition will allow liens securing
the second lien debt basket (on a pari passu lien basis
only), the junior lien debt basket (on junior lien basis only), the
Credit Facilities debt basket, the purchase money debt basket and
the acquired debt basket (limited to liens on indebtedness secured
by the assets to be acquired and not incurred in connection with
the transaction, and provided the Total Secured Leverage Ratio is
no greater after giving pro forma effect to the acquisition than
immediately prior to such acquisition), and will provide a general
liens basket (greater of $40 million and (b) 7.5% of Newco's
Consolidated Net Tangible Assets (on a pari passu or junior
lien basis only)).
- Asset Sales – Subject to excess cash flow sweep as
described above.
Subject to agreement upon mutually acceptable descriptions of
the aforementioned proposed terms and certain other agreed terms in
the Expected Amendment, each member of the Ad Hoc Group has agreed
in principle to tender their Original Notes pursuant to the
terms of the Exchange Offer and deliver their related Consents
in the Consent Solicitation.
Except as described in this press release, all other material
terms of the Exchange Offer and Consent Solicitation will remain
unchanged. The Company intends to distribute a supplement to the
Offering Memorandum and Consent Solicitation Statement to eligible
holders containing the amended terms of the Exchange Offer and
Consent Solicitation as promptly as practicable.
The Exchange Offer and Consent Solicitation is being conducted
in connection with Superior Energy's previously announced entry
into a definitive agreement to divest its U.S. service rigs, coiled
tubing, wireline, pressure control, flowback, fluid management and
accommodations service lines and combine them with Forbes Energy
Services Ltd.'s (OTCQX: FLSS) complementary service lines to create
a new, publicly traded consolidation platform for U.S. completion,
production and water solutions (the "Combination"). The
consummation of the Exchange Offer is a condition of the
Combination; however, the consummation of the Combination is not a
condition of the Exchange Offer and Consent Solicitation.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of the
New Notes, Newco Secured Notes or Superior Secured Notes in any
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. In addition, this press
release is neither an offer to purchase nor a solicitation of an
offer to sell any Original Notes in the Exchange Offer or a
solicitation of any consents to the Proposed Amendment. The New
Notes, Newco Secured Notes and Superior Secured Notes have not been
registered under the Securities Act or any state securities laws
and, unless so registered, may not be offered or sold in
the United States except pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable
state securities laws. The New Notes, Newco Secured Notes and
Superior Secured Notes will only be offered and sold to persons
reasonably believed to be qualified institutional buyers pursuant
to Rule 144A under the Securities Act and to non-U.S. persons in
transactions outside the United
States pursuant to Regulation S under the Securities
Act.
About Superior Energy
Superior Energy serves the drilling, completion and
production-related needs of oil and gas companies worldwide through
a diversified portfolio of specialized oilfield services and
equipment that are used throughout the economic life cycle of oil
and gas wells.
Forward-Looking Statements
All statements in this press release (and oral statements made
regarding the subjects of this communication) other than historical
facts are forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements rely on a number of assumptions
concerning future events and are subject to a number of
uncertainties and factors, many of which are outside the control of
Superior Energy, SESI and Newco, which could cause actual results
to differ materially from such statements. Forward-looking
information includes, but is not limited to: statements regarding
the timing and effect of the Combination, the ability of SESI to
consummate the Exchange Offer and Consent Solicitation on the
amended terms reflected by the agreement in principle with the Ad
Hoc Group or to otherwise satisfy the conditions to the settlement
of the Exchange Offer and Consent Solicitation, general market and
economic conditions, changes in law and government regulations and
other matters affecting the businesses of Superior Energy, SESI or
Newco, and the other risks described in the Offering
Memorandum.
These forward-looking statements are also affected by the risk
factors, forward-looking statements and challenges and
uncertainties described in Superior Energy's Annual Report on Form
10-K for the year ended December 31,
2018, and those set forth from time to time in Superior
Energy's filings with the Securities and Exchange Commission.
Except as required by law, Superior Energy expressly disclaims any
intention or obligation to revise or update any forward-looking
statements whether as a result of new information, future events or
otherwise.
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SOURCE Superior Energy Services, Inc.