Nuverra holders tender for exchange $328.13 million of 9 7/8% notes

By Susanna Moon

Chicago, April 14 – Nuverra Environmental Solutions, Inc. said investors had tendered for exchange $328,129,000 principal amount, or about 89%, of its 9 7/8% senior notes due 2018.

The company was offering to exchange new second-lien notes due April 15, 2021 issued at par and shares of common stock at a conversion price per share of $0.32 for any and all of the 9 7/8% notes, according to a company notice.

The exchange ended at 11:59 p.m. ET on April 13, extended from 11:59 p.m. ET on April 12.

The exchange amount excludes notes held by Mark Johnsrud, the company’s chairman and chief executive officer.

As of the original expiration, holders had tendered about $328.1 million principal amount, or 89%, of the $368.6 million outstanding notes, excluding those held by Johnsrud.

Nuverra said on March 30 that it extended the early exchange date from 11:59 p.m. ET on March 29 to be the same as the final expiration.

As of the original early date, holders had tendered $320 million of the $368.6 million of outstanding notes, an amount that excluded those held by Johnsrud.

Nuverra announced the exchange on March 17.

It said holders who tender the existing notes will receive 2021 notes issued at par and shares of the company’s common stock at a weighted market-average conversion price per share.

The exchange offer is one transaction under a restructuring support agreement dated March 11 between the company and holders of about 81% of the 2018 notes.

An entity controlled by Johnsrud is the owner of $31.4 million principal amount of the 2018 notes and has agreed to convert the 2018 notes to common stock at a weighted market-average conversion price per share, subject to shareholder approval of an increase in the number of shares authorized to be issued by the company.

The 2021 notes will be secured by junior liens on substantially the same collateral as the company’s revolving credit facility and first-lien term loan. The 2021 notes will rank equal in right of payment to all senior debt and senior to all subordinated debt of the company.

Interest on the 2021 notes will be as follows:

• 12˝% in kind for interest payable on Oct. 15, 2016;

• 10% with 50% in kind and 50% in cash for interest payable after Oct. 15, 2016 through April 15, 2018; and

• 10% in cash for interest payable after April 15, 2018.

The company said it will pay interest on the 2018 notes due April 15 in cash, to the extent that the 2018 notes are outstanding. In addition, the company will pay accrued interest in cash through the closing of the exchange offer.

Noteholders will also receive a share of warrants to purchase up to 10% of the company’s outstanding common stock at an exercise price of $0.01 per share. Originally the warrants were being offered as an early exchange fee, but all those who tender will now receive this fee.

The company said it is making the exchange offer and related transactions “in response to the current low commodity price environment for crude oil and natural gas, which has significantly impacted the company’s revenues and liquidity as customer activities have dramatically slowed.”

The company said it is not in default under any of its debt instruments but that its ability to service its debt and fund its operations is at significant risk because of the slump in commodity prices.

If the restructuring fails to go through, including the exchange offer, the company said it may need to file for bankruptcy.

Ipreo LLC (888 593-9546, Aaron Dougherty, exchangeoffer@ipreo.com) is the exchange and information agent.

Nuverra provides environmental solutions to customers in the energy market and is based in Scottsdale, Ariz.

© 2015 Prospect News.
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