Nuverra Environmental Solutions entered into agreements with its lenders to extend the maturity date on its secured credit facilities and to modify the financial covenants to better reflect the company’s current and projected financial profile.
These amendments became effective on July 13 and consist of a third amendment to Nuverra’s first lien credit agreement with funds controlled by Ares Capital Management and a second amendment to its second lien credit agreement with funds controlled by Ascribe Capital Management and Gates Capital Management. The amendments extend the scheduled maturity of the first lien facility from Feb. 7, 2021 to May 15, 2022 and the second lien facility from Oct. 7. 2021 to Nov. 15, 2022.
Primary Terms of the First Lien Amendment
- Extended the maturity date from Feb. 7, 2021 to May 15, 2022
- Deferred measurement of the fixed charge coverage ratio (FCCR) covenant until Q2/21 and set the minimum FCCR at 0.70 to 1.00 for such quarter and at 1.00 to 1.00 thereafter
- Added a monthly minimum liquidity covenant that requires the company to maintain minimum liquidity amounts as follows: $8 million through July 31, 2020, $5.5 million through Aug. 30, 2020, $5 million through Nov. 30, 2020 and $4 million on and after Dec. 1, 2020
- Prohibited draws on the revolving facility until the FCCR is 1.00 to 1.00
- Set the maximum capital expenditures covenant for 2020 and 2021 at $6 million and $7.5 million, respectively.
- As part of the amendment, Nuverra repaid $2.5 million of principal on the first lien facility.
_x000D_
_x000D_
_x000D_
_x000D_
_x000D_
_x000D_
Primary Terms of the Second Lien Amendment
- Extended the maturity date from Oct. 7, 2021 to Nov. 15, 2022
- Deferred measurement of the FCCR covenant until Q2/21 and set the minimum FCCR at 0.60 to 1.00 for such quarter and at 0.85 to 1.00 thereafter
- Added a monthly minimum liquidity covenant that requires the company to maintain minimum liquidity amounts as follows: $6.8 million through July 31, 2020, $4.675 million through Aug. 30, 2020, $4.25 million through Nov. 30, 2020 and $3.4 million on and after Dec. 1, 2020
- Set the maximum capital expenditures covenant for 2020 and 2021 at $7,058,823 and $8,823,529, respectively.
_x000D_
_x000D_
_x000D_
_x000D_
Liquidity Update
As of June 30, 2020, the outstanding balance of the first lien facility was $16.4 million. As part of the amendment, Nuverra made a payment of $2.5 million on July 13, 2020, reducing the outstanding balance on the first lien facility to $13.9 million. As of June 30, 2020, Nuverra’s cash balance was $15.8 million. Nuverra also had no outstanding draws under the revolving credit facility and the balance of the second lien facility was $8.8 million as of June 30, 2020.
“In the current market where capital in the energy space is extremely scarce, we are very pleased to have the support of Ares, Ascribe and Gates Capital in extending the maturity of our facilities to allow us to focus on operating the business and continuing to navigate these challenging conditions,” Charlie Thompson, CEO of Nuverra, said. “We now have almost two years without any debt maturities and have adjusted the financial covenants to better reflect the market conditions and the company’s recent performance. While we are still required to maintain significant liquidity, we continue to focus on that issue daily. As of today, we see some signs of modestly improving industry health, but we are still facing challenging headwinds and don’t see meaningful relief in the near future.”
Nuverra Environmental Solutions provides water logistics and oilfield services to customers focused on the development and ongoing production of oil and natural gas from shale formations in the United States.
