U.S. Well Services entered into an amended and restated senior secured term loan credit agreement with CLMG Corp. The term loan provides for a suspension of scheduled principal and interest payments for 24 months. Under the terms of the amended term loan, U.S. Well Services’ next scheduled principal and interest payment to CLMG will be due June 30, 2022.
Concurrently, U.S. Well Services sold $21 million of newly issued Series B redeemable convertible preferred stock through a private placement with institutional investors, using proceeds from the private placement to fund the $20 million cash portion of an extension fee payable to CLMG.
“This series of transactions significantly strengthens U.S. Well Services’ liquidity profile and balance sheet in a challenging market environment,” Kyle O’Neill, CFO of U.S. Well Services, said. “We believe that this enhancement to the company’s capital structure, in combination with our recent cost reduction measures, positions U.S. Well Services to continue delivering on behalf of its customers and create value for shareholders.”
Pursuant to the terms of the amended term loan, the interest rate on the term loan will be reduced to 0.0% and scheduled principal amortization payments will be suspended for the period beginning April 1, 2020 and ending March 31, 2022. Beginning April 1, 2022, the amended term loan facility will resume incurring interest at the applicable LIBOR rate, subject to a 2.0% floor, plus 8.25%, and scheduled quarterly principal amortization payments equal to 0.5% of the initial principal balance of the loan. Additionally, the maturity date for the amended term loan will be extended by 18 months to December 5, 2025. In exchange for amending the term loan facility, the lenders received an extension fee comprised of a $20 million cash payment, $1.05 million of newly issued preferred stock and approximately 5.5 million shares of U.S. Well Services’ Class A common stock.
“U.S. Well Services has acted swiftly in response to the rapid deterioration in market conditions,” Joel Broussard, CEO of U.S. Well Services, said. “We recently made the difficult decision to significantly reduce headcount and compensation in order to rationalize the company’s cost structure in light of the current market. The suspension of principal and interest payments on our senior secured term loan for eight quarters further improves U.S. Well Services’ financial position and ability to generate cash flow in a challenging operating environment.”
U.S. Well Services is a provider of hydraulic fracturing services and electric fracture stimulation.
