Item 4. Purpose of Transaction.
All of the Common Stock of the Issuer reported on this Schedule 13D
was acquired in the ordinary course of business for investment
purposes by funds and accounts for which certain of the Advisory
Subsidiaries act as investment advisers.
In connection with the filing by the Issuer and certain of its
affiliates (collectively, the “Debtors”) of voluntary
petitions (the “Chapter 11 Cases”) in the United States
Bankruptcy Court for the Southern District of Texas (the
“Bankruptcy Court”) seeking relief under Chapter 11 of Title
11 of the United States Code (the “Bankruptcy Code”), the
Debtors entered into a Senior Secured Super-Priority Debtor-in-Possession Loan and
Security Agreement, dated as of December 22, 2022 (the “DIP
Credit Agreement”), with Wilmington Savings Fund Society, FSB,
as administrative agent (the “Administrative Agent”), and
the lenders from time to time party thereto (collectively, the
“DIP Lenders”), which DIP Lenders include certain funds and
accounts managed by subsidiaries of BlackRock that hold secured
convertible notes of the Issuer (such funds and accounts managed by
subsidiaries of BlackRock, collectively, the “Managed
Funds”).
Pursuant to the terms of the DIP Credit Agreement, the DIP Lenders
provided new financing commitments to the Issuer under a new money
multiple draw term loan facility (the “New Money DIP
Facility”) in an initial aggregate principal amount of up to
$75 million, approximately $57 million of which was
committed to by the initial DIP Lenders, including $17 million
from the Managed Funds. Under the New Money DIP Facility, (i)
$37.5 million will be available following Bankruptcy Court
approval on an interim basis (the “Interim DIP Order”), and
(ii) up to $37.5 million will be available following
Bankruptcy Court approval on a final basis (the “Final DIP
Order”), subject to obtaining commitments for the full amount
of the New Money DIP Facility.
The DIP Credit Agreement provides for a credit facility pursuant to
which up to $75 million of aggregate claims of the holders of
the Issuer’s secured convertible notes who are DIP Lenders (or
affiliates, partners or investors of the DIP Lenders) will, upon
entry of the Final DIP Order, automatically be deemed substituted
and exchanged for, and converted, into (such conversion, the
“Roll Up”) debtor-in-possession loans (the
“Roll Up Loans”) (such credit facility, together with the
New Money DIP Facility, the “DIP Facility”) on a cashless
dollar for dollar basis, in each case, in accordance with and
subject to the terms and conditions in the DIP Credit
Agreement.
Borrowings under the New Money DIP Facility will bear interest at a
rate of 10% which, together with certain fees payable in connection
with the DIP Facility, will be payable in kind. Roll Up Loans will
not bear interest. The DIP Lenders will receive upfront commitment
fees equal to 2% of the aggregate commitments under the New Money
DIP Facility when drawn, payable in kind, and exit fees equal to
(i) in the case of an acceptable exit roll transaction, (x) 3%
of the accreted outstanding principal amount of the New Money Loans
at such time, and (y) 2% of the outstanding principal amount of the
Roll Up Loans as set forth in the DIP Credit Agreement, or
(ii) otherwise (x) 15% of the accreted outstanding principal
amount of the New Money Loans at such time and (y) 2% of the
outstanding principal amount of the Roll Up Loans at such time as
set forth in the DIP Credit Agreement. The DIP Credit Agreement
includes milestones, representations and warranties, covenants
applicable to the Debtors, and events of default. If an event of
default under the DIP Credit Agreement occurs, the Administrative
Agent may, among other things, permanently reduce any remaining
commitments and declare the outstanding obligations under the DIP
Credit Agreement to be immediately due and payable.
The DIP Credit Agreement has a maturity date of June 21, 2023,
which can be extended, under certain conditions, by an additional
three months to September 21, 2023. The DIP Credit Agreement
will also terminate on the date that is the earliest of the
following (i) January 25, 2023, if no Final DIP Order is
entered (or such later date as may be agreed in writing by the
Required Lenders (as defined in the DIP Credit Agreement)), (ii)
the maturity date, (ii) the date of consummation of any
transaction pursuant to which all or substantially all of the
assets of the Issuer and the other credit parties will be sold,
transferred or otherwise disposed, (iii) the effective date of
a plan in the Chapter 11 Cases, and (iv) the date on which all
amounts owed thereunder become due and payable and the commitments
are terminated.
The foregoing description of the DIP Credit Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the DIP Credit Agreement, which is
filed as Exhibit 1 to this Schedule 13D and is incorporated by
reference herein.
On December 22, 2022, the Managed Funds also entered into a
Restructuring Support Agreement (the “Support Agreement”),
with the Issuer and certain other holders of (x) the Issuer’s
secured convertible notes and/or (y) DIP Commitments (as
defined in the Support Agreement) or loans under the DIP Facility
(the “Consenting Creditors”), pursuant to which, among other
things, the Consenting Creditors agreed, for the duration of the
Support Period (as defined in the Support Agreement), to vote in
favor a joint plan of reorganization (the “Plan”) of the
Debtors under the Bankruptcy Code and not to take certain other
actions, including those that would reasonably be expected to
prevent, interfere with, delay or impede the consummation of the
Plan and the restructuring contemplated by the Support
Agreement.
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