Item 1.03.
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Bankruptcy or Receivership.
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Chapter 11 Filing and Solicitation
On May 1, 2017, Nuverra Environmental Solutions, Inc. (the Company) and its subsidiaries (collectively with the Company, the Nuverra
Parties) filed voluntary petitions under chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court) to pursue
prepackaged plans of reorganization (together, the Plan). The Nuverra Parties will seek to have their chapter 11 cases jointly administered under the caption
In re Nuverra Environmental Solutions, Inc. et al.
(Case Nos. 17-10949
through 17-10962). No trustee has been appointed, and the Nuverra Parties will continue to operate the businesses as debtors in possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of
the Bankruptcy Code and orders of the Bankruptcy Court. The Company expects to continue its operations without interruption during the pendency of the chapter 11 cases. To assure ordinary course operations, the Company is seeking approval from the
Bankruptcy Court for a variety of first day motions seeking on an interim basis various relief and authorizing the Nuverra Parties to maintain their operations in the ordinary course.
The subsidiary debtors in the chapter 11 Cases are Heckmann Water Resources Corporation, Heckmann Water Resources (CVR) Inc., 1960 Well Services, LLC, HEK
Water Solutions, LLC, Appalachian Water Services, LLC, Badlands Power Fuels, LLC (a Delaware limited liability company), Badlands Power Fuels, LLC (a North Dakota limited liability company), Landtech Enterprises, L.L.C., Badlands Leasing, LLC, Ideal
Oilfield Disposal, LLC, Nuverra Total Solutions, LLC, NES Water Solutions, LLC and Heckmann Woods Cross, LLC.
On April 28, 2017, the Company
commenced a solicitation of votes (the Solicitation) to accept or reject the Plan from holders of the Companys 9.875% Senior Notes due 2018 (the 2018 Notes), 12.5%/10.0% Senior Secured Second Lien Notes due 2021 (the
2021 Notes), and indebtedness under its Term Loan Credit Agreement, as amended through the Ninth Amendment thereto, dated as of April 15, 2016, by and among Wilmington Savings Fund Society, FSB (Wilmington), the lenders
named therein, and the Company (the Term Loan Credit Agreement).
A summary of the key features of the Plan was included in Item 1.01 to
our Current Report on Form 8-K filed with the United States Securities and Exchange Commission on April 12, 2017, as amended by the RSA Amendment described below and a copy of which is filed as Exhibit 10.1 to this Form 8-K. The description of
the Plan therein is only a summary and does not purport to be complete and is qualified in its entirety by the provisions of the disclosure statement (the Disclosure Statement) accompanying the Solicitation and the Plan. Court filings
and other information related to the chapter 11 cases, including the Disclosure Statement and the Plan, are available at a website administered by the Companys claims agent, Prime Clerk LLC, at http://cases.primeclerk.com/nuverra. The
information provided on the claims agents website is not incorporated by reference into this Form 8-K.
DIP Revolving Facility
In connection with the filing of the Plan, the Nuverra Parties have sought Bankruptcy Court approval of a debtor-in-possession revolving credit facility on the
terms set forth in a Debtor-in-Possession Credit
Agreement (the DIP Revolving Facility), to be entered into by and among the Company, the lenders party thereto (the DIP Revolving Facility Lenders), and Wells Fargo Bank,
National Association (Wells Fargo), pursuant to which the DIP Revolving Facility Lenders will agree to provide the Company a secured revolving credit facility up to a maximum amount of $31.5 million to, among other things, refinance
obligations under the Companys existing asset-based lending facility, and to finance the ongoing general corporate needs of the Nuverra Parties during the course of the chapter 11 proceedings.
The maturity date of the DIP Revolving Facility will be the earliest to occur of: (i) August 7, 2017, (ii) the occurrence of an Event of
Default (as defined in the DIP Revolving Facility), and (iii) the effective date of any chapter 11 plan of reorganization confirmed in connection with the chapter 11 cases. The DIP Revolving Facility will contain customary events of default,
including events related to the chapter 11 proceedings, the occurrence of which could result in the acceleration of the Nuverra Parties obligation to repay the outstanding indebtedness under the DIP Revolving Facility. The Nuverra
Parties obligations under the DIP Revolving Facility will be secured by a senior security interest in, and lien on, substantially all the assets of the Nuverra Parties.
The foregoing description of the proposed DIP Revolving Facility is only a summary and the DIP Revolving Facility is subject in all respects to Bankruptcy
Court approval in a form satisfactory to the DIP Revolving Facility Lenders.
DIP Term Loan Agreement
In connection with the filing of the Plan, the Nuverra Parties have also sought Bankruptcy Court approval of a debtor-in-possession term loan on the terms set
forth in a Debtor-in-Possession Term Loan Credit Agreement (the DIP Term Loan Agreement), to be entered into by and among the Company, the lenders party thereto (the DIP Term Loan Lenders), and Wilmington, pursuant to which
the DIP Term Loan Lenders will agree to provide the Company with up to $12.5 million in financing in the form of an initial term loan in the amount equal to the lesser of (i) $2.5 million and (ii) the amount authorized by the Bankruptcy
Court in its interim order, and subsequent term loans to, among other things, finance the ongoing general corporate needs of the Nuverra Parties during the course of the chapter 11 proceedings.
The maturity date of the DIP Term Loan Agreement will be the earliest to occur of: (i) August 7, 2017, (ii) the occurrence of an Event of
Default (as defined in the DIP Term Loan Agreement), and (iii) the effective date of any chapter 11 plan of reorganization confirmed in connection with the chapter 11 cases. The DIP Term Loan Agreement will contain customary events of default,
including events related to the chapter 11 proceedings, the occurrence of which could result in the acceleration of the Nuverra Parties obligation to repay the outstanding indebtedness under the DIP Term Loan Agreement. The Nuverra
Parties obligations under the DIP Term Loan Agreement will be secured by a security interest in, and lien on, substantially all the assets of the Nuverra Parties.
The foregoing description of the proposed DIP Term Loan Agreement is only a summary and the DIP Term Loan Agreement is subject in all respects to Bankruptcy
Court approval in a form satisfactory to the DIP Term Loan Lenders.
Amendment to Restructuring Support Agreement
On April 28, 2017, the Nuverra Parties entered into a Second Amendment to Restructuring Support Agreement (the RSA Amendment) with the holders
of approximately 86% (the Supporting Noteholders) of the Companys 2021 Notes, which further amends the Restructuring Support Agreement, dated as of April 9, 2017, by and among the Nuverra Parties and the Supporting
Noteholders, as amended by that certain First Amendment to Restructuring Support Agreement, dated as of April 20,
2017 (the RSA). The RSA Amendment amends the term sheet (the Amended Term Sheet) attached to the RSA by, among other things, providing the separate prepackaged plans of
reorganization for certain of the Companys subsidiaries, which plans may be confirmed and consummated separate and apart from, and independent of, confirmation and consummation of each other. In addition, the RSA Amendment changes the timing
of the contemplated rights offering from immediately after filing of the Plan to following confirmation of the Plan, and requires Mark D. Johnsrud, the Companys Chief Executive Officer and Chairman, to enter into a new employment agreement
with the Company on terms mutually acceptable to Mr. Johnsrud and the Supporting Noteholders, which shall be assumed by the Nuverra Parties under the Plan.
The foregoing description of the RSA Amendment, including the Amended Term Sheet, is only a summary and does not purport to be complete, and such description
is qualified in its entirety by reference to the full text of the RSA Amendment (to which the Amended Term Sheet is attached), a copy of which is filed as Exhibit 10.1 to this Form 8-K and is incorporated by reference into this Item 1.03.