Newpark secures $90 million revolver due 2020 at Libor plus 350 bps

By Susanna Moon

Chicago, May 13 – Newpark Resources, Inc. obtained a $90 million senior secured revolving credit facility due 2020 with a letter of credit sublimit of $65 million, according to an 8-K filing with the Securities and Exchange Commission.

The company entered into the asset-based revolving credit agreement on Thursday with pricing in two tiers based on EBITDA.

Initially, interest will be Libor plus 350 basis points, with the margin over Libor ranging from 250 bps to 350 bps based on leverage.

If the company’s consolidated EBITDA exceeds $50 million for two consecutive quarters, interest will drop to Libor plus a margin ranging from 225 bps to 325 bps.

The commitment fee ranges from 37.5 bps to 62.5 bps.

Bank of America, NA is the lead arranger, book manager, syndication agent and administrative agent, and JPMorgan Chase Bank, NA is the documentation agent.

For each letter of credit issued under the facility, the fronting fee will be 12.5 bps.

The credit agreement also contains a swingline sublimit of the lesser of $10 million and the amount of the aggregate commitments.

The ABL facility has an accordion feature, allowing it to be expanded up to a total of $150 million.

Proceeds will be used for working capital and for other general corporate purposes.

The ABL facility will mature on the earlier of March 6, 2020 and June 30, 2017 if by that date the company’s 4% convertible senior notes due 2017 have not been repurchased, redeemed or refinanced or the company has not escrowed enough funds for settlement.

There is a fixed charge coverage financial covenant if availability under the facility is less than the greater of $25 million or 25% of the aggregate commitments during the period prior to the date on which the convertibles have been redeemed, repurchased, converted or refinanced; or less than the greater of $15 million or 15% of aggregate commitments during the period after that date.

During this period, the company must not permit its fixed charge coverage ratio to be less than 1 to 1.

The facility replaces Newpark’s existing $150 million revolving credit facility, which was terminated. In late April, Newpark reported that it was out of compliance with some covenants of that facility, which was undrawn, and that it was in advanced discussions with lenders seeking a solution.

The Woodlands, Texas-based company operates in three segments: drilling fluids systems and engineering, mats and integrated services and environmental services.

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