Weatherford wants to lower debt load, revises terms of JPMorgan loan

By Devika Patel

Knoxville, Tenn., April 28 – Weatherford International plc plans to tackle its debt and drive down costs in order to improve its balance sheet.

“Our largest challenge is to address the debt load on our balance sheet,” president and chief executive officer Mark A. McCollum said on the company’s first quarter earnings conference call on Friday.

“Weatherford has already taken several significant steps to improve its financial position.

“The biggest single challenge ahead of us is getting the debt down.

“Given the importance of restoring our financial strength, I intend to heighten Weatherford’s focus on financial accountability and cost management,” he said.

“We’ve got work to do to push toward profitability.

“I see a lot of opportunities to increase profitability within our control.

“Improved profitability will in turn drive cash flow and stronger cash flow will result in sustained improvement to our balance sheet,” McCollum said.

The company also revised the terms of its bank debt in April.

“On April 17, we amended the terms for both our revolving credit facility as well as our secured term loan,” executive vice president and chief financial officer Christoph Bausch said on the call.

“The amendments allow a higher amount of restructuring charges to be added to EBITDA when calculating the covenants and allow excluding certain collateralized letters of credit from the specified debt.

“The EBITDA changes apply for the first three quarters of 2017.

“In return, we agreed to reduce the overall commitment of our revolver and term loan facility several months earlier than originally anticipated from $1.4 billion to $1.2 billion.

“At the end of the quarter, we were in compliance with all covenants on all of our financing facilities and we expect to remain in compliance going forward,” Bausch said.

As of March 31, the company had $546 million in cash and an undrawn revolver of $1.3 billion.

Net debt was $7 billion, which was an increase of $448 million from the previous quarter.

As previously reported, on April 17, Weatherford amended its amended and restated credit agreement with JPMorgan Chase Bank, NA as administrative agent to reduce total revolving commitments to $1.199 billion from $1.38 billion.

The company also amended the credit agreement and its term loan agreement with JPMorgan as administrative agent to modify each agreement’s definition of consolidated adjusted EBITDA.

Weatherford is an oilfield service company based in Baar, Switzerland, with operational headquarters in Houston.

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