| Item 1.01 | Entry into a Material Definitive Agreement |
On October 18, 2018, Nine Energy Service, Inc. (the “Company”) entered into a Purchase Agreement (the “Purchase Agreement”), among the Company, the subsidiary guarantors named therein (the “Guarantors”) and J.P. Morgan Securities LLC, as representative of the several initial purchasers listed therein (the “Initial Purchasers”), pursuant to which the Company agreed to issue and sell to the Initial Purchasers $400.0 million in aggregate principal amount of the Company’s 8.750% senior unsecured notes due 2023 (the “Notes”). The Notes were priced at par and resulted in proceeds to the Company of approximately $392.0 million, after deducting the initial purchasers’ discount. The offering of the Notes (the “Offering”) is expected to close on or about October 25, 2018, subject to customary closing conditions contained in the Purchase Agreement.
The Company intends to use the proceeds from the Offering, together with cash on hand and borrowings under a new credit facility (the “New Credit Facility”) to be entered into in connection with the consummation of the previously announced acquisition of Magnum Oil Tools International, LTD and certain of its affiliates (the “Magnum Acquisition”), to fully repay and terminate the term loan borrowings and the outstanding revolving credit commitments under the Company’s existing credit facility (the “Existing Credit Facility”), fund the upfront cash purchase price of the pending Magnum Acquisition and pay transaction fees and expenses. If the Magnum Acquisition is not consummated on or prior to November 30, 2018 or, if prior to such date, the purchase agreement relating to the Magnum Acquisition is terminated without the Magnum Acquisition being consummated, then in either case, the Notes will be redeemed at a redemption price equal to 100% of the issue price of the notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The Notes will be issued and sold to the Initial Purchasers pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereunder. The Initial Purchasers intend to resell the Notes only to persons reasonably believed to be “qualified institutional buyers” in reliance on Rule 144A under the Securities Act and tonon-U.S. persons outside the United States in reliance on Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
The Purchase Agreement contains customary representations, warranties and covenants, conditions to closing and termination provisions. Additionally the Purchase Agreement contains customary indemnification and contribution provisions under which the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other, have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. Furthermore, for a period of 60 days after the date of the Purchase Agreement, without the prior consent of J.P. Morgan Securities LLC, the Company and the Guarantors have agreed with the Initial Purchasers not to offer, sell, contract to sell, pledge or otherwise dispose of any debt securities (other than the Notes) issued or guaranteed by the Company or any of the Guarantors and having a tenor of more than one year.
