| Item 1.01 | Entry into a Material Definitive Agreement. |
U.S. Department of Agriculture Business & Industry CARES Act Program
U.S. Well Services, Inc. (the “Company”), U.S. Well Services, LLC, a subsidiary of the Company (“USWS”) and USWS Holdings LLC, a subsidiary of the Company (“Holdings,” and together with the Company and USWS, collectively, the “Borrowers,” and each individually, a “Borrower”), entered into that certain Business Loan Agreement dated as of November 12, 2020, with Greater Nevada Credit Union, as lender (“Lender”), pursuant to the United States Department of Agriculture, Business & Industry Coronavirus Aid, Relief, and Economic Security Act Guaranteed Loan Program (“USDA B&I CARES Act Program”), in the aggregate principal amount of up to $25,000,000 (the “B&I CARES Act Loan”).
As of the date of this report, the B&I CARES Act Loan is not yet funded and is conditioned upon and subject to final approval by the Rural Business-Cooperative Service or successor agency assigned by the Secretary of Agriculture and the satisfaction of all conditions precedent to funding specified in the B&I CARES Act Loan.
The B&I CARES Act Loan will be secured by specific equipment collateral which is currently subject to a lease between the Company and MG Finance Co., Ltd., which lease is anticipated to be terminated as part of the satisfaction of the conditions to funding under the B&I CARES Act Loan. Once funded, the B&I CARES Act Loan will accrue interest at a fixed rate of 5.75% per annum. The maturity date of the B&I CARES Act Loan will be November 12, 2030. The purpose of the B&I CARES Act Loan is to provide long-term financing for eligible working capital purposes and fees and costs associated with the B&I CARES Act Loan in accordance with authorized uses under applicable law and regulations of the USDA B&I CARES Act Program.
The foregoing description of the B&I CARES Act Loan does not purport to be complete and is qualified in its entirety by reference to the complete text of the B&I CARES Act Loan which is filed herewith as Exhibit 10.1 and the Form of Promissory Note which is filed herewith as Exhibit 10.2.
The lenders under each of the Credit Agreement (as defined below) and the ABL Facility (as defined below), consent to the incurrence of the B&I CARES Act Loan, subject to the terms and the satisfaction of the certain conditions.
Fourth Amendment to Senior Secured Term Loan Credit Agreement
USWS, the Company, Holdings and the subsidiary guarantors party thereto (collectively, the “Loan Parties”), entered into the Fourth Amendment to Senior Secured Term Loan Credit Agreement dated November 12, 2020 (the “Term Loan Amendment”) with CLMG Corp., as administrative agent (the “Administrative Agent”), CLMG Corp., as collateral agent (the “Collateral Agent,” and together with the Administrative Agent, the “Agents”) and the lenders party thereto (the “Term Lenders”). The Term Loan Amendment amends that certain Senior Secured Term Loan Credit Agreement dated as of May 7, 2019 (as amended, restated, or supplemented, the “Credit Agreement”), among the Loan Parties, the Agents, the Term Lenders, and certain other financial institutions party thereto from time to time.
Pursuant to the Term Loan Amendment, certain modifications and amendments will be made to the Credit Agreement in order to, among other things, consent to the incurrence of debt and liens under the B&I CARES Act Loan and other modifications provide for additional scheduled amortization payments and other mandatory prepayment arising for the receipt of certain claim proceeds, in each case subject to the terms, and upon the satisfaction of conditions, specified therein.
Pursuant to the Term Loan Amendment, scheduled principal amortization payments in the amount of $1,250,000 will be due and payable quarterly on December 31, 2020 until June 30, 2022 and will be applied to Term B Loans (as defined in the Credit Agreement). On June 30, 2022 and continuing on each scheduled amortization payment date thereafter, Term A Loans (as defined in the Credit Agreement) shall be repaid equal to 0.50% of the initial principal amount advanced and Term B Loans shall be repaid equal to 0.50% of the initial principal amount advanced. On May 31, 2021, an additional $2,500,000 payment will be due and payable in respect of Term B Loans (as defined in the Credit Agreement). Furthermore, in the event USWS receives cash payments arising from its claims made in a specified bankruptcy proceeding, USWS may be required to make prepayments of Term B Loans in a like amount (including a potential mandatory prepayment of up to $2,500,000 on September 30, 2021), subject to the satisfaction of certain payment conditions set forth in the Term Loan Amendment.
The foregoing description of the Term Loan Amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the Term Loan Amendment, which is filed herewith as Exhibit 10.3.
2
