Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
OCTOBER 30, 1998
BLACK WARRIOR WIRELINE CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-18754 11-2904094
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3748 HIGHWAY 45 NORTH, COLUMBUS, MISSISSIPPI 39701
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(Address of principal executive offices)
Registrant's telephone number, including area code: (601) 329-1047
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
Fleet Capital Corporation - Amended and Restated Loan Agreement
On October 30, 1998, the Company entered into an Amended and Restated Loan
and Security Agreement (the "Amended Credit Facility") with Fleet Capital
Corporation ("Fleet") which amended and restated the Credit Facility entered
into with Fleet on March 16, 1998. Reference is made to the Company's Current
Report on Form 8-K for March 16, 1998 which contained a description of the
Credit Facility. Under the terms of the Amended Credit Facility, any and all
defaults or events of default which occurred under the prior Credit Facility
were waived.
Pursuant to the Amended Credit Facility, the Company is able to borrow,
subject to meeting certain lending conditions, a total of approximately $18.3
million. Of such amount, up to $8.0 million subject to certain limitations, is a
revolving credit loan (the "Revolving Credit Loan"), $8.25 million is a
refinancing of the outstanding term loan, approximately $345,000 is a
refinancing of outstanding equipment loans, $490,000 is a refinancing of the
loan used to finance the Petro Wireline Acquisition, $600,000 is a term loan
advanced on October 30, 1998, the proceeds of which were specified to be used to
repay suppliers for goods and services and to make interest payments on an
outstanding note of the Company in the amount of $3.0 million issued in
connection with the acquisition of Diamondback Drilling Inc. (the "Diamondback
Note"), and $600,000 is available to be borrowed subject to the Company meeting
certain conditions precedent. Except for the Revolving Credit Loan, all other
borrowings (the "Term Loan") are due to be repaid in monthly installments
commencing November 1, 1998, with all outstanding balances due and payable on
March 15, 2001. Interest on the Amended Credit Facility is equal to Fleet's base
rate plus 1.0% on the Revolving Line and Fleet's base rate plus 1.25% on the
other borrowings under the Amended Credit Facility. To the extent borrowings
under the Revolving Credit Loan are less than the amount available to be
borrowed, the Company is obligated to pay a commitment fee of 0.5% per month on
the unborrowed amount. In addition, the Company is obligated to pay a quarterly
collateral administration fee of $5,000 and a restructuring fee of $50,000 due
March 31, 1999. Amounts repaid under the Term Loan cannot be reborrowed.
Among other conditions to the closing under the Amended Credit Facility was
a requirement that a third party loan $750,000 to the Company, subordinated to
the Company's indebtedness to Fleet, subject to certain exceptions. The
additional $600,000 loan by Fleet to the Company is also conditioned, among
other things, on an
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additional $750,000 loan to the Company, also subordinated to the Company's
indebtedness to Fleet, subject to certain exceptions. See St. James Transaction,
below, for a description of the Company's agreement with SJMB, L.P., whereby it
agreed to make these loans to the Company.
The Amended Credit Facility terminates and, subject to all prepayment
obligations, the outstanding balance is due and payable on March 15, 2001. The
Amended Credit Facility can be terminated by the Company prior thereto without
prepayment penalty at any time through April 30, 1999, and thereafter subject to
a prepayment penalty, under certain circumstances, declining from 2% during the
period May 1, 1999 through March 15, 2000 to 1% during the last year the Amended
Credit Facility is outstanding. The Amended Credit Facility is secured by a
senior and prior lien against substantially all the Company's real and personal
property, including the assets acquired from Phoenix Drilling Services, Inc.,
subject to certain exceptions.
The Amended Credit Facility includes a number of affirmative and negative
covenants including requirements as to providing Fleet with access to the
Company's facilities, financial and other information, a requirement that St.
James Capital Partners, L.P. and SJMB, LP (collectively "St. James") convert not
less than $4.9 million of indebtedness owed by the Company to St. James into
capital stock of the Company no later than September 30, 1999, restrictions on
mergers, consolidations, acquisitions, limitations on total indebtedness,
restrictions on liens, subject to certain exceptions, on its properties,
restrictions on transactions with affiliates and stockholders, prohibitions
against the payment of dividends and other distributions to stockholders,
restrictions on capital expenditures, dispositions of assets and sales of
subsidiary stock, among other covenants. Such covenants also prohibit the
Company from making payments on the Diamondback Note, except that the Company is
permitted to pay interest when due, subject to certain scheduled payments of
overdue interest, and is permitted to make principal payments out of funds
derived from the issuance of capital stock or the issuance of subordinated debt.
The Company also is prohibited from making any payment with respect to the $15.4
million owing to St. James, except that so long as no default exists under the
Amended Credit Facility, interest may be paid in kind. The Amended Credit
Facility contains a number of affirmative covenants requiring the Company to
maintain compliance with various financial matters, including the maintenance of
ratios of scheduled principal payments to adjusted net earnings plus
depreciation and amortization plus interest on subordinated debt, ratios of
EBITDA (as defined) to interest expense on senior debt, ratios of total
indebtedness to tangible net worth, and certain levels of adjusted tangible net
worth, among other things. Events of default under the Amended Credit Facility
include, among other things, the failure to
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pay principal and interest on the indebtedness under the Amended Credit Facility
when due, failure to pay any other indebtedness when due, making any
misrepresentations to Fleet in any of the loan documents, breach of the
covenants contained in the Amended Credit Facility or defaults under the
security documents under the Amended Credit Facility, defaults under the terms
of other indebtedness, adverse changes in the Company's financial condition or
prospects, insolvency and other bankruptcy proceedings, the failure of St. James
to own at least 55% of the Company's issued and outstanding capital stock (on a
fully diluted basis) prior to a secondary offering of the Company's securities,
or, pursuant to a secondary public offering of capital stock of the Company, at
least 30% of the Company's issued and outstanding capital stock, on a fully
diluted basis. In the event of a default under the Amended Credit Facility, at
the option of Fleet, all amounts thereunder become immediately due and payable
and Fleet would have the right as a secured lender to foreclose against
substantially all of the Company's assets. In addition, under the cross-default
provisions of the Amended Credit Facility, a default under other indebtedness of
the Company could result in a default under the Amended Credit Facility.
Reference is made to the Amended and Restated Loan and Security Agreement
filed as an Exhibit hereto for a complete statement of its terms and conditions.
St. James Transaction
On October 30, 1998, the Company entered into an Agreement for Purchase and
Sale (the "Note Purchase Agreement") with SJMB, L.P. ("SJMB"), a Delaware
limited partnership and an affiliate of St. James Capital Partners, L.P.,
whereby SJMB agreed to purchase and the Company agreed to sell up to $2.0
million principal amount of a convertible promissory note (the "Note") due on
March 16, 2001. Through October 30, 1998, the Company borrowed $1.25 million
under the Note Purchase Agreement and the balance of $750,000 is intended to be
borrowed. Payment of principal and interest on the Note is collateralized by
substantially all the assets of the Company, subject, however, to the terms of a
subordination agreement between SJMB and Fleet. The Note bears interest at 10%
per annum and is convertible into shares of the Company's Common Stock at a
conversion price of $2.25 per share, subject to anti-dilution adjustment for
certain issuances of securities by the Company at prices per share of Common
Stock less than the conversion price then in effect, in which event the
conversion price is reduced to the lower price at which such shares were issued.
Pursuant to the Note Purchase Agreement, the Company has agreed to issue to SJMB
for nominal consideration warrants (the "Warrant") to purchase shares of Common
Stock exercisable at a price of $2.25 per share, subject to anti-dilution
adjustment for
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certain issuances of securities by the Company at prices per share of Common
Stock less than the exercise price then in effect, in which event the exercise
price is reduced to the lower price at which such shares were issued and the
number of shares issuable is adjusted upward. St. James will be issued warrants
to purchase 666 shares of Common Stock for each $1,000 borrowed under the Note
Purchase Agreement, or a maximum aggregate of warrants to purchase 1,333,333,
shares. The shares issuable on conversion of the Note and exercise of the
Warrant have demand and piggy-back registration rights under the Securities Act
of 1933. The Note Purchase Agreement grants St. James certain preferential
rights to provide future financings to the Company, subject to certain
exceptions. The Note contains various affirmative and negative covenants,
including, among others, a prohibition against the Company consolidating,
merging or entering into a share exchange with another person, with certain
exceptions, without the consent of St. James. Events of default under the Note
include, among other events, (i) a default in the payment of principal or
interest on the Note; (ii) a default in the performance of any covenant of the
Note Purchase Agreement or other agreement entered into in connection therewith
and the failure to cure such default; (iii) any representation or warranty of
the Company in the Note Purchase Agreement or other agreement entered into in
connection therewith being untrue in any material respect and such default
remains uncured; (iv) the Company defaults in the payment when due or by
acceleration of any other indebtedness having an aggregate principal amount
outstanding in excess of $100,000 and such default remains uncured; (v) a
judgment for the payment of money in excess of $100,000 is entered against the
Company; (vi) certain bankruptcy or insolvency proceedings; (vi) any person or
group of persons acquiring 40% or more of the voting power of the Company's
outstanding shares who was not the owner as of October 30, 1998; and (vii) a
merger of the Company with another person, its dissolution or liquidation or a
sale of all or substantially all its assets. A default under the SJMB note would
be a default under the notes issued to St. James Capital Partners, L.P. in June
and October 1997 and in January 1998. SJMB will receive an origination fee of 2%
of the amount borrowed in connection with the transaction.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) None required.
(b) None required.
(c) Exhibits:
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
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10.1 Amended and Restated Loan and Security
Agreement dated October 30, 1998 between the
Company and Fleet Capital Corporation
10.2 Agreement for Purchase and
Sale dated October 30, 1998
between the Company and SJMB,
L.P.
10.3 Promissory Note dated October 30, 1998 in the
principal amount of $2.0 million issued by the
Company to SJMB, L.P.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BLACK WARRIOR WIRELINE CORP.
Dated: November 13, 1998 By: /s/ William L. Jenkins
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William L. Jenkins, President