Business Context and Reporting Period
This Form 8-K Current Report was filed by Nabors Industries Ltd. on November 23, 2021, regarding events occurring on November 18 and November 23, 2021. The filing details the entry into a material definitive agreement and the creation of a direct financial obligation by Nabors Industries, Inc. ("NII"), a subsidiary of Nabors Industries Ltd.
Key Financial Metrics
- Debt Issuance: NII sold $700 million aggregate principal amount of 7.375% Senior Priority Guaranteed Notes due 2027.
- Net Proceeds: Approximately $688.9 million received after deducting estimated offering commissions and net expenses.
- Interest Rate: 7.375% per annum.
- Maturity Date: May 15, 2027.
- Use of Proceeds: Approximately $457.5 million designated to repay amounts outstanding under the Revolving Credit Facility; the remainder for general corporate purposes.
Material Changes
The primary material change is the expansion of the company's capital structure through the issuance of new senior unsecured debt. This transaction reduces the outstanding balance of the company's Revolving Credit Facility by approximately $457.5 million. The Notes are fully and unconditionally guaranteed by Nabors Industries Ltd. and various subsidiaries, ranking pari passu with existing unsubordinated debt but effectively junior to secured obligations.
Guidance, Outlook, and Terms
The filing does not provide updated financial guidance or management commentary on future operational outlook. However, it outlines specific terms regarding the new debt:
- Redemption Rights: Prior to May 15, 2024, NII may redeem the Notes at a "make-whole" premium. On or after May 15, 2024, redemption is permitted at specified declining prices. NII may also use equity offering proceeds to redeem up to 35% of the Notes prior to May 15, 2024, at 107.375% of the principal amount.
- Change of Control: In the event of a Change of Control Triggering Event, holders may require NII to purchase the Notes at 101% of the principal amount plus accrued interest.
- Covenants: The Indenture includes customary covenants limiting the ability to incur liens, enter into sale and leaseback transactions, incur additional debt, and engage in asset transfers, subject to significant exceptions.
Investor Verification Checklist
- Verify the exact amount of the Revolving Credit Facility remaining after the $457.5 million repayment.
- Review the full text of the Indenture (Exhibit 4.1) to understand the specific exceptions to the debt incurrence and lien covenants.
- Confirm the list of subsidiaries acting as Guarantors and their respective subordination agreements regarding the Lower Tier Notes Guarantors.
- Assess the impact of the 7.375% interest rate on future interest expense compared to the cost of the repaid Revolving Credit Facility.