Business Context and Reporting Period
Company: Nabors Industries Ltd.
Filing Type: Form 8-K (Current Report)
Date of Report: September 13, 2019
Reporting Period: Event date of September 13, 2019
This filing reports the entry into a material definitive agreement involving a new financing facility. The Company is incorporated in Bermuda and trades on the NYSE under the symbols NBR and NBR.PRA.
Key Financial Metrics and Facility Details
Facility Size: $250 million accounts receivables purchase facility.
Term: Initial term of 23 months, extendable by mutual agreement.
Interest Rate Structure: Yield Rate equals LIBOR Market Index Rate (LMIR) plus an Applicable Margin.
Default Rate: In the event of termination, the rate becomes 2.00% per annum plus the greater of the standard Yield Rate or the Alternative Base Rate plus the Applicable Margin.
Alternative Base Rate: Highest of (i) Prime Rate, (ii) Federal Funds Rate + 0.50%, or (iii) LMIR + 1.00%.
Note: This filing does not provide specific revenue, profit, cash flow, margin, or existing debt figures for the Company. It focuses solely on the terms of the new facility.
Material Changes and Transaction Structure
- New Financing Arrangement: Subsidiaries entered into a Receivables Purchase Agreement and a Receivables Sale Agreement.
- Parties Involved:
- Seller: Nabors A.R.F., LLC (NARF), a special purpose entity and indirect wholly-owned subsidiary.
- Purchasers: Nabors Industries, Inc. (Nabors Delaware) and other purchasers.
- Administrative Agent: Wells Fargo Bank, N.A.
- Originators: Certain operating subsidiaries of the Company.
- Mechanism: Originators sell/contribute trade receivables to NARF in exchange for cash and subordinated notes. NARF then sells undivided interests in these receivables to Purchasers for cash.
- Servicing: Nabors Delaware or its subsidiaries act as the servicer, administering and collecting receivables for a fee consistent with unrelated third-party rates.
Management Commentary, Risks, and Contingencies
Guarantees and Indemnification: The Company has guaranteed the indemnification obligations of Nabors Delaware and the Originators under an Indemnification Agreement with Wells Fargo Bank, N.A.
Limitations on Guarantee: The Company is not responsible for failures resulting from receivables being uncollectible due to the insolvency, bankruptcy, or lack of creditworthiness of the underlying obligor.
Risks and Conditions:
- Purchases are subject to eligibility criteria, limits, and reserves.
- The agreement includes customary Events of Termination, upon which the Administrative Agent may declare a Termination Date and exercise remedies.
- The facility is subject to customary fees and conditions.
Outlook: The filing does not contain forward-looking guidance or management commentary regarding future financial performance beyond the terms of this specific facility.
Investor Verification Checklist
- Verify the specific "Applicable Margin" percentage, which is referenced but not defined in the summary text (likely detailed in the full Facility Agreements).
- Review the full text of Exhibits 10.1, 10.2, and 10.3 for detailed eligibility criteria and reserve requirements.
- Assess the impact of the 23-month term on the Company's liquidity planning and refinancing needs.
- Confirm the extent of the Company's exposure to credit risk given the exclusion of insolvency-related uncollectible receivables from the guarantee.