Business Context and Reporting Period
Company: Weatherford International Plc (Irish public limited company)
Filing Type: Form 8-K (Current Report)
Date of Report: June 26, 2017
Event Date: June 26, 2017 (Agreement); June 29, 2017 (Closing)
This filing reports the entry into a Material Definitive Agreement and the creation of a Direct Financial Obligation. Weatherford International Ltd (Weatherford Bermuda), an indirect wholly-owned subsidiary, entered into a Purchase Agreement with Morgan Stanley & Co. LLC to issue additional senior notes.
Key Financial Metrics and Transaction Details
- Transaction Type: Private placement of additional senior notes.
- Instrument: 9.875% Senior Notes due 2024 ("New Notes").
- Aggregate Principal Amount: $250 million.
- Use of Proceeds: Repayment of amounts outstanding under the Company's revolving credit facility.
- Existing Debt: The New Notes are identical in terms to $540 million of Initial Notes issued in November 2016.
- Financial Performance: The filing text does not provide revenue, profit, cash flow, margin, or liquidity metrics for the reporting period.
Material Changes and Obligations
The primary material change is the increase in long-term debt obligations by $250 million. The Notes Offering closed on June 29, 2017. The New Notes were sold on a private placement basis in reliance on Section 4(a)(2) of the Securities Act and Rule 144A and Regulation S.
Registration Rights: A Registration Rights Agreement was executed on June 29, 2017. Weatherford Bermuda agreed to file a registration statement to permit an exchange offer for the New Notes no later than December 23, 2017. Failure to comply may result in additional interest payments (initially 1.0%, increasing annually).
Guidance, Risks, and Unusual Items
- Related Party Transactions: An affiliate of Morgan Stanley is a lender under the Credit Facility and will receive a portion of the net proceeds from the Notes Offering due to the repayment of borrowings. Morgan Stanley and its affiliates have performed commercial and investment banking services for the Company.
- Risks: The filing notes that the Purchase Agreement contains customary representations, warranties, and covenants. The description of the Registration Rights Agreement is qualified by reference to the full text of the agreement.
- Guidance: The filing text does not provide forward-looking guidance, management commentary on future operations, or specific risk factors beyond the transaction terms.
Investor Verification Checklist
- Verify the total outstanding principal of the 9.875% Senior Notes due 2024 (Initial Notes + New Notes) now totals $790 million.
- Confirm the impact of the $250 million debt issuance on the Company's leverage ratios and liquidity position.
- Review the full text of the Registration Rights Agreement (Exhibit 4.2) to understand the specific penalties for failing to file the exchange offer registration by December 23, 2017.
- Assess the extent of the relationship with Morgan Stanley, including their role as a lender under the Credit Facility and the fees received for banking services.
- Check subsequent filings for the actual reduction in the revolving credit facility balance following the use of proceeds.