HOUSTON, June 28, 2021 /PRNewswire/ -- U.S. Well
Services, Inc. (the "Company", "U.S. Well Services" or "we")
(NASDAQ: USWS) today announced it has entered into a series of
strategic transactions that position the Company to execute on its
previously announced strategic plan to grow and become a
fully-electric hydraulic fracturing services provider. U.S.
Well Services issued $125.5 million
of 16.0% Convertible Senior Secured (Third Lien) PIK Notes due
June 2026 (the "Notes") in a private
placement to institutional investors (the "Private
Placement"). In connection with the Private Placement, the
Company sold $64.0 million of Notes
convertible into U.S. Well Services Class A Common Stock (the "Cash
Notes") and $22.5 million of Notes
convertible into licenses to ProFrac Manufacturing, LLC
("ProFrac") to build three hydraulic fracturing fleets using the
Company's Clean Fleet® technology (the "License Notes"). U.S.
Well Services has also taken substantial steps towards simplifying
the Company's capital structure. The Company exchanged
$39.0 million of its Series A
Redeemable Convertible Preferred Stock for $39.0 million of newly issued Notes convertible
into U.S. Well Services Class A Common Stock (the "Exchange
Notes"). Additionally, the Company expects to amend the
Certificate of Designations for its Series B Redeemable Convertible
Preferred Stock (the "Series B"), which would allow U.S. Well
Services to convert all outstanding shares of the Series B.
Following entry of the final judgment by the Superior Court of
Delaware in the Smart Sand v.
U.S. Well Services LLC litigation awarding Smart Sand
approximately $52 million, the
Company agreed to settle the case for $35.0
million in cash and the entry into an agreement to provide
Smart Sand certain rights of first refusal related to the supply of
frac sand (the "Settlement"). Proceeds from the Private
Placement will be used to fund the cash portion of the Settlement
and to fund capital expenditures related to four Nyx Clean
Fleets® and place deposits on critical items for two
additional Nyx Clean Fleets®, as well as for general corporate
purposes. These capital expenditures are expected to enable
the Company to grow its asset portfolio up to 11 all-electric
fleets representing approximately 593,500 hydraulic horsepower.
Key Transaction Highlights:
- Entered into a series of transactions that simplify the
Company's capital structure, improve liquidity, resolve litigation
overhang and provide funds to grow the Clean Fleet® asset base
- Issued an aggregate of $103.0
million of Cash Notes and Exchange Notes convertible into
U.S. Well Services Class A Common Stock at a weighted average
conversion price of $1.42 per
share
- Received a commitment from an investor to purchase an
additional $5.0 million of Cash Notes
in a subsequent transaction, subject to certain conditions
- Cash Notes and Exchange Notes accrue PIK interest at 16% and
are convertible for U.S. Well Services Class A Common Stock
- After 12 months and (a) so long as no shares of Series A
Redeemable Convertible Preferred Stock or Series B Redeemable
Convertible Preferred Stock are outstanding and (b) the 20-day
volume-weighted average trading price for U.S. Well Services Class
A Common Stock is in excess of $2.00
per share for 10 of 20 trading days, the Company may elect to
convert the Cash Notes and Exchange Notes into Class A Common Stock
at their respective conversion prices
- $22.5 million of License Notes
purchased by ProFrac are convertible into three licenses to build
and operate three fleets using U.S. Well Services' Clean Fleet®
technology for $7.5 million per
license
- Concurrent with the closing of this transaction, ProFrac
converted all three licenses underlying the License Notes
- ProFrac will also have the option to purchase seven additional
licenses for $7.5 million each, and
thereafter, ten additional licenses for $9.0
million each
- In total, the sale of Cash Notes and License Linked Notes is
expected to generate approximately $91.5
million of gross proceeds, of which $35.0 million will be used to fund the cash
portion of the Settlement, and the remainder will be used for
growth capital expenditures related to Nyx Clean Fleets® and
general corporate purposes
- The Company expects to amend the Certificate of Designations
for the Series B, which would allow the Company to convert all
outstanding shares of the Series B at the conversion price of
$0.308 per share (the "Series B
Conversion Price") if U.S. Well Services' Class A Common Stock is
above the Series B Conversion Price for 20 trading days during any
30 consecutive trading day period from June
24, 2021 to December 31,
2021
- If the Company elects to convert the Series B, holders of the
Series B will receive an additional number of shares equal to the
aggregate amount of Series B Dividends that such holder's converted
shares would have accrued if such shares were converted as of
April 1, 2022
- Under the Amended Senior Secured Term Loan Facility the Company
is able to build up to four new Clean Fleet® hydraulic fracturing
fleets as well as purchase critical components for two additional
fleets
- Pursuant to the April 2020
amendment to the Senior Secured Term Loan Facility, the interest
rate was set to 0.0% per annum during the period from April 1, 2020 through March 31, 2022, after which the Senior Secured
Term Loan Facility was set to resume accruing interest at the
applicable benchmark rate, subject to a 2.0% floor, plus an
applicable margin of 8.25% per annum
- Under the terms of the June 2021
Amended Senior Secured Term Loan Facility, on January 1, 2022, the principal amount will resume
incurring interest at the applicable benchmark rate, subject to a
2.0% floor, plus an applicable margin of 8.25% per annum, subject
to the exceptions set forth below designed to incentivize the
reduction of indebtedness
-
- If the outstanding principal amount on the Senior Secured Term
Loan Facility is equal to or less than $132.0 million but greater than $110.0 million on December
31, 2021, the interest rate shall be 0.0% per annum from
January 1, 2022 through March 31, 2022
- If the outstanding principal amount of the Senior Secured Term
Loan Facility is equal to or less than $110.0 million on December
31, 2021, the interest rate shall be 0.0% per annum from
January 1, 2022 through March 31, 2022 and 2.0% per annum from
April 1, 2022 through December 31, 2022
- If on April 1, 2022 the
outstanding principal amount of the Senior Secured Term Loan
Facility is equal to or less than $103.0
million, the interest rate shall be 1.0% per annum from
April 1, 2022 through December 31, 2022
"Although we were disappointed by the Superior Court of
Delaware's decision in our
litigation with Smart Sand, U.S. Well Services is pleased to have
resolved this matter and looks forward to strengthening our balance
sheet and resuming the execution of our strategic plan," commented
Joel Broussard, U.S. Well Services'
President and CEO. "With this Private Placement, U.S. Well
Services has not only simplified our capital structure and secured
funds to begin the development of our new Nyx Clean
Fleet® pumps, but also confirmed the value of our intellectual
property through the licensing agreement with ProFrac."
Simmons Energy, A Division of Piper
Sandler, acted as exclusive financial advisor to the Special
Committee of the Board of Directors for U.S Well Services, Inc.
This press release is neither an offer to sell nor a
solicitation of an offer to purchase the securities described
herein.
About U.S. Well Services, Inc.
U.S. Well Services, Inc. is a leading provider of hydraulic
fracturing services and a market leader in electric fracture
stimulation. The Company's patented electric frac technology
provides one of the first fully electric, mobile well stimulation
systems powered by locally supplied natural gas including field gas
sourced directly from the wellhead. The Company's electric frac
technology dramatically decreases emissions and sound pollution
while generating exceptional operational efficiencies including
significant customer fuel cost savings versus conventional diesel
fleets. For more information visit: www.uswellservices.com.
The information on our website is not part of this release.
Forward-Looking Statements
The information above includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts,
included herein concerning, among other things, the private
placement and the use of proceeds and the expected impact of the
transactions on the Company's financial position and prospects, if
at all, are forward-looking statements. These forward-looking
statements may be identified by their use of terms and phrases such
as "may," "expect," "believe," "intend," "estimate," "project,"
"plan," "may," "anticipate," "will," "should," "could," and similar
terms and phrases. Although the Company believes that the
expectations reflected in these forward-looking statements are
reasonable, they do involve certain assumptions, risks and
uncertainties. These forward-looking statements represent the
Company's current expectations or beliefs concerning future events,
and it is possible that the results described in this release will
not be achieved. These forward-looking statements are subject to
certain risks, including the ability and willingness of the
Organization of Petroleum Exporting Countries ("OPEC") and non–OPEC
countries, such as Russia, to set
and maintain production levels and prices for oil, and the impact
of epidemics, pandemics or other major public health issues, such
as the COVID–19 coronavirus, as well as the other risks,
uncertainties and assumptions identified in this release or as
disclosed from time to time in the Company's filings with the
Securities and Exchange Commission (the "SEC"). Factors that could
cause actual results to differ from the Company's expectations
include changes in market conditions and other factors described in
the Company's public disclosures and filings with the SEC,
including those described under "Risk Factors" in its annual report
on Form 10-K filed on March 11, 2021
and in our quarterly reports on Form 10-Q. As a result of these
factors, actual results may differ materially from those indicated
or implied by forward-looking statements.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, the Company does
not undertake any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. New factors emerge from time to time,
and it is not possible for us to predict all such factors.
Contacts:
U.S. Well Services
Josh Shapiro
Vice President, Finance and Investor Relations
IR@uswellservices.com
Dennard Lascar Investor
Relations
Lisa Elliott
(713) 529.6600
USWS@dennardlascar.com
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SOURCE U.S. Well Services, Inc.