UNITED STATES 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): August 18, 2006
NEWPARK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
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| Delaware
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1-2960
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72-1123385 |
(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.) |
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3850 North Causeway, Suite 1770
Metairie, Louisiana
(Address of principal executive offices)
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70002
(Zip Code) |
Registrant’s telephone number, including area code: (504) 838-8222
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13a-4(c)) |
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
On August 18, 2006, Newpark Resources, Inc. and certain of its domestic subsidiaries entered
into an agreement for a Term Loan Facility with certain lenders, JPMorgan Chase Bank, N.A., as
administrative agent, and Wilmington Trust Company, as collateral agent. The Term Loan Facility is
in the aggregate face amount of $150.0 million, has a five-year term and an initial interest rate
of LIBOR plus 3.25%, based on Newpark’s corporate family ratings of B1 by Moody’s and B+ by
Standard & Poor’s. Newpark will draw down on the entire Term Loan Facility on September 22, 2006,
concurrently with its redemption of its outstanding 8 5/8% Senior Subordinated Notes in the
principal amount of $125.0 million plus accrued interest, as described below in Item 2.04. The
maturity date of the Term Loan Facility is August 18, 2011.
Borrowings can be made under the Term Loan Facility at the prime rate plus a spread or at
Libor plus a spread. The amount of the spread is determined by Newpark’s Corporate Family Ratings
as issued by Moody’s and Standard & Poor’s. Interest is payable either quarterly or at the
maturity of each Libor loan, but not less than quarterly. Principal on the Term Loan Facility will
be repaid in quarterly installments of $375,000. In addition, there will be an annual principal
reduction equal to 25% to 50% of excess cash flow, as defined in the Term Loan Facility. The
amount of the excess cash flow is based upon Newpark’s consolidated leverage ratio. The Term Loan
Facility is subject to a fixed charge coverage ratio and consolidated leverage ratio covenant.
Newpark is required to supply the administrative agent with Quarterly Reports on Form 10-Q and
Annual Reports on Form 10-K under the Term Loan Facility. Until Newpark is current on its periodic
filings with the Securities and Exchange Commission, Newpark must supply monthly reports to the
administrative agent. The term loan also limits Newpark’s ability to incur additional debt, pay
dividends and repurchase its outstanding common stock.
Under the terms of the agreement that governs the Term Loan Facility, Newpark must, within 180
days after the Borrowing Date as defined in the agreement, enter into and maintain rate management
transactions, such as interest rate swap arrangements, to provide that at least 50% of the
aggregate principal amount borrowed under the Term Loan Facility is subject to either a fixed
interest rate or interest rate protection for a period of not less than three years.
Proceeds from the Term Loan Facility will be used primarily to consolidate approximately
$144.5 million of existing debt, including the redemption of the Notes described above, to pay
transaction costs and provide additional liquidity. The Term Loan Facility will be a senior
secured obligation of Newpark and will be secured by first liens on all of Newpark’s tangible and
intangible assets, excluding its accounts receivable and inventory, and by a second lien on
accounts receivable and inventory. The Term Loan Facility will be callable at face value, except
for a 1% call premium if called at any time during the first year. As a result of the retirement
of existing debt, Newpark will record a charge in the third quarter of approximately $1.2 million
related to unamortized debt issuance costs and prepayment penalties.
The Term Loan Facility was well received in the market, as indicated by a significant
over-subscription.
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J.P. Morgan Securities Inc. served as sole lead arranger and sole bookrunner for Newpark.
Other than in respect of the agreement governing the Term Loan Facility, no material relationship
exists between Newpark or its affiliates and any of the parties to that agreement. This summary of
the Term Loan Facility is qualified in its entirety by the text of that agreement, a copy of which
is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated herein by
reference.
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| Item 2.03 |
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant. |
The disclosure set forth above under Item 1.01 is hereby incorporated by reference into this
Item 2.03.
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| Item 2.04 |
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Triggering Events that Accelerate or Increase a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement. |
On August 18, 2006, Newpark Resources, Inc. sent a notice of redemption to the trustee of the
holders of Newpark’s 8 5/8% Senior Subordinated Notes. Pursuant to this notice of redemption,
Newpark set a redemption date of September 22, 2006. On the redemption date, Newpark will
voluntarily redeem $125.0 million principal amount of its Notes plus accrued interest, in
accordance with the terms of the indenture governing the Notes. As disclosed above under Item
1.01, Newpark intends to use a portion of the net proceeds from its Term Loan Facility to fund this
redemption.
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| Item 9.01 |
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Financial Statements and Exhibits. |
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10.1 |
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Term Credit Agreement, dated as of August 18, 2006, by and among Newpark
Resources, Inc., certain of its domestic subsidiaries, certain lenders, JPMorgan Chase
Bank, N.A., as administrative agent, and Wilmington Trust Company, as collateral agent. |
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