ProFrac Holding Corp. Completes Refinancing of Senior Secured Term Loan and Enhances Financial Flexibility
Summary
Refinances the existing Term Loan due with a term loan credit facility and senior secured notes with maturities in Cash neutral transaction that also positions the Company to maintain liquidity to fund working capital for expected increased activity in 2024 Provides a bifurcated capital structure to allow for future optionality designed to realize the full value potential of the proppant segment Eliminates any material near-term maturities and provides additional runway to de-lever Enables ProFrac to focus on the 2024 strategy where it plans to increase utilization of its proppant and stimulation assets through a more diversified commercial approach First Financial Term Loan and REV Seller Note fully repaid as part of the transaction ABL Credit Facility amended to lower the lines capacity to fromMatt Wilks, ProFracs Executive Chairman, stated, "We are pleased to announce this successful refinancing, which not only extends our near-term debt maturities into 2029, but it also provides us with the financial flexibility to opportunistically take advantage of the anticipated ramp in activity levels in the coming year. "This is an important and necessary step for ProFrac as we execute the improvements made to the business and demonstrate the cash generation potential in 2024. This refinancing transaction provides the Company with a more stable financial platform, a strengthened balance sheet, a bifurcated capital structure and ample liquidity from which it will continue executing various growth-related and value realization opportunities. Additional details on these debt arrangements are as follows:These loans were made to ProFracs family of wholly owned subsidiaries that hold and run ProFracs proppant business, including Alpine Holding II, LLC ("Alpine Holding") and PF Proppant Holding, LLC ("PFP Holding") among others Lenders made certain term loans to PFP Holding in the aggregate principal amount of Guaranteed by ProFrac pursuant to the Unsecured ProFrac Guarantee Agreement and are guaranteed by Alpine Holding, PFP Holding and the Subsidiary Guarantors pursuant to the Alpine Guarantee Agreement Obligations under the Alpine Term Loan are secured by a lien on and security interest in substantially all of the assets of Alpine Holding, PFP Holding and the Subsidiary Guarantors, which holds ProFracs Proppant business The Alpine Term Loan bears a floating interest rate at the borrowers option of either a Base Rate or SOFR Rate plus an applicable margin Base Rate Loans bear interest at a fluctuating per annum rate equal to the base rate plus a margin of 7.25% per annum subject to both a floor and maximum rate SOFR Rate Loans bear interest at a fluctuating per annum rate equal to the adjusted term SOFR for a one-month interest period plus a margin of 7.25% per annum subject to both a floor and maximum rate Mandatory principal payments commence at the end of the calendar quarters ending , and , in an amount equal to on each such date followed by quarterly payments of The stated maturity date for the Alpine Term Loans is the earlier of or the date it becomes due and payable ProFrac Holdings II, a wholly-owned subsidiary of ProFrac, issued and sold aggregate principal amount of its Senior Secured Floating Rate Notes due 2029 in a private placement to institutional investors The Secured Notes bear interest at a fluctuating per annum rate equal to adjusted term SOFR plus the Applicable Margin (as defined in the Indenture) payable quarterly beginning on Obligations under the Secured Notes are secured by ProFrac Holdings II, which holds ProFracs Services business Mandatory prepayments of on each of , and , and at the end of each calendar quarter thereafter On and after , ProFrac Holdings II may redeem all or a part of the Secured Notes at certain redemption prices outlined in the associated 8-K to this transaction Maximum Revolver Amount is decreased ratably among the Lenders from to Alpine Holding and its Subsidiaries are designated as Excluded Subsidiaries and Unrestricted Subsidiaries (each as defined therein) Liens held by the lenders on the assets of the Alpine Excluded Subsidiaries, and all guarantees of the obligations under ABL Credit Facility made by the Alpine Excluded Subsidiaries, are released, terminated and discharged The ABL Credit Facility has a maturity date of the earlier of and 91 days prior to the maturity of any material indebtednessPiper Sandler & Co acted as the sole financial advisor, and Gibson, Dunn & Crutcher LLP and Brown Rudnick LLP acted as legal counsel to ProFrac in connection with the refinancing.ProFrac Holding Corp. is a technology-focused, vertically integrated, innovation-driven energy services holding company providing hydraulic fracturing, proppant production, other completion services and other complementary products and services to leading upstream oil and natural gas companies engaged in the exploration and production ("E&P") of North American unconventional oil and natural gas resources throughout the United States. ProFrac is focused on employing new technologies to significantly reduce "greenhouse gas" emissions and increase efficiency in what has historically been an emissions-intensive component of the unconventional E&P development process.