Each one in plain English, with the numbers worked through for a shareholder.
31 July 2018business combination● NeutralMajor
The company filed a preliminary proxy statement asking shareholders to vote on the Sidewinder merger: approving the issuance of 36,752,657 new shares to Sidewinder's holders, and raising authorized common stock from 100,000,000 to 200,000,000 shares. The meeting date and record date are still blank, and 38,252,765 shares are currently outstanding. The share issuance is a condition of closing; the charter increase depends on the share issuance being approved and the merger closing.
On July 31, 2018 the company filed financial statements for the Sidewinder deal: pro forma combined figures for ICD, plus Sidewinder's audited 2015-2017 and unaudited Q1 2018 statements. It describes Sidewinder as owning 15 AC rigs and four modern 1500hp SCR rigs in the Permian or Haynesville, plus five smaller rigs ICD will keep as spare equipment, and 11 mechanical rigs in the Utica and Marcellus that ICD agreed can be sold, with the net proceeds going to Sidewinder's former unitholders. The merger is still pending approvals.
This appears to be a second filing of the July 18, 2018 report on the Sidewinder merger, with the same terms: 36,752,657 new ICD shares plus a share of any mechanical rig sale proceeds to Sidewinder's Series A holders, about $58.5 million of first lien notes repaid by ICD, and a $6.0 million termination fee in specified cases. It adds nothing new to the first filing's merger terms.
A follow-up filing carrying communications about the Sidewinder merger: the CEO's email to ICD employees, a letter from Sidewinder's CEO Anthony Gallegos to its employees, and the transcript of the July 19, 2018 conference call. It adds no new deal terms in its own text; the substance is in the merger agreement filing.
On July 18, 2018 the company agreed to acquire Sidewinder Drilling by merger. Sidewinder's Series A holders (including its noteholders after they swap notes for units) get 36,752,657 new ICD shares plus a share of net proceeds from any sale of specified mechanical rigs, and ICD will pay off about $58.5 million of remaining Sidewinder first lien notes. Closing needs ICD shareholder approval, antitrust clearance, NYSE listing of the new shares and at least $30 million of pro forma liquidity; a $6.0 million termination fee applies in specified cases. Under a stockholders' agreement, MSD affiliates get two board seats on a seven-member board, with a new CEO also to join. Existing shareholders face heavy dilution from the new shares (inference from the share count; the filing does not state the percentage).
On July 14, 2017 the company amended and restated its CIT credit facility again, keeping commitments at $85 million, extending maturity two years to November 5, 2020 and adding a $65 million uncommitted accordion. Pricing is unchanged; covenants were reset (rig utilization 70% in 2017 and 75% after, not tested when borrowings are under $30 million). At June 30, 2017 borrowings were $39.0 million against a $89.7 million borrowing base. The filing also furnishes investor presentation materials for meetings on July 18-19, 2017.
On April 20, 2016 the company agreed to sell 11,500,000 new common shares at $3.50 each through underwriters led by Morgan Stanley; the underwriters exercised an option for 1,725,000 more shares. Net proceeds of about $43.0 million were used to repay revolving credit facility debt, with the rest for general corporate purposes. This issues new shares, diluting existing holders, and is an equity raise of more than the $10 million that the April 2016 credit amendment tied to avoiding a rate increase.
The company gave preliminary (unreviewed) first-quarter 2016 estimates: revenue of $22.2-22.5 million, a net loss of $0.4-0.7 million and Adjusted EBITDA of $7.3-7.4 million. At quarter-end five rigs were operating, four earned standby-without-crew revenue, one earned early-termination revenue and two were idle; credit facility borrowings were about $62.7 million against a borrowing base of about $86.4 million.
On April 14, 2016 the company signed a Fourth Amendment to its CIT credit facility, cutting commitments from $125 million to $85 million while keeping the $25 million uncommitted accordion. It adds a $10 million-per-year capital spending limit that applies only when rig utilization is below 80%, and raises interest by 0.5% from September 30, 2016 unless the company raises $10 million of additional equity by then. At March 31, 2016 the company's leverage ratio was about 1.8x and utilization about 86%.
On October 20, 2015 the company signed a Third Amendment to its CIT credit facility, cutting commitments from $155 million to $125 million, with pricing and maturity unchanged. It also reset the leverage, rig utilization (60% in 2016, 70% in 2017) and fixed charge covenants. This follows the March 2015 amendment and a Second Amendment dated April 17, 2015, and reverses the November 2014 increase in commitments.
This amendment to the April 2015 auditor-change filing only corrects an error in Exhibit 16.1, which referenced a Form 8-K dated April 7 instead of April 1. The auditor change itself (PwC dismissed, BDO engaged) is unchanged.
On April 1, 2015 the company dismissed PricewaterhouseCoopers as auditor, with Audit Committee approval, and on April 6 engaged BDO USA. The filing states PwC's reports for 2013 and 2014 were unqualified and there were no disagreements.
On March 4, 2015 the company amended the CIT credit facility (First Amendment). It changed the definition of eligible rigs to cover rigs on standby at a customer's request, and lowered the required rig utilization ratio from 80% to 60% for 2015, 70% for 2016 and 80% from January 2017. This loosens a covenant in the November 2014 facility.
On November 5, 2014 the company amended and restated its credit facility with lenders led by CIT Finance, raising commitments from $125 million to $155 million, with a further uncommitted $25 million accordion and a maturity of November 5, 2018. Borrowing is limited by a formula tied to receivables and the value of owned rigs; interest is LIBOR plus 4.5% (or a base rate plus 3.5%), and the facility is secured by substantially all company assets.
