FTS International to Raise $350 Million of New Equity
FORT WORTH, Texas--(BUSINESS WIRE)--FTS International, Inc. today announced that it has received commitments to raise $350 million of new equity capital from existing stockholders, with the proceeds to be used to pay down existing debt. This new capital raise is part of an overall program of FTSI to strengthen its financial position and balance sheet, and provide flexibility for potential future expansion into international markets, such as Brazil, Middle East, China and Indonesia. FTSI believes this new capital raise and related debt reduction will better position the company to broaden its service offerings into areas such as wireline, water treatment and other ancillary services.
As part of this overall equity capital raising, FTSI is seeking the consent of lenders to amend its existing senior secured term loan in order to (i) suspend the maximum leverage ratio until the third quarter of 2014 and replace it with a minimum quarterly EBITDA covenant beginning in the fourth quarter of 2012, (ii) beginning in the third quarter of 2014, increase the maximum leverage ratio from the level that would otherwise apply, (iii) suspend the interest coverage ratio for the third quarter of 2012 and, thereafter, reduce the ratio from the level that would otherwise apply, (iv) increase FTSI’s and its subsidiaries’ ability to enter into joint ventures, make acquisitions, incur indebtedness, enter into hedging arrangements and grant related liens, engage in affiliate transactions and sell assets, (v) reduce the annual limits on capital expenditures, and (vi) make certain other modifications, all as more fully described in materials relating to the term loan amendment that are being distributed to lenders under the term loan.
The amendments to the term loan are conditioned on a principal repayment of $200 million. FTSI will raise the $350 million of new equity capital through an offering of convertible preferred stock to its existing stockholders. The proceeds of the offering will be used to fund the required principal repayment and to fund the redemption of up to 35 percent of the outstanding 7.125% Senior Notes due 2018 issued by FTS International Services, LLC, a Texas limited liability company and indirect wholly owned subsidiary of the FTSI (“FTSI Services”), and FTS International Bonds, Inc., a Delaware corporation and wholly owned subsidiary of FTSI Services.
This press release is neither an offer to sell nor the solicitation of an offer to buy any securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which, or to any persons to whom, such an offer, solicitation or sale is unlawful.
FTS International (www.ftsi.com) is a leading provider of well completion services for the oil and gas industry. Exploration and production companies use FTSI’s products and services primarily to enhance their recovery rates from oil and gas wells. FTSI’s vertical integration provides a competitive edge, as the company custom manufactures, assembles and produces many key components used in its operations, including high-pressure hydraulic pumps and mobile pressure pumping units. FTSI also owns and operates sand mines and processing facilities for producing proppants, and offers cased-hole wireline services.