Weatherford International plc – Court Approves Exit Facility Commitment Letter and Fee Letters

November 12, 2019 – The Court hearing the Weatherford International cases has authorized the Debtors to enter into (i) a November 11, 2019 commitment letter and (ii) a series of fee letters; in each case relating to the Debtors' anticipated exit financing [Docket No.433, which attaches an executed version of the commitment letter, although the fee letters are filed under seal. Curiously, fee information is, however, disclosed in an 8-K as described below]. The order also attaches a pair of term sheets which outline the exit financing which is to be comprised of (a) a senior secured LC credit facility in an aggregate amount of up to $200.0mn, but not less than $105.0mn (the “LC Facility”) and (b) a senior secured ABL revolving credit facility in an aggregate amount of up to $450.0mn (the “ABL Facility” and together with the “LC Facility,” the “Facilities”).

Key Terms of the Facilities:

The LC Facility

• FacilityType and Amount: A 4.5-year committed facility for the issuance of bid, performance and other non-financial letters of credit ("Letters of Credit") by the Issuing Banks for the account of the Parent, the Borrowers and their restricted subsidiaries as applicants in the aggregate amount outstanding at any time of up to $200.0mn (the ‘Commitment Amount’).
  
• Borrowers: Weatherford International plc ("Weatherford plc" or the "Parent"), Weatherford International Ltd. (“WIL-Bermuda”) and  Weatherford  International,  LLC  (“WIL-Delaware”, and together with Weatherford plc and WIL-Bermuda, the “Borrowers”).
• Guarantors: (a) the Parent and (b) subsidiaries of the Parent that are Guarantors under the ABL Term Sheet, which for avoidance of doubt shall include all Guarantors of the prepetition Term Loan Agreement and DIP Agreement (but excluding Weatherford Investments Holding B.V.).
• Issuing Banks: Each of Deutsche Bank AG New York Branch (“DBNY”), Wells Fargo Bank, National Association (“WF”) and Barclays Bank PLC (“Barclays”) and any additional issuing banks that agree to issue Letters of Credit, in each case up to a respective amount to be agreed (each in such capacity, an “Issuing Bank” and, collectively, the “Issuing Banks”). 
• Administrative Agent: Deutsche Bank Trust Company Americas (“DBTCA”)
• LC Joint Lead Arrangers and Book Runners: Deutsche Bank Securities Inc. (“DBSI”),  WF and Barclays
  
• Collateral: (i) pledge, collateral assignment and first priority perfected security interest to the Administrative Agent for the benefit of the Secured Parties in substantially all of the assets of the Loan Parties other than the Revolver Facility Priority Collateral (as defined in the ABL Term Sheet) and including material real property (with mortgages on such real property to be granted and perfected within a post-closing period to be agreed) (the "LC Priority Collateral") and (ii) pledge, collateral assignment and second priority perfected security interest in the Revolver Facility Priority Collateral (together with the LC Priority Collateral, the "Collateral") which shall secure the facility contemplated by the ABL Term Sheet (the "ABL Facility") on a first priority basis.
• Maturity Date: Ends on the 4.5 year anniversary of the Closing Date.
• Interest Rates: [Filed under seal, although see below as to 8-K disclosure]
• Fees: [Filed under seal, although see below as to 8-K disclosure]
• Governing Law and Forum: New York 

The ABL Facility

• The Facility: A senior secured asset-based revolving credit/FILO loan facility in an aggregate maximum credit amount ("Maximum Credit Amount") of $450.0m. Under the facility, lenders will provide the Borrowers with a revolving credit facility (the "Revolver") and a first-in last-out loan facility (the "FILO").
• Revolver: Advances under the Revolver (“Advances") will be available up to a maximum amount outstanding at any one time of $400.0mn (the "Maximum Revolver Amount"). In addition, the amount of Advances plus Letters of Credit issued under the Revolver shall not, at any time, exceed the borrowing base.
• FILO: Advances under the FILO ("FILO Advances") and Letters of Credit provided under the FILO will be available up to a maximum amount outstanding at any one time of $50.0mn (the "Maximum FILO Amount"). 
• Letter of Credit Subfacility: Up to $350.0mn at any one time outstanding; provided that the aggregate amount of outstanding Letters of Credit will be reserved against the credit availability created under the borrowing base, the FILO borrowing base, the Maximum FILO Amount and the Maximum Revolver Amount (as applicable and without duplication between the Revolver and the FILO).
• Borrowers: Weatherford plc, WIL-Delaware and WIL-Bermuda
• Guarantors: Weatherford plc (or “the Parent”) as a reorganized debtor, (ii) all of Parent's subsidiaries that are guarantors under the DIP Credit Agreement and under the Prepetition Term Loan Agreement (as defined in the Plan of Reorganization), other than Weatherford Investments Holding B.V.
• Administrative Agent: Wells Fargo ("WF")
• ABL Joint Lead Arrangers and Bookrunners: DBSI, WF and Barclays 
• Use of Proceeds: To (i) refinance certain of the Prepetition A&R Claims and DIP Facility Claims (each as defined in the Plan of Reorganization) in connection with the Parent's and Borrowers' emergence from its chapter 11 cases, (ii) pay fees and expenses associated with the transactions contemplated hereby, and (iii) finance the ongoing general corporate needs of the Parent and its subsidiaries.
• Collateral: The Obligations will be secured by a first priority (subject to permitted liens) perfected security interest in the Loan Parties' interests in…[pretty much everything].
  
• Maturity Date: Four and one half (4.5) years from the Closing Date.
• Interest Rates: [Filed under seal, although see below as to 8-K disclosure]
• Fees: [Filed under seal although see below as to 8-K disclosure]
• Governing Law and Forum: State of New York

8-K Disclosure on Fees and Interest Rates

The Debtors' 8-K provides the following as to fees: "The LC Facility includes a letter of credit fee for each letter of credit issued thereunder equal to the LIBOR screen rate plus 350 basis points per annum, with a zero LIBOR floor, on the outstanding amount of each such letter of credit and a 12.5 basis point per annum fronting fee on the outstanding amount of each such letter of credit. In addition, the LC Facility requires the payment of an unused commitment fee in respect of the unutilized LC Facility commitments at a rate of 50 basis point per annum on the average daily unused commitments under the LC Facility….The ABL Facility includes a letter of credit fee for each letter of credit issued thereunder equal to (i) in the case of the Revolver, 175-225 basis points per annum based on the average Aggregate Excess Availability, and (ii) in the case of the FILO, 350 basis points per annum, in each case, on the amount of each such letter of credit, and a 12.5 basis point per annum fronting fee on the amount of each such letter of credit. In addition, the ABL Facility requires the payment of an unused commitment fee in respect of the unutilized commitments at a rate of 50 basis point per annum on the average unused commitments under the ABL Facility. 

In respect of interest rates, the 8-K adds: "The loans under the Revolver under the ABL Facility will bear interest at a rate of (i) in the case of LIBOR rate borrowings, the LIBOR rate plus an applicable margin in the range of 175-225 basis points per annum, with a zero LIBOR rate floor, and (ii) in the case of base rate borrowings, the base rate plus an applicable margin in the range of 75-125 basis points per annum, in the case of clauses (i) and (ii), based on the average Aggregate Excess Availability (as defined in the Exit Facility Commitment Letter). The loans under the FILO (as defined in the Exit Facility Commitment Letter) under the ABL Facility will bear interest at a rate of (i) in the case of LIBOR rate borrowings, the LIBOR rate plus an applicable margin of 350 basis points per annum, with a zero LIBOR rate floor, and (ii) in the case of base rate borrowings, the base rate plus an applicable margin of 250 basis points per annum."

Debtors' Prepetition and Re-organized Capital Structure

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