Item 1.01. Entry into a Material Definitive Agreement.
As previously reported by SAExploration Holdings, Inc. ("SAExploration," the
"Company," "we," "our," and "us") on August 27, 2020 (the "Petition Date"), the
Company and certain of its wholly-owned direct and indirect subsidiaries
(collectively, the "Debtors") filed voluntary petitions (collectively, the
"Petition," and the cases commenced thereby, the "Chapter 11 Cases") seeking
relief under Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for Southern District of Texas, Houston Division (the
"Court") to pursue a Chapter 11 plan of reorganization (as amended, restated,
supplemented or otherwise modified from time to time, the "Plan") under the
caption In re SAExploration Holdings, Inc. et. al. (Case No. 20-34306).
Settlement of Potential Claims and Modification to Second Amended Plan
Following the Petition Date, the Debtors have engaged in negotiations with
various stakeholders to achieve a consensual Plan, including with the Ad Hoc
Committee of Term Lenders, which raised certain potential objections to the
Plan. These negotiations resulted in a settlement pursuant to Bankruptcy Rule
9019 to resolve the Ad Hoc Committee of Term Lenders' potential objections to
the Plan, which settlement is incorporated in the Debtors' Second Amended
Chapter 11 Plan of Reorganization, as Modified on December 8, 2020 (the "Plan
Modification"), which provides that the Ad Hoc Committee of Term Lenders will
receive a payment in the amount of $625,000 on the effective date of the Plan.
In addition, pursuant to the terms of the settlement, Tegean Capital Management
LLC ("Tegean"), a member of the Ad Hoc Committee of Term Lenders, became a party
to the Backstop Agreement (as defined below) and will backstop $1.0 million of
the First Lien Exit Facility (as defined below) as described in further detail
below. Pursuant to the terms of the settlement, the Ad Hoc Committee of Term
Lenders will also benefit from certain preemptive rights in the First Lien Exit
Facility and the New Organizational Documents (as defined in the Plan).
Second Amendment and Joinder to Backstop Commitment Agreement
As previously reported, on the Petition Date, the Debtors entered into that
certain Restructuring Support Agreement (as amended, restated, supplemented or
otherwise modified from time to time, the "Restructuring Support Agreement")
with (i) the lenders (the "ABL Lenders") under that certain Third Amended and
Restated Credit and Security Agreement, dated as of September 26, 2018 (as
amended, restated, supplemented or otherwise modified from time to time, the
"ABL Credit Agreement"), by and among SAExploration, Inc., the Company, the
other guarantors party thereto, Cantor Fitzgerald Securities, as administrative
agent and collateral agent, and the lenders party thereto, (ii) certain lenders
(the "Term Loan Lenders" and collectively with the ABL Lenders, the "Supporting
Lenders") under that certain Term Loan and Security Agreement, dated as of
June 29, 2016 (as amended, restated, supplemented or otherwise modified from
time to time, the "Term Loan Credit Agreement"), by and among the Company, the
guarantors party thereto, Delaware Trust Company, as administrative agent and
collateral agent, and the lenders party thereto, and (iii) holders (the
"Supporting Noteholders" and collectively with the Supporting Lenders, the
"Supporting Parties") of the outstanding principal amount of those certain 6.00%
Senior Secured Convertible Notes due 2023 (the "Convertible Notes") issued under
that certain Senior Secured Convertible Notes Indenture, dated as of
September 26, 2018, by and among the Company, the guarantors party thereto, and
Wilmington Savings Fund Society, FSB, as trustee and collateral trustee.
The Restructuring Support Agreement contemplates that the Company will enter
into certain restructuring transactions in accordance with the Plan, including,
among other things, (i) the entry into a first lien exit term loan facility (the
"First Lien Exit Facility") in an aggregate principal amount of $15 million, on
the terms set forth in the term sheet attached to the Restructuring Support
Agreement, as modified by the settlement described above, (ii) the conversion of
the ABL Credit Facility into a new second lien exit facility
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("Second Lien Exit Facility") in an aggregate principal amount of $20.5 million
with the existing lenders under the ABL Credit Facility, and (iii) a rights
offering (the "Rights Offering") pursuant to which all eligible holders of loans
under the ABL Credit Agreement and loans under the Term Loan Credit Agreement
will be offered the opportunity to purchase (the "Subscription Rights") loans to
be advanced under the First Lien Exit Facility (the "First Lien Term Loans") and
new shares of common stock (the "New Common Shares") in the reorganized Company
for an aggregate purchase price of $15 million, with the Rights Offering being
backstopped pursuant to the Backstop Agreement.
As previously reported, on the Petition Date, the Company entered into that
certain Backstop Commitment Agreement (as amended, restated, supplemented or
otherwise modified from time to time, the "Backstop Agreement") with the
Supporting Parties (the "Backstop Parties"), pursuant to which the Backstop
Parties agreed to backstop $15 million of the Rights Offering.
In connection with the filing of the Plan Modification with the Court, on
December 8, 2020, the Debtors entered into that certain Second Amendment and
Joinder to Backstop Commitment Agreement by and among the Debtors, the Backstop
Parties party thereto and Tegean (the "Backstop Amendment"). Pursuant to the
Backstop Amendment, the Backstop Agreement was amended to provide for Tegean to
become a Backstop Party for all purposes under the Backstop Agreement; provided,
however, Tegean will not be entitled to any of the fee and expense reimbursement
provisions in the Backstop Agreement, nor will Tegean be entitled to any
backstop commitment premium under the Backstop Agreement. The Backstop
Agreement, as amended by the Backstop Amendment, also provides that Tegean will
purchase term loans under the First Lien Exit Facility and New First Lien Exit
Facility Equity for which the Ad Hoc Committee of Term Lenders receive but do
not exercise subscription rights pursuant to the Rights Offering, with any
remaining term loans under the First Lien Exit Facility and New First Lien Exit
Facility Equity that are not purchased in the Rights Offering being purchased by
the Backstop Parties other than Tegean in accordance with the Backstop
Agreement.
Copies of the Plan Modification and the Backstop Amendment are attached as
Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K.
The foregoing descriptions of the Plan Modification and the Backstop Amendment
are only summaries, do not purport to be complete and are qualified in their
entirety by reference to the Plan Modification and the Backstop Amendment.
Item 8.01. Other Events.
The Company cautions that trading in the Company's securities during the
pendency of the anticipated Chapter 11 Cases is highly speculative and poses
substantial risks. Trading prices for the Company's securities may bear little
or no relationship to the actual recovery, if any, by holders of the Company's
securities in the anticipated Chapter 11 Cases.
Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts included in this Current Report on
Form 8-K are forward looking statements. These forward-looking statements are
subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected.
Among those risks, trends and uncertainties are: (i) the Company's ability to
obtain Court approval with respect to motions or other requests made to the
Court in the Chapter 11 Cases, including maintaining strategic control as
debtor-in-possession; (ii) the ability of the Company and its subsidiaries to
negotiate, develop, confirm and consummate a plan of reorganization; (iii) the
effects of the Company's bankruptcy filing on the
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Company and on the interests of various constituents; (iv) Court rulings in the
Chapter 11 Cases in general; (v) the length of time that the Company will
operate under Chapter 11 protection and the continued availability of operating
capital during the pendency of the proceedings; (vi) risks associated with third
party motions in the Chapter 11 Cases, which may interfere with the Company's
ability to confirm and consummate a plan of reorganization; (vii) the potential
adverse effects of the Chapter 11 proceedings on the Company's liquidity or
results of operations; (viii) increased advisory costs to execute the Company's
reorganization; (ix) the impact on the Company's ability to access the public
capital markets; and (x) other factors disclosed by the Company from time to
time in its filings with the Securities and Exchange Commission, including those
described under the caption "Risk Factors" in the Company's Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. The Company does not intend to
publicly update or revise any forward-looking statements as a result of new
information, future events or otherwise, except as required by law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
10.1 Debtors' Second Amended Chapter 11 Plan of Reorganization, as
modified on December 8, 2020.
10.2 Second Amendment and Joinder to Backstop Commitment Agreement dated
as of December 8, 2020.
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