KLX Energy Services Announces Amendment And Extension Of ABL Facility

HOUSTON, Sept. 28, 2022 /PRNewswire/ — KLX Energy Services Holdings, Inc. (NASDAQ:KLXE) (“KLX” or the “Company”) announced today that the Company has entered into a Third Amendment to the Credit Agreement, with certain of its subsidiaries party thereto, as guarantors, JPMorgan Chase Bank, N.A. (“JPM”), as administrative agent and the lender party thereto (the “Amendment”), which amends that certain Credit Agreement, dated as of August 10, 2018, with JPM, as administrative agent, collateral agent and an issuing lender and the other lenders and issuing lenders party thereto from time to time (as amended, the “Credit Agreement”).

The Amendment, among other things, (i) extends the maturity date of the Credit Agreement by a year from September 14, 2023 to September 15, 2024, (ii) increases the applicable margin by 0.50%, (iii) replaces LIBOR as the benchmark rate with Term SOFR, (iv) provides the Company with the ability to redeem, repurchase, defease or otherwise satisfy its outstanding senior secured notes using proceeds of equity issuances or by converting or exchanging such secured notes for equity, (v) resets consolidated EBITDA solely for purposes of calculating the springing fixed charge coverage ratio (“FCCR”) to be annualized beginning with the fiscal quarter ended as of June 30, 2022, until the fourth fiscal quarter ended thereafter (provided that fixed charges will continue to be calculated on a trailing-twelve month basis), (vi) requires that, after giving effect to any borrowing and the use of proceeds thereof, the Company not have more than $35,000,000 in excess cash on its balance sheet and (vii) increases the amount of availability required to avoid a cash dominion event.

Keefer Lehner, EVP and Chief Financial Officer, stated, “We are very pleased to announce a one-year extension with improved terms on our ABL facility. We have an extremely supportive group of ABL lenders and appreciate their continued partnership with KLX as our underlying business continues to return to historical levels of activity and profitability. We believe this amendment enables KLX to continue to participate in the ongoing recovery in our industry by augmenting liquidity and positions KLX to generate free cash flow and ultimately reduce net debt.”

After giving effect to the Amendment, we believe KLX will be greater than 1.0:1.0 on the springing FCCR, which on a pro forma basis would have improved KLX’s liquidity by $14 million to $71 million as of June 30, 2022. Further, the Company ended August 31, 2022, with approximately $39 million in cash and pro forma $84 million of liquidity, including $45 million of pro forma availability on the August 2022 borrowing base certificate (Pro Forma for Amendment).