Newpark Secures Loan To Pay Off Covenant Breach Bonds

Newpark Resources turned to JPMorgan to secure a $150 million term loan to redeem $125 million of 8 5/8% bonds.

  • 08 Sep 2006
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Newpark Resources turned to JPMorgan to secure a $150 million term loan to redeem $125 million of 8 5/8% bonds. Bondholders called for the redemption of the notes after the company delayed filing financial statements, causing it to violate financial reporting covenants. The company chose bank debt to pay off the notes because it was unable to do a public offering due to the delay in filing the financial statements, John Dardenne, treasurer, said.

JPMorgan is administrative agent, while Wilmington Trust Company is collateral agent. Dardenne turned to JPMorgan because of its longstanding relationship with the bank. The loan has an initial interest rate of LIBOR plus 3 1/4%. The company will draw down on the entire loan on Sept. 22 to redeem the notes, plus accrued interest. Newpark will have no bonds outstanding after the redemption, but Dardenne did not rule out issuing new bonds in future.

Newpark is restating its financial statements for fiscal years 2001 through 2005, as well as for the fiscal quarters in 2004 and 2005 because of accounting irregularities. These relate to the processing and payment of invoices by Soloco Texas, a subsidiary. Its audit committee also uncovered improper stock option granting practices. The company estimates the restatement will reduce pre-tax income by $12 million.

  • 08 Sep 2006

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1 Citi 4,296 9 13.13
2 BNP Paribas 3,026 10 9.25
3 Bank of America Merrill Lynch (BAML) 2,411 8 7.37
4 Lloyds Bank 2,213 9 6.76
5 Credit Agricole 2,025 6 6.19

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3 Wells Fargo Securities 27,406.11 76 8.41%
4 JPMorgan 24,953.34 73 7.65%
5 Credit Suisse 21,208.34 50 6.51%