Arrow BidCo launches exchange offer, consent bid for 9½% notes due 2024

By Wendy Van Sickle

Columbus, Ohio, Sept. 29 – Arrow BidCo, LLC began an offer to exchange any and all of its $209.5 million outstanding 9½% senior secured notes due 2024 (Cusips: 042728AA3, U0424NAA2) for new 10¾% senior secured notes due 2025, according to a news release.

The issuer is also soliciting consents from holders of the notes to some proposed amendments to the note indenture.

For each $1,000 principal amount of existing notes exchanged, the company is offering a total consideration of $1,000 of new notes and $15 in cash.

That figure includes $50 of new notes that is only being offered to holders who exchange their existing notes by the early deadline, 5 p.m. ET on Oct. 13, which is also the withdrawal and consent-revocation deadline.

The exchange offer and consent solicitation will expire at 5 p.m. ET on Oct. 30.

Holders whose notes are accepted for exchange will also receive a cash payment for any accrued interest.

The new notes will mature on June 15, 2025, unless any existing notes remain outstanding on March 15, 2024, in which case the new notes will mature on March 15, 2024 at a make-whole price.

Prior to Sept. 15, 2024, the new notes will be redeemable at the issuer’s option at a make-whole price. On and after Sept. 15, 2024, the new notes will be redeemable at the issuer’s option at scheduled redemption prices.

The new notes will be guaranteed by the same entities that guarantee the existing notes and will be secured by the same assets.

The issuer is soliciting consents from eligible holders of existing notes to some proposed amendments to the indenture, dated March 15, 2019. If consents are received from holders of at least 50.1% of the outstanding principal amount of existing notes that are not affiliates of the issuer, the proposed amendments will eliminate substantially all of the restrictive covenants contained in the existing notes indenture and the existing notes, eliminate certain events of default, modify covenants regarding mergers and consolidations and modify or eliminate certain other provisions, including certain provisions relating to future guarantors and defeasance, contained in the existing notes indenture and the existing notes.

In addition, if consents are received from holders of at least 66.67% of the outstanding principal amount of existing notes that are not affiliates of the issuer, the proposed amendments will also release all of the collateral securing the existing notes.

Holders may not tender their existing notes pursuant to the exchange offer without delivering a consent with respect to such existing notes pursuant to the consent solicitation, and holders may not deliver their consents under the consent solicitation without tendering the related existing notes under the exchange offer. If holders tender their existing notes under the exchange offer, they will be deemed to have given their consent to the proposed amendments pursuant to the consent solicitation.

In connection with the exchange offer and the consent solicitation, the issuer has begun discussions with the lenders of its ABL facility to negotiate some amendments to increase the size of the aggregate revolver commitments.

The primary purpose of the exchange offer is to improve the issuer’s maturity profile by extending the maturity date of the issuer’s notes.

D.F. King & Co., Inc. (866 356-7813, 212 269-5550 or arrow@dfking.com) is the information and exchange agent for the offer, which is being conducted under Rule 144A and Regulation S.

Arrow Bidco is an indirect subsidiary of Target Hospitality Corp., a provider of specialty rental and hospitality services in the United States, principally focused on several end markets, including oil and gas, energy infrastructure and government, which is based in The Woodlands, Texas.

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