Arrow BidCo gets no more tenders to trade 9½% notes after early date

By Wendy Van Sickle

Columbus, Ohio, Nov. 1 – Arrow BidCo, LLC, an indirect subsidiary of Target Hospitality Corp., said it received no additional tenders after the early participation date of its 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.

As of the early exchange date of 5 p.m. ET on Oct. 13, Arrow had received valid and unrevoked tenders and related consents representing $181,446,000, or 86.6%, of the aggregate principal amount of existing notes outstanding, as previously reported. The offer expired at 5 p.m. ET on Oct. 30 with no additional tenders having come in.

The total exchange consideration represents $181.4 million in aggregate principal amount of new notes and $2.7 million in cash.

As previously reported, for each $1,000 principal amount of existing notes exchanged, the company was offering a total consideration of $1,000 of new notes and $15 in cash.

That figure includes $50 of new notes that was only being offered to holders who exchanged their existing notes by the early deadline, which was also the withdrawal and consent-revocation deadline.

The issuer was also soliciting consents from holders of the notes to some proposed amendments to the note indenture dated March 15, 2019.

Arrow also reported at the early deadline that enough consents had been received to both meet the threshold for enacting the proposed amendments and to release all of the collateral securing the existing notes.

As previously reported, if consents were received from holders of at least 50.1% of the outstanding principal amount of existing notes that were not affiliates of the issuer, the proposed amendments would 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.

In addition, if consents were 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 would also release all of the collateral securing the existing notes.

Holders whose notes were accepted for exchange also received a cash payment for any accrued interest. The offer was settled on Nov. 1.

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.

Holders could not tender their existing notes under the exchange offer without delivering a consent with respect to such existing notes under 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 under the consent solicitation.

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) was the information and exchange agent for the offer, which was conducted under Rule 144A and Regulation S.

Arrow Bidco is an indirect subsidiary of Target Hospitality, 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, Tex.

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