HAMILTON, Bermuda - Nabors Industries Ltd. (NYSE: NYSE:NBR), an energy technology company, has successfully amended and restated its secured credit facility, according to a press release statement. The new facility, which closed today, amounts to $475 million and includes a $350 million revolving credit component and a $125 million letter of credit facility. This credit arrangement is set to mature on June 17, 2029, with an option to accelerate the maturity date under certain conditions related to the company's debt securities.
The updated credit facility offers an increase from the previous $100 million to $125 million for letters of credit, which will not impact the capacity under the revolving credit component. Moreover, there's a new $200 million uncommitted accordion feature that could potentially expand the facilities further, compared to a $100 million accordion in the prior arrangement. The facility also retains a basket for up to $150 million of additional indebtedness and a grower basket for term loans up to $100 million.
Under the terms of the amended facility, Nabors is required to maintain an interest coverage ratio of 2.75:1.00 and ensure a minimum guarantor value of 90%. The initial borrowing margin is approximately 2.75%, with the rate subject to adjustments based on the company's credit ratings.
William Restrepo, Nabors' Chief Financial Officer, remarked on the strategic move, stating that the amended facility enhances near-term liquidity and supports growth, particularly in international markets where bid or performance bonds are essential. Restrepo expressed confidence in the company's operating results and cash flow targets for 2024.
Major financial institutions involved in the credit facility include Citibank, N.A., Wells Fargo Bank, N.A., Goldman Sachs Bank USA, HSBC Bank USA, N.A., and Morgan Stanley Senior Funding, Inc.
Nabors Industries is known for its advanced technology contributions to the energy sector, with operations in over 20 countries. The company focuses on innovation in drilling, engineering, automation, data science, and manufacturing to promote safe and efficient energy production and support the transition to a lower-carbon world.
Further information about the credit facility can be found in a Current Report on Form 8-K filed with the Securities and Exchange Commission. This news article is based on a press release statement.
In other recent news, Nabors Industries reported a strong start to 2024, with Q1 adjusted EBITDA exceeding market expectations. The company's robust international market presence was underscored by new rig deployments in Algeria and contracts in Argentina and the Middle East. However, rig count in the Lower 48 was disappointing. The technology segment, NDS, experienced revenue growth both domestically and internationally. Nabors Industries also highlighted its focus on sustainability and reducing net debt to improve credit ratings.
Despite a projected decrease in average rig count in the US due to consolidation and weaker gas-focused drilling, the company anticipates generating free cash flow and reducing net debt. With projected capital expenditures of $190 million for Q2 and $590 million for the full year, Nabors Industries plans to capitalize on expansion opportunities in Latin America, the Middle East, and other regions.
The company's guidance on 2024 free cash flow is between $100 million and $200 million, excluding the SANAD program. These are some of the recent developments in the company's operations.
InvestingPro Insights
In the wake of Nabors Industries Ltd.'s announcement regarding its amended and restated secured credit facility, a closer look at the company's financial metrics and market performance through InvestingPro reveals a mixed picture. The PRONEWS24 coupon code can be used to access additional insights into Nabors and similar companies on the InvestingPro platform.
InvestingPro data indicates that Nabors Industries has a market capitalization of $589.78 million, reflective of its scale in the energy technology sector. However, the company's P/E ratio stands at -4.3, suggesting that investors have concerns about its profitability in the near term. This is further underscored by the fact that analysts do not expect the company to be profitable this year, an insight that aligns with the negative earnings per share (EPS) of -14.41 over the last twelve months as of Q1 2024.
Moreover, the stock's performance has been notably poor in recent times, with a one-week price total return of -10.93% and a staggering one-year price total return of -40.04%. These figures exemplify the stock's volatility and the bearish sentiment that has surrounded it over the past several months. Despite this, Nabors Industries has maintained a gross profit margin of 40.38%, which may provide some solace to investors concerned about the company's ability to generate income relative to its revenue.
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