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| FES > SEC Filings for FES > Form 8-K on 20-Jun-2012 | All Recent SEC Filings |
20-Jun-2012
Entry into a Material Definitive Agreement, Creation of a Direct Fina
The disclosure required by this item is included in Item 2.03 below and is incorporated herein by reference.
On June 14, 2012, TX Energy Services, LLC and C.C. Forbes, LLC, or the Lessors, two subsidiaries of Forbes Energy Services Ltd., or the Company, became obligated with respect to operating lease obligations pursuant to lease schedules under that certain Master Agreement dated as of June 6, 2012 among the Lessors, Regions Equipment Finance Corporation and Regions Commercial Equipment Finance, LLC, collectively, Regions Finance. On June 18 and 19, 2012, respectively, the Lessors became obligated with respect to additional operating lease obligations pursuant to two new lease schedules under the Master Agreement. Concurrently with the funding of each of these lease schedules, Regions Finance provided notice to the Lessors that they had assigned their rights and obligations thereunder to CapitalSource Bank.
Pursuant to these lease schedules, the Lessors are leasing certain trucks, trailers and related equipment. The term for these lease schedules range from 48 months to 60 months, with such terms automatically extending for consecutive additional two-month periods unless either party provides notice of termination. The aggregate lease payments owned under these lease schedules during the terms thereof is approximately $7.5 million. The Lessors have the right to purchase the property subject to each lease schedule at fair market value, which is determined by a formula set forth in each schedule. As a credit enhancement, the Company caused letters of credit in an aggregate value of approximately $1.7 million to be issued under its secured revolving credit facility to secure the Lessors' obligations under the lease schedules. The Master Agreement and the lease schedules contain customary representations and warranties, covenants and indemnification provisions.
The Company has agreed to guaranty the obligations under the lease schedules pursuant to that certain Guaranty Agreement dated as of June 6, 2012, between the Company and Regions Finance.
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