19. Subsequent events

Acquisition of U.S. Well Services, Inc.

On November 1, 2022, the Company acquired U.S. Well Services, Inc. (NASDAQ: USWS) (“USWS”) in a stock-for-stock merger transaction pursuant to the Agreement and Plan of Merger (the “USWS Merger Agreement”), dated as of June 21, 2022, by and among the Company, USWS and Thunderclap Merger Sub I, Inc., a Delaware corporation and an indirect subsidiary of the Company (“Merger Sub”). Pursuant to the terms and conditions of the USWS Merger Agreement, on November 1, 2022, Merger Sub merged with and into USWS, with USWS surviving the merger as the surviving corporation and an indirect subsidiary of the Company. At the effective time of the merger, each share of USWS Class A Common Stock was converted automatically into the right to receive 0.3366 shares of the Company’s Class A Common Stock. As a result of this transaction, the Company issued an aggregate of approximately 12.9 million shares of its Class A Common Stock to holders of USWS Class A Common Stock, USWS Series A Preferred Stock, USWS Equity Linked Convertible Notes (as such terms are defined in the USWS Merger Agreement), and USWS equity awards. The equity issued, based on the Company’s Class A Common Stock 10-day VWAP as of October 31, 2022, was approximately $270 million. In addition, the Company used cash to retire approximately $170 million of USWS debt, leaving approximately $35 million of various forms of equipment related financing outstanding.

Pursuant to the terms of the USWS Merger Agreement, the Company assumed the obligations of USWS under certain of its public and private warrants, including those that traded on NASDAQ. These warrants now represent the right to receive, upon valid exercise thereof, shares of the Company’s Class A Common Stock in an amount equal to the product of (i) the number of shares of USWS Class A Common Stock subject to such warrant immediately prior to the effective time of the merger and (ii) 0.3366. The assumed public warrants are traded on NASDAQ under the symbol “ACDCW.” In addition, pursuant to a warrant purchase agreement entered into concurrently with the execution of the USWS Merger Agreement, the Company purchased all of the outstanding February Term C Loan Warrants and March Term C Loan Warrants (as such terms are defined in the USWS Merger Agreement) of USWS from their holders for total aggregate consideration of approximately $2.6 million, which warrants were automatically canceled and ceased to exist as of the effective time of the merger.

In connection with the Company’s acquisition of USWS, the ABL Borrower borrowed approximately $164 million under the Amended ABL Credit Facility (as defined herein). See below for additional discussion regarding the Amended ABL Credit Facility.

Dan Wilks and Farris Wilks, together with certain of their affiliates, (collectively, the “Wilks Parties”) collectively hold a controlling interest in the Company. Certain Wilks Parties also owned certain securities of USWS. Upon the consummation of the merger, the Wilks Parties received approximately 4.1 million shares of ProFrac Class A Common Stock as merger consideration.

The accounting for this acquisition is in process and will be completed in the fourth quarter.

Amendment to New Term Loan Credit Facility.

On November 1, 2022, the Company entered into a second amendment to the New Term Loan Credit Facility (as amended, the “Amended New Term Loan Credit Facility”), pursuant to which the Agent and the Required Lenders have agreed to: (a) consent to (i) the Amended ABL Credit Facility; (ii) certain existing debt of U.S. Well Services Holdings, LLC (successor by conversion to USWS), a Delaware limited liability company (“U.S. Well LLC”), and each of its subsidiaries (collectively, the “U.S. Well Entities”), remaining outstanding (the “U.S. Well Debt”) following the Company’s acquisition of USWS; (iii) the corresponding liens on the assets of the U.S. Well Entities securing such U.S. Well Debt (the “U.S. Well Liens”) remaining outstanding following the acquisition; and (iv) any restrictions existing under the agreements evidencing the U.S. Well Debt, which would otherwise be prohibited under the Amended Term Loan Credit Facility and (b) waive any defaults and/or events of default arising as a result of the defaults and/or events of default existing under the agreements evidencing the U.S. Wells Debt, including without limitation, as a result of the consummation of the First Amendment Acquisition (as defined in the Amended Term Loan Credit Facility) with respect to the U.S. Well Entities, subject to the terms and conditions set forth in the Amended Term Loan Agreement. Immediately following consummation of the Company’s acquisition of USWS, the U.S. Well Debt was repaid in full and the U.S. Well Liens were all released.

Amendment to New ABL Credit Facility.

On November 1, 2022, the Company entered into a second amendment to the New ABL Credit Facility (as amended, the “Amended ABL Credit Facility”), pursuant to which the Agent and the Lenders have agreed to: (a) consent to U.S. Well LLC and its subsidiaries becoming Restricted Subsidiaries (as defined in the Amended Term Loan Credit Facility) of ProFrac LLC immediately prior the payment in full of certain U.S. Well Debt and the termination and release of certain U.S. Well Liens and agree that the existence of such debt or liens any restrictions in the applicable documents will not trigger a default or event of default under the Amended ABL Credit Facility and (b) waive any defaults and/or events of default under the ABL Credit Facility and the other applicable loan documents solely relating to or arising from (i) U.S. Well and its subsidiaries becoming Restricted Subsidiaries of ProFrac LLC immediately prior the payment in full of the certain of the U.S. Well Debt and the termination and release of certain U.S. Well Liens and (ii) any defaults and/or events of default existing under the applicable documents which govern the U.S. Well Debt, including without limitation, as a result of the consummation of the Merger, subject to the terms and conditions set forth in the Amended ABL Credit Facility.

Under the Amended ABL Credit Facility, (i) the aggregate Maximum Revolver Amount (as defined in the Amended ABL Credit Facility) was increased from $200.0 million to $280.0 million as of the Second Amendment Effective Date (as defined in the Amended ABL Credit Facility) and (ii) the Borrower is entitled to request up to $120.0 million of additional Revolving Credit Commitment Increases (as defined in the Amended ABL Credit Facility) after the Second Amendment Effective Date subject to certain terms and conditions provided that, as of the Second Amendment Effective Date, such additional Revolving Credit Commitment Increases are uncommitted.

In connection with the Company’s acquisition of USWS, the ABL Borrower borrowed approximately $164 million under the Amended Credit Facility. Immediately prior to this draw down, there were no amounts outstanding under the Amended ABL Credit Facility.