Filing Details

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934 (Amendment No. 5)*

INDEPENDENCE CONTRACT DRILLING, INC.

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

453415309

(CUSIP Number)

Alan L. Dye C. Alex Bahn Hogan Lovells US LLP 555 13th Street, NW Washington, DC 20004 202-637-5600 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communication)

March 18, 2022 (Date of Event which Requires Filing of this Statement)

*	The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

CUSIP NO.

453415309

SCHEDULE 13D

 

1	NAMES OF REPORTING PERSONS
		MSD Credit Opportunity Master Fund, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP					(a) ☐
						(b) ☒
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)
		WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)					☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
		Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH			7	SOLE VOTING POWER
					-0-
			8	SHARED VOTING POWER
					4,074,0633
			9	SOLE DISPOSITIVE POWER
					-0-
			10	SHARED DISPOSITIVE POWER
					4,074,0633
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
		4,074,0633
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)					☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
		19.9%2
14	TYPE OF REPORTING PERSON (See Instructions)
		PN

 

*  See Item 5.

3	Includes 3,377,303 shares of the Issuer’s Common Stock underlying the $17,122,927.50 principal amount of the Notes held by the Reporting Person.

CUSIP NO.

453415309

SCHEDULE 13D

1	NAMES OF REPORTING PERSONS
		MSD PCOF Partners LXXIII, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP					(a) ☐
						(b) ☒
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)
		WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)					☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
		Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH			7	SOLE VOTING POWER
					-0-
			8	SHARED VOTING POWER
					10,172,3084
			9	SOLE DISPOSITIVE POWER
					-0-
			10	SHARED DISPOSITIVE POWER
					10,172,3084
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
		10,172,3084
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)					☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
		19.9%2
14	TYPE OF REPORTING PERSON (See Instructions)
		OO

CUSIP NO.

453415309

SCHEDULE 13D

1	NAMES OF REPORTING PERSONS
		MSD PRIVATE CREDIT OPPORTUNITY (NON-ECI) FUND, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP					(a) ☐
						(b) ☒
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)
		WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)					☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
		Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH			7	SOLE VOTING POWER
					-0-
			8	SHARED VOTING POWER
					3,345,8825
			9	SOLE DISPOSITIVE POWER
					-0-
			10	SHARED DISPOSITIVE POWER
					3,345,8825
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
		3,345,8825
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)					☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
		19.9%2
14	TYPE OF REPORTING PERSON (See Instructions)
		OO

Explanatory Note

 

Item 2.  Identity and Background.

Shareholder Approval

Under the Indenture, the Issuer is required to submit two matters for stockholder approval at its 2022 Annual Meeting of Stockholders: (i) an amendment to increase the number of shares of the Issuer’s common stock authorized under its certificate of incorporation to 250,000,000 shares and (ii) the issuances of the Issuer’s common stock pursuant to the terms of the Indenture, including based on a decrease of the noteholder’s optional conversion rate for the Notes from 197.23866 Shares per $1,000 principal amount of Notes (representing a conversion price of $5.07 per share) to 221.72949 Shares per $1,000 principal amount of Notes (representing a conversion price of $4.51 per share) (iii) the issuance by the Issuer of additional Notes, if and when issued by the Issuer, (iv) the conversion of all Notes (including PIK Notes) without any limitation of the Pre-Approval Conversion Ratio (as defined in the Indenture) and (v) the issuance of shares of common stock upon conversion of Notes in connection with a Qualified Merger Conversion (as defined in the Indenture) to the extent the number of shares issuable upon such conversion would exceed the number of shares of common stock issuable at the otherwise then-current Conversion Rate (with the requisite stockholder approval of such proposals referred to as the “Shareholder Approval”). Following Shareholder Approval, the Issuer will have the right, at its option, to PIK interest under the Notes for the entire term of the Notes, and the PIK interest rate will reduce from SOFR plus 14.0% to SOFR plus 9.5%.

Note Holders Optional Right to Convert All or Part of the Notes

Subject to limitations under the Indenture governing the Notes (the “Indenture”), the Reporting Persons may convert their Notes at any time following the issue date of the Notes until the close of business on the second trading day immediately before March 18, 2026.  The limitations on such conversions include that if the Issuer calls any Note for redemption in connection with a permitted redemptions up to $50 million of Notes during an 18-month period following the issue date of the Notes, then the holder of such Note may not convert such Note after the close of business on the business day on which the applicable redemption notice is sent in accordance with the Indenture (unless the Issuer fails to pay the redemption price due on the redemption date for such Note in full in accordance with the Indenture); for the avoidance of doubt, any Note not called for redemption may be converted during such period.

The initial conversion rate is 197.23866 shares of common stock per $1,000 principal amount of Notes (representing a conversion price of $5.07 per share).  Following the applicable shareholder approval described above, the conversion rate will be increased to 221.72949 shares of common stock per $1,000 principal amount of Notes (reflecting a decrease in the conversion price to $4.51 per share).

Limitation on Holders Right to Convert Notes if Conversion Would Result in Beneficial Ownership of More Than 9.9% or 19.9% of the Issuer’s Outstanding Common Stock Following Conversion

Under the Indenture, a holder is not entitled to receive Shares upon conversion of any Notes to the extent to which the aggregate number of Shares that may be acquired by such beneficial owner upon conversion of Notes, when added to the aggregate number of Shares deemed beneficially owned, directly or indirectly, by such beneficial owner and each person subject to aggregation of the Shares with such beneficial owner under Section 13 or Section 16 of the Exchange Act and the rules promulgated thereunder at such time (an “Aggregated Person”) (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on such beneficial owner’s or such person’s right to convert, exercise or purchase similar to this limitation), as determined pursuant to the rules and regulations promulgated under Section 13(d) of the Exchange Act, would exceed 9.9% (the “Restricted Ownership Percentage”) of the total issued and outstanding shares of Common Stock (the “Section 16 Conversion Blocker”); provided that any holder has the right to elect for the Restricted Ownership Percentage to be 19.9% with respect to such holder, (x) at any time, in which case, such election will become effective sixty-one (61) days following written notice thereof to the Issuer or (y) in the case of a holder acquiring Notes on the Issue Date, in the Subscription Agreement. The Reporting Persons have elected that the Restricted Ownership Percentage be set at 19.9% with respect to their Notes. In lieu of any Shares not delivered to the Reporting Persons by operation of the Restricted Ownership Percentage limitation, the Issuer will deliver to the Reporting Persons pre-funded warrants (“Pre-Funded Warrants”) in respect of any equal number of Shares. Such Pre-Funded Warrants will contain substantially similar Restricted Ownership Percentage terms.

Pre-Approval Conversion Ratio prior to Shareholder Approval

Under the Indenture, the conversion of the Notes prior to the shareholder approval described above is subject to a “Pre-Approval Conversion Ratio” of 75%. Any Pre-Funded Warrants issued in lieu of Shares in connection with a conversion of Notes prior to shareholder approval would also not be exercisable in accordance with the terms of the Pre-Funded Warrants prior to shareholder approval.

Issuer’s Right to Redeem Notes

During the first six months immediately following issuance of the Notes, the Issuer has the right to redeem up to $25 million principal amount of Notes at 105% plus accrued interest; and during the period between the first six months and 18 months from the Notes issue date, the Issuer has the right to redeem up to an additional $25 million of Notes at 104% plus accrued interest.  Redemptions are required to be made from proceeds from sales of the Issuer’s common stock at a price equal to at least the conversion price under the Notes.  The Issuer also may elect to convert all, but not less than all, of the Notes in connection with a “Qualified Merger,” as detailed in the Indenture.

Issuer’s Mandatory Obligation to Offer to Redeem Notes

The Issuer is required to offer to repurchase the amount of Notes as follows: $5,000,000 on each of June 30, September 30 and December 31, 2023; $3,500,000 on each of March 31, June 30, September 30 and December 31, 2024, and March 31, June 30, September 30 and December 31, 2025.  Such mandatory offer amounts, in chronological order, will be reduced (but not below $0) by any principal amount of Notes redeemed pursuant to the Issuer’s right to redeem the Notes (if any such redemptions are made).  The mandatory offer price for any Note to be repurchased upon a mandatory offer is an amount in cash equal to the principal amount of such Note plus accrued and unpaid interest on such Note to, but excluding, the mandatory offer Date for such mandatory offer, subject to certain record date adjustments

 

Concurrently with the execution of the Subscription Agreement, each of the MSD Investors, MSD Partners, affiliates of Glendon, William Monroe and officers and directors of the Issuer (severally and not jointly) entered into a Voting and Support Agreement with the Issuer (the “Voting Agreement”). The Issuer’s stockholders who are subject to the Voting Agreement have, among other things, agreed with the Issuer (but not any of the other stockholders) to vote the shares of the Issuer’s common stock held by each such stockholder (1) in favor of an amendment of the Issuer’s certificate of incorporation to increase the number of authorized shares of the Issuer’s common stock from 50,000,000 shares to 250,000,000 shares (the “Charter Amendment Proposal”), (2) in favor of the issuance of the shares of the Issuer’s common stock pursuant to the Indenture, including shares issuable at the amended conversion rate, and upon conversion under PIK Notes or up to $7.5 million of Additional Notes, or at the Issuer’s option in connection with a Qualified Merger (the “Share Issuance Proposal”), and (3) in favor of an amendment to increase the authorized shares of the Issuer’s common stock under the Issuer’s long-term incentive plan by 4,300,000 shares (the “Incentive Plan Proposal”).  As of March 18, 2022, these stockholders owned an aggregate of approximately 36.5% of the outstanding Shares. The Reporting Persons and Glendon are not affiliates or acting as a “group” of beneficial owners.

 

The Issuer plans to submit each of the Charter Amendment Proposal, the Share Issuance Proposal and the Incentive Plan Proposal for approval at the Issuer’s 2022 Annual Meeting of Stockholders.

 

Concurrently with the execution of the Subscription Agreement and the issuance of the Notes on March 18, 2022, MSD Partners entered into an Investor’s Rights Agreement with the Issuer, pursuant to which the Issuer has granted MSD Partners the right to designate one director as long as it and its affiliates continues to own at least $25 million principal amount of Notes (the “Sunset Date”). The Issuer also entered into an Investor’s Rights Agreement with Glendon that permitted them to designate one director on the same terms. In addition, as long as each of such parties continues to have the right to appoint such holder representatives, the two holder representatives will have the right to nominate one additional representative as a director, provided that the third representative must be an independent director unless one of the MSD Partners and Glendon Capital representatives is not independent for NYSE purposes. The proposed representatives are subject to review by the Issuer’s nominating and governance committee.  Following the Sunset Date for the applicable party, MSD Partners and/or Glendon, as applicable, will cause its designee to offer to tender his or her resignation, unless otherwise requested by the Issuer’s board of directors, and the third representative may be removed by the board of directors.

Pursuant to the Investor Rights Agreement, the MSD Investors designated Christopher Gleysteen, a Principal on MSD Partners’ Credit Team and employee of MSD Partners, to serve on the Issuer’s Board of Directors.

 

 

 

	D.		MSD PRIVATE CREDIT OPPORTUNITY (NON-ECI) FUND, LLC
			(a)	As of the date hereof, MSD PRIVATE CREDIT OPPORTUNITY (NON-ECI) FUND, LLC beneficially owns, in aggregate, 3,345,882 Shares, representing 19.9% of the Issuer's outstanding Shares.6
			(b)	Number of shares as to which such person has:
				(i)	Sole power to vote or direct the vote: -0-
				(ii)	Shared power to vote or direct the vote: 3,345,882
				(iii)	Sole power to dispose or direct the disposition: -0-
				(iv)	Shared power to dispose or direct the disposition: 3,345,882

	E.		MSD Partners (GP), LLC
			(a)	As of the date hereof, MSD Partners (GP), LLC beneficially owns, in aggregate, 17,592,253 Shares, representing 19.9% of the Issuer's outstanding Shares.6
			(b)	Number of shares as to which such person has:
				(i)	Sole power to vote or direct the vote: -0-
				(ii)	Shared power to vote or direct the vote: 17,592,253
				(iii)	Sole power to dispose or direct the disposition: -0-
				(iv)	Shared power to dispose or direct the disposition: 17,592,253

___________

6 Includes shares of the Issuer’s Common Stock underlying the Notes held by the Reporting Persons, as specified on the cover pages of this Schedule 13D/A. The percentage used herein and in the rest of this Schedule 13D is calculated based upon (i) 11,349,005 shares of the Issuer’s Common Stock outstanding as of March 4, 2022, as disclosed in the Issuer’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2022, (ii) an additional 2,268,000 shares of the Issuer’s Common Stock issued on March 18, 2022, as reported in the Issuer’s Current Report on Form 8-K filed with the SEC on March 21, 2022, and (iii) assuming the issuance to the applicable Reporting Persons of the shares of the Issuer’s Common Stock upon conversion of the Notes. It also reflects the operation of a 19.9% Restricted Ownership Percentage with respect to the Reporting Persons.

Item 5(c):

Item 5(d):

 

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

	MSD PCOF Partners LXXIII, LLC
	By:	MSD Partners, L.P.
	Its:	Investment Manager

	By:	MSD Partners (GP), LLC
	Its:	General Partner

	By:	/s/ Marc R. Lisker
	Name:	Marc R. Lisker
	Title:	Manager

	MSD PRIVATE CREDIT OPPORTUNITY (NON-ECI) FUND, LLC
	By:	MSD Partners, L.P.
	Its:	Investment Manager
	By:	MSD Partners (GP), LLC
	Its:	General Partner

	By:	/s/ Marc R. Lisker
	Name:	Marc R. Lisker
	Title:	Manager

Exhibit 99.1

JOINT FILING AGREEMENT

March 23, 2022

The undersigned hereby agree as follows:

(i) Each of them is individually eligible to use the Schedule 13D to which this Exhibit is attached, and such Schedule 13D is filed on behalf of each of them; and

(ii) Each of them is responsible for the timely filing of such Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning such person contained therein; but none of them is responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate.

Date: March 23, 2022

 

	MSD PCOF Partners LXXIII, LLC
	By:	MSD Partners, L.P.
	Its:	Investment Manager

	By:	MSD Partners (GP), LLC
	Its:	General Partner

	By:	/s/ Marc R. Lisker
	Name:	Marc R. Lisker
	Title:	Manager

	MSD PRIVATE CREDIT OPPORTUNITY (NON-ECI) FUND, LLC
	By:	MSD Partners, L.P.
	Its:	Investment Manager
	By:	MSD Partners (GP), LLC
	Its:	General Partner

	By:	/s/ Marc R. Lisker
	Name:	Marc R. Lisker
	Title:	Manager