UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2011 (July 27, 2011)
KEY ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
| |
|
|
|
|
| Maryland |
|
001-08038 |
|
04-2648081 |
| (State or other Jurisdiction of Incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
| |
|
|
1301 McKinney Street, Suite 1800
Houston, Texas
|
|
77010 |
| (Address of Principal Executive Offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: 713/651-4300
| |
| |
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
1
Item 1.01 Entry into a Material Definitive Agreement.
On July 27, 2011, Key Energy Services, Inc., a Maryland corporation (the “Company”) entered
into the First Amendment to Credit Agreement (the “Amendment”) among the Company, each lender from
time to time party to the Credit Agreement (as defined below), JPMorgan Chase Bank, N.A., as
Administrative Agent, Bank of America, N.A., as Syndication Agent, and Capital One, N.A., Wells
Fargo Bank, N.A., Credit Agricole Corporate and Investment Bank and DnB NOR Bank ASA, as
Co-Documentation Agents. The Amendment, which is effective as of July 27, 2011, amends certain
provisions of the Company’s credit agreement, dated as of March 31, 2011 (together with all
annexes, exhibits and schedules thereto, the “Credit Agreement”), which provides for a senior
secured credit facility (the “Senior Secured Credit Facility”) consisting of a revolving credit
facility, letter of credit sub-facility and swing line facility of up to an aggregate principal
amount of $400.0 million, all of which will mature no later than March 31, 2016. The Senior
Secured Credit Facility and the obligations thereunder are secured by substantially all of the
assets of the Company and the subsidiary guarantors, and are guaranteed by certain of the Company’s
existing and future domestic subsidiaries.
Among other changes, the Amendment increased the total commitments by the lenders under the
credit facility from $400.0 million to $550.0 million, effected by an increase in the commitments
of certain existing lenders under the facility and the addition of certain new lenders.
The Amendment also modifies the Senior Secured Credit Facility by, among other things:
| |
• |
|
increasing, from $500.0 million to $650.0 million, the maximum aggregate amount of
commitments permitted under the Credit Agreement pursuant to the Company’s option to
increase commitments by the lenders; and |
| |
| |
• |
|
amending the requirement that the Company maintain a debt to capitalization ratio of
consolidated total funded indebtedness to total capitalization of 45% or less by
changing the maximum required ratio to the following percentages during each
corresponding period: |
| |
|
|
| Fiscal Quarter Ending |
|
Ratio |
| June 30, 2011 through March 31, 2012
|
|
50% |
| June 30, 2012 and September 30, 2012
|
|
47.5% |
| December 31, 2012 and thereafter
|
|
45% |
Except as amended by the Amendment, the Senior Secured Credit Facility remains in full force
and effect as originally executed, and the Company is subject to the various other affirmative and
negative covenants included in the Senior Secured Credit Facility, as amended, including without
limitation restrictions related to (i) liens; (ii) debt, guarantees and other contingent
obligations; (iii) mergers and consolidations; (iv) sales, transfers and other dispositions of
property or assets; (v) loans, acquisitions, joint ventures and other investments (with
acquisitions permitted so long as, after giving pro forma effect thereto, no default or event of
default exists under the Senior Secured Credit Facility, the pro forma consolidated total leverage
ratio does not exceed 4.00 to 1.00, the Company is in compliance with its other financial covenants
and the Company has at least $25 million of availability under the Senior Secured Credit Facility);
(vi) dividends and other distributions to, and redemptions and repurchases from, equityholders;
(vii) making investments, loans or advances; (viii) selling properties; (ix) prepaying, redeeming
or repurchasing subordinated (contractually or structurally) debt; (x) engaging in transactions
with affiliates; (xi) entering into hedging arrangements; (xii) entering into sale and leaseback
transactions;
(xiii) granting negative pledges other than to the lenders; (xiv) changes in the nature of
business; (xv) amending organizational documents; and (xvi) changes in accounting policies or
reporting practices; in each of the foregoing cases, with certain exceptions. Furthermore, the
Senior Secured Credit Facility provides that share repurchases by the Company in excess of $200
million can be made only if the Company is in compliance, on a pro forma basis, with the debt to
capitalization ratio requirement described above.
The Company may prepay the Senior Secured Credit Facility in whole or in part at any time
without premium or penalty, subject to certain reimbursements to the lenders for breakage and
redeployment costs.
The description of the Senior Secured Credit Facility and the Amendment contained herein does
not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, a
copy of which is attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April
5, 2011 and is incorporated herein by reference, and the Amendment, a copy of which is attached to
this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
On July 28, 2011, the Company announced its results for the quarter ended June 30, 2011. A
copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is
incorporated herein by reference. The information contained in this Item 2.02 (including the
exhibit hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by
specific reference in such a filing.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The information provided under Item 1.01 with respect to the Amendment, the Credit Agreement
and the Senior Secured Credit Facility is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| |
10.1 |
|
First Amendment to Credit Agreement, dated as of July 27, 2011, among Key
Energy Services, Inc., each of the lenders from time to time party thereto, JPMorgan
Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent,
and Capital One, N.A., Wells Fargo Bank, N.A., Credit Agricole Corporate and Investment
Bank and DnB NOR Bank ASA, as co-documentation agents. |
| |
| |
99.1 |
|
Press release of Key Energy Services, Inc. issued July 28, 2011 reporting results for the
quarter ended June 30, 2011. |