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KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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million (subject to certain advance formulas) and the aggregate principal amount
available  under  WellTech's  new credit  agreement  will be not less than $17.5
million  (subject to certain advance  formulas).  The New Indebtedness is in the
form of a three-year  revolving  credit  arrangement and a three-year term loan.
The initial three-year term is renewable for successive  two-year terms,  unless
either the lender or the  borrower  gives  notice of  termination.  After giving
effect to the  repayment  of all then  existing  debt of Key (other than that of
Odessa  Exploration) and WellTech (other than that of certain affiliates) out of
the  proceeds of such  borrowing,  Key has  available to it  approximately  $5.6
million of borrowing capacity, depending, in part, on the amount of its accounts
receivable  and  machinery  and  equipment  and  WellTech  has  available  to it
approximately $1.4 million of borrowing capacity,  depending,  in part, upon the
same factors.  The New  Indebtedness  is cross-  guaranteed by Key, Yale E. Key,
Clint Hurt and WellTech and  cross-collateralized  by their  respective  assets.
Upon consummation of the Merger,  the New Indebtedness will be the obligation of
Key, as survivor of the Merger,  and Key's  subsidiaries,  Yale E. Key and Clint
Hurt. The cross-guaranty and  cross-collateralization  arrangement could, if the
Merger is not  consummated,  create  contingent  liabilities for each of Key and
WellTech.  The  failure to  consummate  the Merger on or prior to April 30, 1996
will, at the option of the lender,  constitute an event of default under the New
Indebtedness  if WellTech  fails to refinance its credit  agreement on or before
July 31,  1996 or Key fails to  continue  to operate  WellTech  pursuant  to the
Interim  Operations  Agreement  until  such  refinancing.   (See  "Business  and
Properties of Key - Recent Developments - New Indebtedness".)

       o Dawson WellTech  Arrangements.  Dawson WellTech,  L.C., a Texas limited
liability company, was owned 61% by Dawson Production  Services,  Inc. (formerly
Dawson Well Servicing, Inc. ("Dawson")), and 39% by WellTech. Effective November
1, 1995,  WellTech  exchanged  its 39%  interest in Dawson  WellTech,  L.C.  for
309,186  shares of Dawson,  and effective  December 31, 1995 Dawson  WellTech,
L.C. was merged into Dawson.  WellTech has  directed  Dawson to  distribute  the
stock of  Dawson to the  WellTech  shareholders  and  directors  . In  addition,
WellTech  has agreed to  perform  consulting  services  for Dawson in return for
11.7% of Dawson's consolidated pre-tax earnings.  This consulting agreement will
terminate on the earliest of (i) March 31, 1996, (ii) the date Dawson closes and
funds an initial public offering of its securities, or (iii) the date upon which
Dawson shall engage in a business  combination or sell  substantially all of its
assets to another  party.  (See  "Business and  Properties  of  WellTech--Recent
Developments--Dawson WellTech.")

Delivery of Key Securities

       A description of the method of delivery of shares of Key Common Stock and
New Key Warrants to be issued to the WellTech stockholders in the Merger will be
furnished, along with the appropriate transmittal forms, prior to or immediately
following the consummation of the Merger.  WELLTECH STOCKHOLDERS SHOULD NOT SEND

Ownership of Key Common Stock after the Merger

         Based  solely  on  the   securities   to  be  issued  to  the  WellTech
stockholders  pursuant  to  the  Merger,  such  stockholders  would  own  in the
aggregate  approximately  47.3% of the  outstanding  shares of Key Common  Stock