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SEC Filings

S-4/A
KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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WellTech has agreed to pay all reasonable costs and expenses  incurred by Key in
connection with its management services under the Interim Operations  Agreement.
If the Merger is not  consummated,  Key will receive a management fee of $25,000
per  month  for its  services,  payable  after  the  Merger  Agreement  has been
terminated.  The Interim Operations  Agreement may be terminated by either party
at any  time  after  May  31,  1996  if the  Merger  is  not  consummated,  upon
commencement of any bankruptcy or insolvency proceedings or upon the termination
of the Merger  Agreement  provided,  however that so long as any  obligation  of
WellTech is outstanding under the New Indebtedness, neither Key nor WellTech may
terminate the Interim  Operations  Agreement  without the consent of the lender.
The Interim  Operations  Agreement will  automatically  terminate on the Closing
Date. In the event the Merger is not  consummated,  for a period of three years,
Key will be prohibited from offering  employment to certain  WellTech  employees
and  both  Key  and  WellTech  will  be  prohibited  from   disclosing   certain
confidential information.

         New  Indebtedness.  On January 19, 1996, Key and WellTech  entered into
credit agreements with The CIT Group/Credit  Finance,  Inc. ("CIT") to refinance
substantially all of the existing indebtedness of Key (other than that of Odessa
Exploration)  and  WellTech  (other than  indebtedness  to certain  affiliates),
respectively.  The  aggregate  principal  amount  available  under  such  credit
arrangements to each of Key and WellTech is $17.5 million  (subject to a certain
advance  formula).  The New Indebtedness is in the form of three-year  revolving
credit or term-loan arrangements,  automatically renewed for successive two-year
periods,  unless  terminated  by either CIT or Key.  After giving  effect to the
repayment  of all  such  existing  debt  of  Key  (other  than  that  of  Odessa
Exploration) and WellTech (other than indebtedness to certain affiliates) out of
the proceeds of such  borrowing,  Key and WellTech have available  approximately
$5.6 million and $1.4 million,  respectively,  of borrowing capacity, depending,
in part, on the amount of their respective  accounts receivable and the value of
their  respective  equipment.  The  borrowing  arrangements  prior to the Merger
entail separate borrowings by, on the one hand, Key, Yale E. Key and Clint Hurt,
jointly and severally,  up to an aggregate of $17.5 million  principal amount of
revolving  credit  loans  less the  aggregate  principal  amount  of term  loans
(currently  aggregating  approximately  $10.1  million)  and, on the other hand,
WellTech of up to an aggregate of $17.5  million  principal  amount of revolving
credit  loans  less the  aggregate  principal  amount of term  loans  (currently
aggregating  approximately  $16.1  million)  . Each of the  borrowers  has also,
jointly and severally,  cross-guaranteed  the obligations of each other borrower
and   the   obligations   of  all   borrowers   are   cross-collateralized   and
cross-defaulted.  Accordingly,  Key is liable for all borrowings by WellTech. In
an attempt to protect Key, should the Merger not be consummated,  Key negotiated
the  management  and  operational  power and  authority it has under the Interim
Operations  Agreement.  At the option of CIT, the loans will be immediately  due
and payable if the Merger has not been  consummated  on or before April 30, 1996
and WellTech has failed to refinance its borrowings on or prior to July 31, 1996
or Key ceases to  continue  to operate  WellTech  under the  Interim  Operations
Agreement until such  refinancing.  Key and WellTech have agreed that so long as
any obligation of WellTech to CIT is outstanding,  neither Key nor WellTech will
terminate the Interim Operations Agreement without CIT's consent.  There can, of
course, be no assurance that, should the Merger not be consummated, Key will not
suffer a significant loss with respect to its guaranty of WellTech  indebtedness
pursuant to these arrangements.

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