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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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         Substantial  Leverage  and  History of Losses.  Key,  as the  surviving
company,  will be highly  leveraged due to the substantial  indebtedness Key and
WellTech have incurred over time primarily to finance  acquisitions  and capital
expenditures,  expand operations and, in the case of WellTech, finance operating
losses.  As of December 31, 1995,  Key's aggregate debt was  approximately  $17
million.  After  giving  effect to the  Merger and the New  Indebtedness,  as of
December 31, 1995,  Key's  aggregate  debt on a pro forma basis would have been
approximately  $35  million.  Key  may  incur  additional  indebtedness  to make
investments,   acquisitions  and  capital   expenditures  in  the  future.  (See
"Management's  Discussion  and Analysis of Results of  Operations  and Financial
Condition of  Key--Liquidity  and Capital  Resources.")  Key anticipates that it
will continue to have substantial indebtedness for the foreseeable future.

         WellTech  has had  operating  losses  in each of the five  years  ended
December 31, 1994 but had operating  income for the nine months ended  September
30, 1995. There can be no assurance that WellTech will not have operating losses
for the year ended December 31, 1995 or, if the Merger is consummated,  that the
operations of Key subsequent to the Merger will not be adversely affected by the
same factors that contributed to WellTech's operating losses. (See "Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations  of
WellTech .")

         In recent years,  cash  generated  from Key's  operating  activities in
conjunction  with borrowings and proceeds from private equity issuances has been
sufficient  to meet its debt  service and  acquisition,  investment  and capital
expenditure  requirements.  Key  believes  that cash  generated  from  operating
activities,  together with borrowings from existing and future credit facilities
and proceeds from future equity issuances, will be sufficient to meet its future
debt service requirements and to make anticipated acquisitions,  investments and
capital expenditures.  However, there can be no assurance in this regard or that
the terms  available  for such  financing  would be favorable to Key or that any
such future  equity  issuance  would be at a price per share equal to or greater
than the current market price. Any such future equity financing would dilute the
interests of current  stockholders  of Key. (See  "Management's  Discussion  and
Analysis of Results of Operations and Financial  Condition of Key--Liquidity and
Capital Resources.")

         Cross-Guaranty and Cross-Collateralization of the New Indebtedness. Key
has guaranteed WellTech's obligations under the New Indebtedness and has pledged
its assets to secure such  WellTech  obligations,  and WellTech  has  guaranteed
Key's  obligations  under the New  Indebtedness  and has  pledged  its assets to
secure such Key  obligations.  The obligations of Key and WellTech under the New
Indebtedness  are also cross  defaulted.  Accordingly,  a default  under the New
Indebtedness  by WellTech or Key could  jeopardize the assets of the other party
even if such  other  party  were not  itself in  default.  If the  Merger is not
consummated on or before April 30, 1996, the New Indebtedness will be in default
unless  WellTech  refinances its  obligations on or before July 31, 1996 and Key
continues to operate WellTech under the Interim Operations  Agreement until such
refinancing.  There can be no  assurance,  particularly  in light of  WellTech's
operating  history,  that it will be able to refinance  its  obligations  in the
event the Merger is not  consummated.  In such event, the lender could foreclose
on substantially all of Key's, as well as WellTech's, properties and assets.

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