As filed with the Securities and Exchange Commission on August 3, 1998.
Registration Statement No. 333-_______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
DAWSON PRODUCTION SERVICES, INC.
(Exact name of Registrant)
TEXAS 74-2231546
(State of incorporation) (I.R.S. Employer
Identification No.)
MICHAEL E. LITTLE, PRESIDENT
DAWSON PRODUCTION SERVICES, INC.
112 E. PECAN STREET, SUITE 1000
SAN ANTONIO, TEXAS 78205
(210) 476-0420
(Address and telephone number of Registrant's executive offices and name,
address and telephone number of agent for service)
COPY TO:
J. ROWLAND COOK
JENKENS & GILCHRIST
A PROFESSIONAL CORPORATION
600 CONGRESS AVENUE, SUITE 2200
AUSTIN, TEXAS 78701
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
---------------------------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================
PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER SHARE(1) OFFERING PRICE(1) FEE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01
par value 68,067 $14.00 $952,938 $281.12
====================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee and based
upon the average of the high and low prices reported on the New York Stock
Exchange on July 29, 1998, in reliance on Rule 457(c) under the Securities
Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
DAWSON PRODUCTION SERVICES, INC.
CROSS REFERENCE SHEET
PURSUANT TO REGULATION S-K ITEM 501(b)
<TABLE>
<CAPTION>
FORM S-3 ITEM NUMBER AND CAPTION LOCATION/CAPTION IN PROSPECTUS
<S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Pages of Prospectus..... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus.................................. Inside Front and Outside Back Cover
Pages of Prospectus
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges................ Risk Factors; The Company
4. Use of Proceeds............................. Not Applicable
5. Determination of Offering Price............. Not Applicable
6. Dilution.................................... Not Applicable
7. Selling Security Holders.................... Selling Shareholders
8. Plan of Distribution........................ Plan of Distribution
9. Description of Securities to be Registered.. Incorporation of Certain Documents by
Reference
10. Interests of Named Experts and Consultants.. Not Applicable
11. Material Changes............................ Not Applicable
12. Incorporation of Certain Material by
Reference................................... Incorporation of Certain Documents by
Reference
13. Disclosure of Commission Position on Indemni-
fication for Securities Act Liabilities..... Not Applicable
</TABLE>
1
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion; Dated August 3, 1998
68,067 Shares
[LOGO]
DAWSON PRODUCTION SERVICES, INC.
Common Stock
This Prospectus relates to an aggregate of 68,067 shares (the "Shares")
of common stock, par value $.01 per share ("Common Stock"), of Dawson Production
Services, Inc. ("Dawson" or the "Company"). The Common Stock is currently traded
on the New York Stock Exchange ("NYSE") under the symbol DPS. On July 29, 1998,
the closing sale price of the Common Stock on NYSE was $14.00 per share.
The Shares may be offered from time to time by persons (collectively,
the "Selling Shareholders") who acquired the Shares in a transaction or chain of
transactions not involving a public offering. The Selling Shareholders have
indicated that the Shares may be sold in the over-the-counter market or
otherwise at prevailing market prices or negotiated prices or by a combination
of the foregoing methods of sale. No underwriter has been engaged to participate
in the offering of the Shares. Expenses of the offering, other than underwriting
discounts and commissions, will be paid by the Company. Such expenses are
estimated at $20,309. The Company will receive no portion of the proceeds of any
sales of Shares by the Selling Shareholders. See "Plan of Distribution."
THESE SECURITIES INVOLVE CERTAIN RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES ADMINISTRATOR, NOR
HAS THE COMMISSION OR ANY SUCH ADMINISTRATOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS __________________, 1998.
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<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part)
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Shares. This Prospectus does not contain all the information set
forth in the Registration Statement, certain portions of which have been omitted
as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Shares, reference is made to
such Registration Statement and exhibits.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. The Registration Statement, the exhibits forming a part thereof,
and the reports, proxy statements and other information can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following
regional offices of the Commission: 7 World Trade Center, 13th Floor, New York,
New York 10048 and Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Commission maintains a web site
(http:\\www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants, such as the Company, that file
electronically with the Commission. The Company's Common Stock is traded on the
New York Stock Exchange. Reports, proxy statements and other information
concerning the Company can also be inspected at the office of the New York Stock
Exchange, 20 Broad Street, 16th Floor, New York, New York 10005.
The statements contained in this Prospectus that are not historical
facts, including but not limited to, statements found in the "The Company" and
"Risk Factors," are forward-looking statements as that term is defined in
Section 21E of the Exchange Act that involve a number of risks and
uncertainties. The actual results of the future events described in the
forward-looking statements in this Prospectus could differ materially from those
stated in such forward-looking statements. Among the factors that could cause
actual results to differ materially are: general economic conditions,
competition and government regulations, as well as the risks and uncertainties
discussed in this Prospectus, including without limitation, the matters
discussed in "Risk Factors" and the uncertainties set forth from time to time in
the Company's other public reports, filings, and public statements.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998;
(2) all other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since March 31, 1998
(3) the description of the Common Stock set forth in the Registration
Statement on Form 8-A, filed with the Commission on February 8,
1996, including any amendment or report filed for the purpose of
updating such description; and
(4) all documents filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and
3
<PAGE>
prior to the termination of this offering of the Shares, from the
date of filing of such documents.
Any statement contained in a previously filed document incorporated by
reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
accompanying Prospectus supplement, or in any other subsequently filed document
which also is or is deemed to be incorporated by reference, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company undertakes to provide without charge to each person to whom
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all documents incorporated herein by reference, other than
exhibits. All requests for copies of such documents should be directed to: P.
Mark Stark, Vice President and Chief Financial Officer, Dawson Production
Services, Inc., 112 E. Pecan Street, Suite 1000, San Antonio, Texas 78205,
telephone: (210) 476-0420.
THE COMPANY
Dawson Production Services, Inc. (the "Company" or "Dawson") is a
leading provider of a broad range of workover, liquid and production services
used in the production of oil and gas. The Company's services are utilized by
major oil and gas companies as well as independent producers to optimize
performance of oil and gas wells. Dawson is currently the third largest provider
of land based workover rigs in the United States.
The Company commenced operations in 1951. In 1982, under the direction
of the current president, the Company initiated a strategy to expand and
diversify the Company's workover rig services. At that time, the Company owned
four workover rigs that were operated out of a single yard. In November 1994,
the Company broadened the array of services that it provides by acquiring the
liquid services and production services businesses of Well Solutions, Inc. (the
"Well Solutions Acquisition") and expanded such business in July 1996 with the
acquisition of Taylor Companies, Inc. (the "Taylor Acquisition") and in January
1997 with the acquisition of Mobley Company, Inc. (the "Mobley Acquisition"). In
February 1997, the Company continued the growth by acquiring the stock of Pride
Land Operations L.P. (the "Pride Acquisition"). The Taylor, Mobley and Pride
acquisitions (the "1997 Acquisitions") established the Company as one of the
largest providers of services in the oil industry. In December 1997, the Company
acquired Bobby's Hot Oil Service, Inc., Tubing Tests Corp. and Alamo Tubing
Testers Corp. (collectively, the "Bobby's Acquisition"), and in January 1998,
the Company acquired PetroStar Corporation of Louisiana (the "PetroStar
Acquisition"). The Bobby's, PetroStar and other small acquisitions during fiscal
year 1998 (the "1998 Acquisitions") continued the Company's growth with the
addition of 26 workover rigs and other equipment. In addition, the Company
expanded its services to include hot oil trucks. The Company believes that it
generally has been successful in acquiring businesses and assets and
subsequently reducing overhead, enhancing internal controls, improving marketing
and related operations through management incentives and improving the
utilization of its assets by redeploying equipment.
As a result of its acquisitions and certain corporate restructuring, the
Company currently has several direct and indirect subsidiaries through which it
conducts a significant portion of its operations. All of the assets are held in
Dawson Production Partners, L.P., a Delaware limited partnership (the
"Partnership"). All of the general and limited partnership interests in the
Partnership are owned by three wholly-owned corporate subsidiaries of Dawson
Production Services; Dawson Production Management, Inc., a Delaware corporation,
owns a 1.4% general partnership interest in the Partnership; Dawson Production
Taylor, Inc., a Delaware
4
<PAGE>
corporation, owns a 8.85% limited partnership interest in the Partnership; and
Dawson Production Acquisition Corp., a Delaware corporation owns the remaining
89.75% limited partnership interest in the Partnership. Dawson has the following
additional wholly-owned subsidiaries: Dawson Production Services de Mexico, S.A.
de C.V., and Ubicadora de Tecnicos S.A. de C.V., both of which are companies
organized under the laws of Mexico.
The Company's principal executive office is located at 112 E. Pecan
Street, Suite 1000, San Antonio, Texas 78205, and its telephone number is (210)
476-0420.
RECENT DEVELOPMENTS
In a press release and letter to the Company, both dated June 29, 1998,
Key Energy Group, Inc. ("Key") submitted to Dawson an unsolicited proposal to
acquire all issued and outstanding shares of common stock of the Company at a
cash price of $16 per share; Key also stated it would be willing to consider a
stock-for-stock transaction or a mixed stock-and-cash transaction.
On July 7, 1998, the Company issued a press release announcing that it
had engaged Morgan Stanley & Co. Incorporated to review and provide advice with
respect to Key's unsolicited proposal.
RISK FACTORS
THE STATEMENTS INCLUDED IN THIS REPORT REGARDING FUTURE FINANCIAL
PERFORMANCE AND RESULTS AND THE OTHER STATEMENTS THAT ARE NOT HISTORICAL FACTS
ARE FORWARD-LOOKING STATEMENTS. THE WORDS "EXPECT," "PROJECT," "ESTIMATE,"
"PREDICT" AND SIMILAR EXPRESSIONS ALSO ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. SUCH STATEMENTS INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS,
INCLUDING BUT NOT LIMITED TO, INDUSTRY CONDITIONS, PRICES OF CRUDE OIL AND
NATURAL GAS, AND OTHER FACTORS DISCUSSED IN THIS REPORT (INCLUDING THOSE
SPECIFICALLY DISCUSSED BELOW) AND IN THE COMPANY'S OTHER FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION. SHOULD ONE OR MORE OF THESE RISKS OR
UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT,
ACTUAL OUTCOMES MAY VARY MATERIALLY FROM THOSE INDICATED.
INCURRENCE OF SUBSTANTIAL INDEBTEDNESS
At March 31, 1998, the Company had approximately $149 million in total
indebtedness, including $140 million of Senior Notes due February 1, 2007 (the
"Senior Notes"). The Company historically has operated at substantially lower
levels of debt. The Company's level of indebtedness has several important
effects on its future operations, including, without limitation, that (i) a
substantial portion of the Company's cash flow from operations must be dedicated
to the payment of interest and principal on its indebtedness, (ii) the Company's
leveraged position substantially increases its vulnerability to adverse changes
in general economic and industry conditions, as well as to competitive pressure,
and (iii) the Company's ability to obtain additional financing for working
capital, capital expenditures, acquisitions, general corporate and other
purposes may be limited. The Company's ability to meet its debt service
obligations and to reduce its total indebtedness will be dependent upon the
Company's future performance, which will be subject to general economic
conditions, industry cycles and financial, business and other factors affecting
the operations of the Company, many of which are beyond its control. There can
be no assurance that the Company's business will continue to generate cash flow
at or above current levels. If the Company is unable to generate sufficient cash
flow from operations in the future to service its debt, it may be required,
among other things, to seek additional financing in the debt or equity markets,
to refinance or restructure all or a portion of its indebtedness, including the
Senior Notes, or to sell selected assets or reduce or delay planned capital
5
<PAGE>
expenditures. There can be no assurance that any such measures would be
sufficient to enable the Company to service its debt or that any such financing,
refinancing or sale of assets would be available on economically favorable
terms.
DEPENDENCE ON VOLATILE OIL AND GAS INDUSTRY
Demand for the Company's services depends substantially upon the level
of activity in the oil and gas industry, which in turn depends in part on oil
and gas prices, expectations about future prices, the cost of exploring for,
producing and delivering oil and gas, the discovery rate of new oil and gas
reserves in land areas, the level of drilling and workover activity, domestic
and international political, military, regulatory and economic conditions and
the ability of oil and gas companies to raise capital. Prices for oil and gas
historically have been extremely volatile and have reacted to changes in the
supply of and demand for oil and natural gas, domestic and worldwide economic
conditions and political instability in oil producing countries. Currently, oil
prices are down and natural gas prices are stable, while both oil and gas
inventories are on the rise. Additionally, energy demand from Asian countries is
on the decline. Given these fundamental factors, it is extremely difficult to
predict or forecast customer demand for the Company's services. Continued
depressed prices of oil, or material decline in natural gas prices could
materially affect the demand for the Company's services and the Company's
results of operations.
Industry conditions will continue to be influenced by numerous factors over
which the Company has no control.
The volatility of the oil and gas industry and the consequent impact
thereof on exploration activity could adversely impact certain of the Company's
customers. The Company, therefore, could be subject to special credit risks as
to certain of its customers. While the Company endeavors not to take unjustified
credit risks, it is necessary from time to time to extend trade credit to
long-term customers and others where some risks of nonpayment or late payment
could exist.
ACQUISITION RISKS
The Company completed several small acquisitions in the fiscal year
1998. No assurance can be given that the Company will be successful in managing
and incorporating the businesses and assets acquired into its existing
operations or that such activities will not require a disproportionate amount of
management's attention. The Company's failure to incorporate the acquired
businesses and assets into its existing operations successfully, or the
occurrence of unexpected costs or liabilities in the acquired businesses, could
have a material adverse effect on the Company.
LIQUIDITY NEEDS; ABILITY TO REPAY NOTES
The Company may from time to time fund a portion of its working capital
needs and capital expenditure requirements from external financing. In addition,
the Company expects that in order to repay the principal amount of the Senior
Notes at maturity or upon acceleration, or to purchase the Senior Notes upon a
Change of Control (as defined in the Indenture relating to the Senior Notes (the
"Indenture")), it will likely be required to seek additional financing or engage
in asset sales or similar transactions. These can be no assurance that
sufficient funds for any of the foregoing purposes would be available to the
Company at the time they are required on favorable terms.
RISKS RELATING TO INJECTION WELLS
The Company's injection operations pose certain environmental liability
risks to the Company. Although the Company monitors the injection process, any
leakage from the subsurface portions of the wells could cause degradation of
fresh groundwater resources, potentially resulting in cancellation of operation
of
6
<PAGE>
the well, fines and penalties from governmental agencies, expenditures for
redemption of the affected resource, and liability to third parties for property
damages and personal injuries. In addition, the sale by the Company of residual
crude oil collected as part of the saltwater injection process could impose
liability on the Company in the event the transferee of the oil fails to manage
the material in accordance with applicable environmental health and safety laws.
SUBSTANTIAL COMPETITION
The workover rig and production services industry is highly competitive
and fragmented and includes several large companies and a number of small
companies capable of competing effectively with the Company on a local basis.
OPERATING RISKS AND INSURANCE
The Company's operations are subject to hazards inherent in the oil and
gas industry, such as blowouts, explosions, craterings, fires and oil spills,
that can cause personal injury or death, damage to or destruction of property,
equipment, the environment and marine life and suspension of operations. In
addition, claims for loss of oil and gas production and damage to formations can
occur in the workover business. Litigation arising from a catastrophic
occurrence at a location where the Company's equipment and services are used may
in the future result in the Company being named as a defendant in lawsuits
asserting potentially large claims.
The Company maintains insurance coverage against these hazards that it
believes to be customary in the industry. However, there can be no assurance
that the Company will be able to maintain adequate insurance in the future at
rates it considers reasonable, or that insurance will continue to be available
on terms as favorable as the Company's existing arrangements. The occurrence of
a significant event or adverse claim in excess of the insurance coverage limits
maintained by the Company could have a materially adverse effect on the
Company's financial condition and results of operations.
RISK OF ENVIRONMENTAL COSTS AND LIABILITIES
The Company's operations are subject to governmental laws and
regulations governing the management and disposal of waste materials, otherwise
relating to environmental protection or public health and safety. Many of the
Company's operations take place in or near ecologically sensitive areas, such as
the Texas Gulf Coast and Louisiana inland waters. Numerous local, state and
federal environmental laws impose liability for causing pollution in inland and
coastal waters. State and federal legislation also provide special protection to
water quality and animal and marine life that could be affected by some of the
Company's activities. The Company's operations also take place in states that
stringently regulate environmental matters, such as California. In general, the
regulations applicable to the Company's operations include certain regulations
controlling the discharge of hazardous or toxic materials into the environment,
requiring removal or remediation of pollutants and imposing civil and criminal
penalties for violations. Some of the statutory and regulatory programs that
apply to the Company's operations also authorize private suits, the recovery of
natural resource damages by the government, injunctive relief and cease and
desist orders.
Some environmental statutes impose strict liability, rendering a person
or entity liable for environmental damage without regard to negligence or fault
on the part of such person or entity. As a result, the Company could be liable,
under certain circumstances, for environmental damage caused by others or for
acts of the Company that were in compliance with all applicable laws at the time
such acts were performed.
7
<PAGE>
The clear trend in environmental regulation has been to impose more
restrictions and limitations on activities that may impact the environment,
including the generation and disposal of wastes and the use and handling of
chemical substances. These restrictions and limitations have increased operating
costs for both the Company and its customers. Any regulatory changes that impose
additional environmental restrictions or requirements on the Company and its
customers could adversely affect the Company through increased operating costs
and potential decreased demand for the Company's services.
In this regard, the Resource Conservation and Recovery Act ("RCRA"), the
principal federal statute governing the disposal of solid and hazardous wastes,
includes a statutory exemption that allows oil and gas exploration and
production wastes to be classified as nonhazardous waste. A similar exemption is
contained in many of the state counterparts to RCRA, including the state
statutes in Texas, New Mexico, and Louisiana; however, there is no such
exemption in the California statutes. If oil and gas exploration and production
wastes were required to be managed and disposed of as hazardous waste, either as
a result of changes in RCRA or the imposition of more stringent state
regulations, domestic oil and gas producers, including many of the Company's
customers, could be required to incur substantial obligations with respect to
such waste. Because of the potential impact on the Company's customers, any
regulatory changes that impose additional restrictions or requirements on the
disposal of oil and gas wastes could adversely affect demand for the Company's
services.
DEPENDENCE ON KEY PERSONNEL
The Company believes that its success will depend to a significant
extent upon the continued services of certain key individuals, particularly
Michael E. Little, Chairman of the Board, President and Chief Executive Officer,
and James J. Byerlotzer, Vice President of Operations and Chief Operating
Officer. The loss of the services of either of these individuals could have a
material adverse effect on the Company.
DEPENDENCE ON MAJOR CUSTOMERS
During the fiscal year ended March 31, 1998, the Company derived
approximately 11.2% of its revenues from its largest customer. The loss of this
customer could have a material adverse effect on the Company's financial
condition and results of operations.
DIVIDEND POLICY
The Company has never paid cash dividends on the Common Stock and does
not anticipate that cash dividends will be paid in the foreseeable future. The
Company currently intends to retain any future earnings to finance the expansion
and continuing development of the Company's business. The declaration and
payment in the future of any cash dividends will be at the election of the
Company's Board of Directors and will depend upon the earnings, capital
requirements and financial position of the Company, future loan covenants,
general economic conditions and other pertinent factors. Furthermore, certain
provisions of the Credit Facility (as defined in the Indenture) and the
Indenture will restrict the Company's ability to pay cash dividends on the
Common Stock.
SUBSTANTIAL AMOUNT OF SECURITIES SUBJECT TO REGISTRATION RIGHTS
The Company is a party to a registration rights agreement entered into
in 1995 pursuant to which certain shareholders, who at that time beneficially
owned approximately 2.4 million shares of Common Stock, were entitled to
registration of such shares under the Securities Act of 1933. Pursuant to the
requirements of that registration rights agreement, in September 1997, the
Company filed a shelf registration statement on Form S-3 pursuant to which it
registered 707,631 shares of Common Stock. The Company is required to keep
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<PAGE>
the shelf registration statement effective for a period of 36
months. In addition, the Company is a party to three additional registration
rights agreements entered into in connection with recent acquisitions that
require it to register 68,067 shares of the Company's issued and outstanding
Common Stock and pursuant to which the Company has filed this Registration
Statement. Sales of substantial amounts of the Common Stock in the public market
pursuant to any such registration statement or otherwise could adversely affect
prevailing market prices and the ability of the Company to raise equity capital
in the future.
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS
The Company's Articles of Incorporation and Bylaws include certain
provisions that may have the effect of discouraging potential unsolicited offers
or other efforts to obtain control of the Company that are not approved by the
Board. Upon a change of control of the Company, holders of the Senior Notes will
have the right to require the Company to purchase such Senior Notes at a price
equal to 101% of the aggregate principal amount thereof, together with accrued
and unpaid interest to the date of purchase. Such provisions may adversely
affect the market price of the Common Stock and may also deprive the
shareholders of opportunities to sell shares of Common Stock at prices higher
than prevailing market prices. Such provisions include the requirement that all
shareholder action must be taken at a duly called annual or special meeting of
shareholders unless a majority of the entire Board provides its prior approval
for shareholder action to be taken by written consent of the shareholders. The
Board has the authority, without further action by the shareholders, to issue up
to 560,000 shares of the Company's preferred stock in one or more series and to
fix the rights, preferences, privileges and restrictions thereof, and to issue
over 9,000,000 additional shares of Common Stock. The issuance of the Company's
preferred stock or additional shares of Common Stock could adversely affect the
voting power of the purchasers of Common Stock and could have the effect of
delaying, deferring or preventing a change in control of the Company.
In addition, on September 11, 1997, the Company adopted a Shareholder
Rights Plan (the "Rights Plan") that is designed to deter unfair takeover
tactics. On that date, the Board of Directors of the Company declared a dividend
distribution of one Right for each outstanding share of Common Stock, to
shareholders of record at the close of business on September 22, 1997.Each right
entitles the registered holder to purchase from the Company one-tenth of one
share of Common Stock of the Company, at a purchase price of $85 per share of
Common Stock, subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement between the Company and Harris Trust Company of
New York, as Rights Agent. The Rights have certain anti-takeover effects and
will cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on a substantial number of Rights
being acquired.
9
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SELLING SHAREHOLDERS
The following table sets forth information, as of July 7, 1998,
regarding the Selling Shareholders, their recent relationships with the Company
and its affiliates, their ownership of Common Stock before and after this
offering, and the number of Shares to be offered for the account of each.
<TABLE>
<CAPTION>
MATERIAL
RELATIONSHIPS WITH AMOUNT OF NUMBER OF SHARES TO AMOUNT OF
COMPANY OR COMMON STOCK BE OFFERED FOR SELLING COMMON STOCK
AFFILIATES SINCE OWNED AT SHAREHOLDER'S OWNED AT
SELLING SHAREHOLDER APRIL 1995 APRIL ,1998 ACCOUNT OFFERING(1) (2)
------------------- ---------- ------------ -------------------- ----------------
<S> <C> <C> <C>
SECURITY WELL SERVICE NONE 9,482 9,482 -0-
SECURITY WELL SERVICE, NONE 11,589 11,589 -0-
INC.
DAVID & MARIA NONE 26,733 26,733 -0-
BREEDING
BILL'S FLUID SERVICE, INC. NONE 20,263 20,263 -0-
</TABLE>
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(1) Assumes that all Shares are sold pursuant to this offering and that no
additional Common Stock is sold or acquired by Selling Shareholders.
(2) In each case, represents less than 1% of issued and outstanding Common
Stock.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholders that all or a
portion of the Shares may be sold from time to time (i) on the New York Stock
Exchange at prevailing market prices, (ii) otherwise than on such market at
prevailing market prices or negotiated prices, or (iii) by a combination of the
foregoing methods of sale. The Company will receive no portion of the proceeds
of any sales of Shares by the Selling Shareholders, but will bear all expenses
of registering the Shares under the Securities Act, except as provided below.
Pursuant to the terms of various purchase agreements between the Company
and the Selling Shareholders (or their predecessors in interest) (the "Purchase
Agreements"), the Company has agreed to file the Registration Statement of which
this Prospectus forms a part for the purpose of registering the potential resale
of the Shares and to maintain the effectiveness of such Registration Statement
for eight months, as contemplated by the Purchase Agreements. In addition, the
Company and the Selling Shareholders listed herein have agreed to indemnify each
other and certain affiliated parties from and against any losses or claims
arising out of, among other things, (1) any untrue statement of a material fact
or (2) any material omission contained or referred to in the Registration
Statement. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company, pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
10
<PAGE>
Except as specifically set forth herein, none of the Selling
Shareholders has, or within the past three years has had, any position, office
or other material relationship with the Company or any of its predecessors or
affiliates.
The Company has been advised by the Selling Shareholders that they (or,
subject to applicable law, their pledgees, donees, distributees, transferees or
other successors in interest) intend to sell all or a portion of the Shares
offered by this Prospectus from time to time (i) on the New York Stock Exchange,
(ii) otherwise than on the New York Stock Exchange, in negotiated transactions
at fixed prices which may be changed, at market prices prevailing at the time of
sale or at prices reasonably related thereto or at negotiated prices, or (iii)
by a combination of the foregoing methods of sale (any of which may involve
crosses and block transactions). The Selling Shareholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of the Shares
for which such broker-dealers may act as agent or to whom they may sell as
principal, or both. The Company is not aware as of the date of this Prospectus
of any agreements between any of the Selling Shareholders and any broker-dealers
with respect to the sale of the Shares offered by this Prospectus. In connection
with distributions of the Shares or otherwise, the Selling Shareholders may
enter into hedging transactions with broker-dealers. In connection with such
transactions, broker-dealers may engage in short sales of the Shares registered
hereunder in the course of hedging the positions they assume with Selling
Shareholders. The Selling Shareholders may also sell Shares short and deliver
the Shares to close out such short positions. The Selling Shareholders may also
enter into option or other transactions with broker-dealers which require the
delivery to the broker-dealer of the Shares registered hereunder, which the
broker-dealer may resell pursuant to this Prospectus. The Selling Shareholders
may also pledge the Shares registered hereunder to a broker or dealer and upon a
default, the broker or dealer may effect sales of the pledged Shares pursuant to
this Prospectus.
The Selling Shareholders and any broker, dealer or other agent executing
sell orders on behalf of the Selling Shareholders may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event
commissions received by any such broker, dealer or agent and profit on any
resale of the Shares may be deemed to be underwriting commissions under the
Securities Act. Such commissions received by a broker, dealer or agent may be in
excess of customary compensation. The Shares may also be sold in accordance with
Section 4(1) of the Securities Act or Rule 144 and Rule 145 under the Securities
Act.
Information as to whether any underwriter who may be selected by the
Selling Shareholders, or any other broker-dealer, is acting as principal or
agent for the Selling Shareholders, the compensation to be received by
underwriters who may be selected by the Selling Shareholders, or any
broker-dealer, acting as principal or agent for the Selling Shareholders and the
compensation to be received by other broker-dealers, will, to the extent
required, be set forth in a supplement to this Prospectus (the "Prospectus
Supplement"). Any dealer or broker participating in any distribution of the
Shares may be required to deliver a copy of this Prospectus, including the
Prospectus Supplement, if any, to any person who purchases any of the Shares
from or through such dealer or broker.
All expenses of registration incurred in connection with the offering
will be borne by the Company. All selling and other expenses incurred by the
Selling Shareholders will be borne by the Selling Shareholders.
The Selling Shareholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including without
limitation, Rule 102 under Regulation M, which provisions may limit the timing
of purchases and sales of any shares of the Common Stock by the Selling
Shareholders. Rule 102 under Regulation M provides, with certain exceptions,
that it is unlawful for a selling shareholder or its affiliated purchaser to,
directly or indirectly, bid for or purchase or attempt to induce any person to
bid for or purchase, for an account in which the selling shareholder or
affiliated purchaser has a beneficial interest
11
<PAGE>
in any securities that are thesubject of the distribution during the applicable
restricted period under Regulation M. All of the foregoing may affect the
marketability of the Common Stock. The Company will require each Selling
Shareholder and his or her broker if applicable, to provide a letter that
acknowledges his compliance with Regulation M under the Exchange Act before
authorizing the transfer of such Selling Shareholder's Shares.
It is anticipated that the Selling Shareholders may offer all of the
Shares for sale. Further, because it is possible that a significant number of
Shares could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of the Company's
Common Stock.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Jenkens & Gilchrist, A Professional Corporation, Austin, Texas.
EXPERTS
The financial statements of Dawson Production Services, Inc. as of March
31, 1998 and 1997, and for each of the years in the three-year period ended
March 31, 1998, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
12
<PAGE>
No dealer, salesman, or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or the Selling
Shareholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Shares nor does it
constitute an offer or solicitation by anyone in any jurisdiction in which such
offer or solicitation would be unlawful or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any offer or sale made hereunder at any time shall imply that information herein
is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Available Information.................................................... 3
Incorporation of Certain Documents
by Reference ......................................................... 3
The Company ............................................................. 4
Recent Developments...................................................... 5
Risk Factors ............................................................ 5
Selling Shareholders .................................................... 10
Plan of Distribution .................................................... 10
Legal Matters ........................................................... 12
Experts ................................................................. 12
68,087 Shares
DAWSON PRODUCTION
SERVICES, INC.
Common Stock
----------------
PROSPECTUS
----------------
July__, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution
of the securities being registered, all of which will be borne by the Company,
are set forth in the following itemized table:
SEC Registration Fee..................................... $ 309
Transfer Agent's Fees.................................... 2,000
Accounting Fees.......................................... 5,000
Legal Fees............................................... 10,000
Miscellaneous............................................ 3,000
----------
Total............................................. $ 20,309
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02-1 of the Texas Business Corporation Act provides that a
corporation may indemnify its officers, directors, employees and agents for
expenses and costs incurred in certain proceedings arising out of actions taken
in their official capacity only if such persons were acting in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation, except in relation to matters in which they have been found
liable (i) to the corporation, or (ii) on the basis that personal benefit was
improperly received regardless of whether or not the benefit resulted from
action taken in their official capacity. In the case of any criminal proceeding,
such persons must also have had no reasonable cause to believe such conduct was
unlawful. Article 2.02-1 further provides that a corporation shall indemnify its
officers and directors against reasonable expenses incurred in connection with
proceedings arising out of actions taken in their official capacity in which
such persons have been wholly successful, on the merits or otherwise, in the
defense of such actions. The Bylaws of the Company, as amended, provide for
indemnification of the Company's directors, officers, and employees to the
fullest extent permitted by Article 2.02-1. Additionally, the Company amended
its Articles of Incorporation, with shareholder approval, to confirm that the
Company has the power to indemnify certain persons in such circumstances as are
provided in its Bylaws. The amendment further enables the Company to enter into
additional insurance and indemnity arrangements at the discretion of the board
of directors. The Company has entered into Indemnification Agreements with each
of its officers and directors, the form of which was approved by the
shareholders of the Company, that essentially indemnify such individuals to the
fullest extent permitted by law.
Article 7.06 of the Texas Miscellaneous Corporation Laws Act provides
that a corporation's articles of incorporation may provide for the elimination
or limitation of a director's liability. The Company's Articles of Incorporation
to eliminate the liability of directors to the corporation or its shareholders
for monetary damages for an act or omission in his capacity as a director, with
certain specified exceptions to the Company and its shareholders to the fullest
extent permitted by Article 7.06 of the Texas Miscellaneous Corporation Laws
Act.
The Company maintains insurance, the general effect of which is to
provide coverage for the Company with respect to amounts that it is required to
pay officers and directors under the indemnity provisions described above and
coverage for officers and directors against certain liabilities, including
certain liabilities under the federal securities law.
II-1
<PAGE>
ITEM 16. EXHIBITS.
4 Specimen share certificates (incorporated by reference to the
Company's Registration Statement No. 333-00452 on Form S-1 filed
on January 18, 1996)
5 Opinion of Jenkens & Gilchrist, A Professional Corporation,
regarding legality
23(a) Consent of Jenkens & Gilchrist, A Professional Corporation
(contained in its opinion filed as Exhibit 5)
23(b) Consent of KPMG Peat Marwick LLP (contained in Part II of this
Registration Statement)
24 Power of Attorney (included on the signature pages hereof)
ITEM 17. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post- effective amendment to this
Registration Statement (i) to include any prospectus
required by 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective Registration
Statement; (iii) to include any material information
with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration
Statement;
(2) that, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment
shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each
filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be
deemed to be a new
II-2
<PAGE>
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 15 above, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Antonio, State of Texas, on July 22, 1998.
DAWSON PRODUCTION SERVICES, INC.
By: /s/ MICHAEL E. LITTLE
Michael E. Little,
Chairman of the Board,
President and Chief
Executive Officer
Each person whose signature appears below hereby constitutes and
appoints Michael E. Little and P. Mark Stark, and each of them, each with full
power to act without the other, his true and lawful attorneys-in-fact and
agents, each with full power of substitution and resubstitution for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments to this Registration Statement (including post-effective amendments),
and to file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each of
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person hereby ratifying and confirming that each of said attorneys-in-fact and
agents or his substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below in multiple counterparts with the effect of one
original by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ MICHAEL E. LITTLE Chairman of the Board, President July 22, 1998
Michael E. Little Chief Executive Officer and Director
(Principal Executive Officer)
/s/ P. MARK STARK Chief Financial Officer July 22, 1998
P. Mark Stark (Principal Financial and Accounting
Officer)
/s/ WM. WARD GREENWOOD Director July 22, 1998
Wm. Ward Greenwood
________________________ Director _____________
J. Michael Bell
/S/ DOUGLAS D. LEWIS Director July 22, 1998
Douglas D. Lewis
/s/ PAUL E. McCOLLAM Director July 13, 1998
Paul E. McCollam
/s/ STEPHEN F. OAKES Director July 13, 1998
Stephen F. Oakes
II-4
<PAGE>
/s/ RUSSELL BANKS Director July 13, 1998
Russell Banks
/s/ LAWRENCE C. PETRUCCI Director July 13, 1998
Lawrence C. Petrucci
II-5
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Dawson Production Services, Inc.:
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of Dawson Production Services, Inc., of our report dated
June 17, 1998 with respect to the consolidated financial statements of Dawson
Production Services, Inc. and subsidiaries as of March 31, 1998 and 1997, and
for each of the years in the three-year period ended March 31, 1998,
incorporated herein by reference from the Company's annual report on Form 10-K
for the year ended March 31, 1998 and to the reference to our firm under the
heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
San Antonio, Texas
July 16, 1998
II-6
EXHIBIT 5
[JENKENS & GILCHRIST LETTERHEAD]
August 3, 1998
Dawson Production Services, Inc.
112 E. Pecan Street, Suite 1000
San Antonio, Texas 78205
Re: Dawson Production Services, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
On August 3, 1998, Dawson Production Services, Inc., a Texas corporation
(the "Company"), filed with the Securities and Exchange Commission
("Commission") a Registration Statement on Form S-3 (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act"), relating
to the offer and sale by the certain shareholders of the Company (the "Selling
Shareholders") of an aggregate of 68,067 shares of common stock, $.01 par value
per share (the "Shares"). We have acted as counsel to the Company in connection
with the preparation and filing of the Registration Statement.
In connection therewith, we have examined and relied upon the original or
copies, certified to our satisfaction, of (i) the Articles of Incorporation and
the Bylaws of the Company, in each case as amended to date, (ii) copies of
resolutions of the Board of Directors of the Company authorizing the offering
and the issuance of the shares to be sold by the Company and related matters,
(iii) the Registration Statement, and all exhibits thereto, and (iv) such other
documents and instruments as we have deemed necessary for the expression of
opinions herein contained. In making the foregoing examinations, we have assumed
the genuineness of all signatures and the authenticity of all documents
submitted to us as originals, and the conformity to original documents of all
documents submitted to us as certified or photostatic copies. As to various
questions of fact material to this opinion, we have relied, to the extent we
deem reasonably appropriate, upon representations or certificates of officers or
directors of the Company and upon documents, records and instruments furnished
to us by the Company, without independent check or verification of their
accuracy.
<PAGE>
Dawson Production Services, Inc.
Page 2
Based upon the foregoing examination, we are of the opinion that the
Shares have been duly and validly authorized and are legally issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving such consent, we do not admit that we come within the category of persons
whose consent is required by Section 7 of the Act or the rules and regulations
of the Commission thereunder.
Respectfully submitted,
JENKENS & GILCHRIST,
A Professional Corporation
By: /s/ KATHRYN K. LINDAUER
Kathryn K. Lindauer
Authorized Signatory
