Registration No. 333-01777
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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KEY ENERGY GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MARYLAND 04-2648081
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
OF INCORPORATION OR ORGANIZATION)
255 LIVINGSTON AVENUE, NEW BRUNSWICK, NEW JERSEY 08901
(908) 247-4822
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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FRANCIS D. JOHN
Key Energy Group, Inc.
255 Livingston Avenue
New Brunswick, New Jersey 08901
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPY TO:
KAREN L. LINSLEY, ESQ.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 338-2800
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement, as
determined by the Selling Securityholders.
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 reinvestment plans, please check the following box. |X|
The Prospectus contained in this Registration Statement also relates to
the Registration Statement on Form S-4 (333-369) (the "Form S-4 Registration
Statement") of the Registrant insofar as the Form S-4 Registration Statement
relates to the resale of shares of Key Common Stock and Five-Year Key Warrants
and the issuance of Key Common Stock upon exercise of the Five-Year Key
Warrants. The Prospectus contained in this Registration Statement is not
intended in any way to relate to the original issuance of Key Common Stock
(other than upon exercise of Warrants) and Warrants under the Form S-4
Registration Statement. The Prospectus contained in this Registration Statement
is intended to be a combined prospectus as contemplated by Rule 429 under the
Securities Act; the Form S-4 Registration Statement is, accordingly, amended to
reflect the resale prospectus contained herein.
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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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Key Energy Group, Inc.
4,242,046 Shares of Common Stock, $.10 Par Value Per Share
Five-Year Warrants to Purchase
469,551 Shares of Common Stock, $.10 Par Value Per Share
This Prospectus relates to (i) the resale of 3,697,495 shares (the "Resale
Shares") of Key Energy Group, Inc. ("Key") of Common Stock, $.10 par value per
share (the "Key Common Stock"); (ii) the resale of Five-Year Warrants (the
"Resale Warrants") to purchase 469,551 shares of Key Common Stock at any time
prior to the fifth anniversary of the date of issue at an exercise price of
$6.75 per share; (iii) the issuance of 544,551 shares of Key Common Stock (the
"Warrant Shares") upon exercise of the Resale Warrants and upon exercise of a
warrant to purchase 75,000 shares of Key Common Stock that was issued by Key to
its senior lender in a private placement transaction in January, 1996
(collectively with the Resale Warrants, the "Warrants"); and (iv) the resale of
the Warrant Shares. The Resale Shares, the Warrants and the Warrant Shares are
referred to herein as the "Securities" and the holders of the Securities are
referred to herein as the "Selling Securityholders."
The Key Common Stock is listed on the American Stock Exchange. On March 22,
1996 the closing price of the Key Common Stock, as reported on the American
Stock Exchange was $7 7/16 per share. The Resale Shares have been listed, and
the Warrant Shares will be listed, subject to notice of issuance, on the
American Stock Exchange.
The Securities may be sold from time to time in public or private
transactions, through the facilities of the American Stock Exchange or
otherwise, and at prevailing market prices or as otherwise determined by the
Selling Securityholders, as more fully described under "Plan of Distribution."
Key will not receive any of the proceeds from the sale of the Securities by the
Selling Securityholders. Key will use the proceeds from the exercise of the
Warrants for general corporate purposes.
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For a discussion of certain factors that should be considered by prospective
investors, See "Risk Factors".
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is March 28, 1996.
<PAGE>
AVAILABLE INFORMATION
Key has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a registration statement on Form S-3
(together with all exhibits, schedules and amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities. This Prospectus, which is a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement. Statements in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference and the exhibits and schedules thereto. For
further information concerning Key and the Securities, reference is made to the
Registration Statement. Copies of the Registration Statement may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the prescribed fee.
Key is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports and other information with the Commission. The Registration
Statement, the exhibits and schedules forming a part thereof and the reports,
proxy statements and other information filed by Key with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: Chicago
Regional Office, Suite 1400, 500 West Madison Street, Chicago, Illinois
60661-2511; and New York Regional Office, Seven World Trade Center, New York,
New York 10048. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Key Common Stock is listed on
the American Stock Exchange and its reports and proxy statements and other
information concerning Key can be inspected at such exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission pursuant
to the Exchange Act, are hereby incorporated in this Prospectus and specifically
made a part hereof by reference: (i) Key's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1995, as amended by amendment on Form 10-KSB/A dated
October 31, 1995, by amendment on Form 10-KSB/A dated January 19, 1996, and by
amendment on Form 10-K/A dated March 22, 1996; (ii) Key's Quarterly Reports on
Form 10-Q for the quarters ended September 30, 1995 and December 31, 1995; (iii)
the description of the Key Common Stock contained in Key's Form 8-A filed on May
21, 1981, as amended on January 27, 1986 and October 19, 1989; and (iv) Key's
current report on Form 8-K dated March 28, 1996. All other documents filed by
Key pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of the offering of
the Securities shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the respective dates of filing of such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated herein 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 other subsequently filed document that also is or is
deemed to be incorporated herein 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.
Key will provide without charge to each person to whom this Prospectus is
delivered, upon the written or oral request of such person, a copy of any and
all of the information that has been incorporated by reference in this
Prospectus (excluding exhibits unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be made to Key at its principal
executive offices, 255 Livingston Avenue, New Brunswick, New Jersey 08901,
telephone number (908) 247-4822.
USE OF PROCEEDS
Key will receive no proceeds from the sale of Securities by the Selling
Securityholders. Key will utilize the proceeds from the exercise of the Warrants
for general corporate purposes.
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THE COMPANY
Key is a holding company with diversified energy operations in the Permian
Basin area of West Texas and New Mexico. Through three operating entities, each
of which is a wholly-owned subsidiary, Key (a) operates oil field services
activities primarily in the Permian Basin area of West Texas for both major and
independent oil companies (Yale E. Key, Inc.), (b) owns and operates interests
in various oil and gas properties in West Texas (Odessa Exploration
Incorporated), and (c) drills oil and gas wells in West Texas (Key Energy
Drilling, Inc., d/b/a Clint Hurt Drilling).
In March, 1996, Key completed its acquisition (in the form of a merger) of
the assets and operations of WellTech, Inc. ("WellTech"). As a result of the
merger, Key has expanded its operations into Oklahoma, Michigan, Pennsylvania
and West Virginia, and conducts the following businesses formerly operated by
WellTech: (i) workover rig services, including completion of new wells,
maintenance and recompletion of existing walls (including horizontal
recompletions) and plugging and abandonment of wells at the end of their useful
lives; (ii) oil field liquid transportation, storage and disposal services,
including vacuum truck services, frac tank rental and salt water injection; and
(iii) other services including pipeline installation and testing, slick line
wireline services, fishing and rental tool services and general oil field
roustabout services. In addition to its domestic operations, Key acquired
WellTech's well servicing equipment and operations in Argentina.
Key was incorporated in the State of Maryland in 1977. Key's principal
offices are located at 255 Livingston Avenue, New Brunswick, New Jersey 08901,
and its telephone number is (908) 247-4822.
RISK FACTORS
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995. Key desires to take advantage
of the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. Statements made herein and in documents incorporated herein by
reference, other than statements of historical fact, are "forward-looking
statements." Key wishes to caution prospective investors that the following
important factors, among others, may have affected and could in the future
affect Key's actual results and could cause Key's actual results for subsequent
periods to differ materially from those expressed in any forward-looking
statement made by or on behalf of Key:
- Occurrences affecting the need for, timing and extent of Key's capital
expenditures or affecting Key's ability to obtain funds from
operations, borrowings or investments to finance needed capital
expenditures;
- Key's ability successfully to identify and finance oil and gas
property acquisitions and its ability successfully to operate existing
and any subsequently acquired properties;
- The availability of adequate funds under the new credit facility to
fund operations for the foreseeable future, or if such funds are
inadequate, the ability of Key to obtain new or additional financing
or to generate adequate funds from operations;
- Key's ability to enter into and retain profitable oil field servicing
and drilling contracts with customers which make timely payments for
such services;
- The demand for oil field services, drilling services and for oil and
gas, and the supply of and demand for drilling and servicing rigs, all
of which are subject to fluctuations which could adversely affect
Key's operations;
- The amount and rate of growth in Key's general and administrative
expenses, including, but not limited to, the costs of integrating
WellTech's operations into Key assuming consummation of the Merger;
- The effect of changes in regulations, including environmental
regulations with which Key must comply, the cost of such compliance
and the potentially material adverse effects if Key were not in
substantial compliance either currently or in the future;
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- Key's relationship with its employees and the potential adverse effect
if labor disputes or grievances were to occur;
- The costs and other effects of legal and administrative cases and
proceedings and/or settlements, including but not limited to
environmental and workers compensation cases;
- The effect of changes in accounting policies and practices or of
changes in Key's organization, compensation and benefit plans, or of
changes in Key's material agreements or understandings with third
parties.
In addition, prospective investors should consider the following risk
factors:
Substantial Leverage and History of Losses. Key, as the surviving company
in the merger with WellTech, is highly leveraged due to the substantial
indebtedness Key and WellTech incurred over time, primarily to finance
acquisitions and capital expenditures, expand operations and, in the case of
WellTech, to finance operating losses. Immediately after the merger, Key's
aggregate debt was approximately $35 million. Key may incur additional
indebtedness to make investments, acquisitions and capital expenditures in the
future. Key anticipates that it will continue to have substantial indebtedness
for the foreseeable future.
WellTech 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.
Prior to the merger WellTech was in violation of certain restrictive covenants
in its loan agreement with its principal lender which necessitated obtaining
waivers from that lender. There can be no assurance that the operations of Key
will not be adversely affected by the same factors that contributed to
WellTech's operating losses.
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.
Potential Obstacles to Integration of WellTech Operations. The success of
Key will be dependent partially upon Key's ability to integrate the former
management and operations of WellTech into its ongoing management and
operations. Obstacles to such integration may arise, and some of those obstacles
could adversely affect Key's ongoing operations and performance. There can be no
assurance that Key will be able effectively to integrate its management and
operations with those of WellTech or that administrative and operational
efficiencies resulting from the merger can be attained.
Customer Response to the Merger with WellTech. Management of Key believes
that Key will be able to provide its customers with a broader array of products
and an increased ability to service customer needs as a result of the merger
with WellTech. However, there can be no assurance that Key customers and former
WellTech customers will respond favorably to the merger. An unfavorable customer
response to the merger could have an adverse effect upon the ongoing operations
of Key.
Securities Eligible for Future Sale. There are 10,413,513 shares of Key
Common Stock outstanding, all but 155,000 of which are freely tradeable without
restriction or registration under the Securities Act, although sales of shares
held by "affiliates" of Key are subject to volume and other limitations imposed
by Rule 144 under the Securities Act. The Selling Securityholders hold
approximately 38.3% of the outstanding Key Common Stock.
No predictions can be made as to the effect, if any, that market sales of
shares or the availability of shares for sale will have on the market price for
Key Common Stock prevailing from time to time. Sales of substantial amounts of
Key Common Stock in the public market could adversely affect the market price of
Key Common Stock.
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Possible Volatility of Stock Price. Key Common Stock is traded on the
American Stock Exchange. The closing price of Key Common Stock on March 22, 1996
was $7 7/16. The volume of transactions in Key Common Stock has varied from time
to time, although it has, for the most part, been limited. The Resale Warrants
are a new issue, and there exists no trading market for them. The Resale
Warrants have not been listed on the American Stock Exchange. In addition, the
stock market in recent years has experienced price and volume fluctuations that
have often been unrelated or disproportionate to the operating performance of a
specific company. These fluctuations could adversely affect the market price of
Key Common Stock.
No Intention to Pay Dividends. Key has no intention to pay cash dividends
on Key Common Stock in the foreseeable future. In addition, under the terms of
its existing indebtedness, Key is prohibited from paying cash dividends on the
Key Common Stock.
Regulation and Competition in the Well Servicing Industry. Oil field
service operations, oil and gas production activities and oil and natural gas
drilling are subject to various local, state and federal laws and regulations
intended, among other things, to protect the environment. Key competes with many
national and local independent companies, many of which have financial and other
resources greatly in excess of those available to Key.
International Investments. WellTech made investments in foreign countries
(Russia and Argentina) and Key as its successor will have investments in
Argentina and may make additional investments in these and other foreign
countries and in companies located or with significant operations outside the
United States. Such investments are subject to risks and uncertainties relating
to the indigenous political, social and economic structures of those countries.
Risks specifically related to investments in foreign companies may include risks
of fluctuations in currency valuation, expropriation, confiscatory taxation and
nationalization, currency conversion restrictions, increased regulation and
approval requirements and governmental policies limiting returns to foreign
investors. WellTech's contract in Russia was not renewed upon its expiration in
November, 1995.
Anti-Takeover Effect of Certain Provisions of Key's Articles and By-Laws.
Certain provisions of Key Articles of Amendment and Restatement (the "Key
Charter") and Key By-Laws could have the effect of making it more difficult for
a third party to acquire, or discouraging a third party from acquiring, a
majority of the outstanding capital stock of Key and could make it more
difficult to consummate certain types of transactions involving an actual or
potential change in control of Key, such as a merger, tender offer or proxy
contest. The most significant of these is the ability of the Board of Directors
to issue, without stockholder approval, preferred stock containing class voting
rights, provided, however, that the Board of Directors may not classify or
reclassify shares to create any class of stock which (i) has more than one vote
per share, (ii) is issued in connection with any shareholder rights plan,
"poison pill" or other anti-takeover measure, or (iii) is issued for less than
fair consideration, as determined in good faith by the Board of Directors.
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SELLING SECURITYHOLDERS
The following table provides certain information with respect to the
Securities owned by the Selling Securityholders:
<TABLE>
<CAPTION>
Key Common Stock Key Common Stock
Name of Owned Prior to Owned After Warrants Owned Warrants Owned
Securityholder Re-Offering(1) Re-Offering(2) Prior to Re-Offering After Re-Offering(2)
<S> <C> <C> <C> <C>
Fidelity Puritan Trust: 573,000 -0- -0- -0-
Fidelity Low-Priced
Stock Fund
Fidelity Advisor Series V: 38,000 -0- -0- -0-
Fidelity Advisor Global
Resources Fund
Belmont Capital 2,661,524 -0- 351,436 -0-
Partners II, L.P.
Belmont Fund, L.P. 380,217 -0- 50,205 -0-
Fidelity Capital and 514,305 -0- 67,910 -0-
Income Fund
CIT Group/Credit 75,000(3) -0- -0- -0-
Finance
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<FN>
(1) Includes 469,551 shares of Key Common Stock issuable upon exercise
of the Warrants.
(2) Assumes that the Selling Securityholders dispose of all of the Securities
and do not acquire additional Securities.
(3) Issuable upon exercise of the warrant held by it.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The Selling Securityholders may sell Securities directly to purchasers
as principals or through one or more underwriters, brokers, dealers or agents
from time to time in one or more transactions (which may involve crosses or
block transactions) or (i) on any exchange or in the over-the-counter market,
(ii) in transactions otherwise than in the over-the-counter market or (iii)
through the writing of options (whether such options are listed on an options
exchange or otherwise) on, or settlement of short sales of, the Securities. Any
of such transactions may be effected at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case as
determined by the Selling Securityholder or by agreement between the Selling
Securityholder and underwriters, brokers, dealers or agents, or purchasers. If
the Selling Securityholders effect such transactions by selling Securities to or
through underwriters, brokers, dealers or agents, such underwriters, brokers,
dealers or agents may receive compensation in the form of discounts, concessions
or commissions from the Selling Securityholders or commissions from purchasers
of Securities for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). The Selling
Securityholders and any brokers, dealers or agents that participate in the
distribution of the Securities may be deemed to be underwriters, an any profit
on the sale of Securities by them and any discounts, concessions or commissions
received by any such underwriters, brokers, dealers or agents may be deemed to
be underwriting discounts and commissions under the Securities Act.
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To the extent not described herein and as otherwise required by law,
the specific amount of Securities being offered or sold, the names of the
Selling Securityholders, the respective purchase prices and public offering
prices, the names of any agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer or sale will be set
forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the Registration Statement of which this Prospectus
is a part.
Under the securities laws of certain states, the Securities may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in certain states the Securities may not be sold unless the Securities
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
Key will pay all of the expenses incident to the registration, offering
and sale of the Securities other than commissions, fees and discounts of
underwriters, brokers, dealers and agents. Key has agreed to indemnify the
Selling Securityholders and any underwriters against certain liabilities,
including liabilities under the Securities Act. Key will not receive any of the
proceeds from the sale of any of the Securities by the Selling Securityholders.
DESCRIPTION OF SECURITIES
Key Common Stock. Key is currently authorized to issue 25,000,000 shares of
Key Common Stock, of which an aggregate of 10,413,513 shares are issued and
outstanding. The outstanding shares of Key Common Stock are fully paid and
nonassessable. Each share is entitled to one vote in the election of directors
and other corporate matters. The holders of Key Common Stock do not have
cumulative voting rights, which means that the holders of a majority of the
votes entitled to be cast by holders of the outstanding Key Common Stock are
able to elect all directors of Key. Key Common Stock has no redemption
provisions and the holders thereof have no preemptive rights. The holders of Key
Common Stock are entitled to receive dividends in such amounts as may be
declared by the Board of Directors, as permitted by applicable law, and upon
liquidation, dissolution, or winding up of Key, subject to the rights of any
preferred stock then outstanding, the holders of Key Common Stock are entitled
to share ratably in the assets of Key, according to the number of shares they
hold. The Key Common Stock is listed on the American Stock Exchange.
Resale Warrants. In the merger with WellTech, Key issued Resale Warrants to
the Selling Securityholders to purchase an aggregate of 469,551 shares of Key
Common Stock at an exercise price of $6.75 per share.
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<PAGE>
Exercise of Resale Warrant. A Resale Warrant is exercisable in full or
in part at any time during a five-year period from the date of issue. If a
Resale Warrant is exercised in respect of fewer than the full number of shares
issuable, a new Resale Warrant shall be issued providing for the difference. Key
does not have to issue fractional shares upon the exercise of a Resale Warrant
and may substitute cash in lieu of fractional shares.
Dividends. If Key declares a dividend (other than Key Common Stock) or
makes a distribution of property, cash, securities or options (other than Key
Common Stock) the holder of a Resale Warrant shall receive the dividend or
distribution as if such holder had exercised the Resale Warrant.
Adjustment of Exercise Price. The exercise price will be adjusted if
Key changes the number of outstanding shares by declaring a stock dividend,
subdividing, combining or reclassifying the outstanding shares. The exercise
price will be multiplied by the number of shares of Key Common Stock outstanding
before the transaction, then divided by the number of shares of Key Common Stock
outstanding after the transaction. In the event that Key issues options,
warrants or convertible securities to its stockholders which enable the holder
to purchase Key Common Stock for less than Market Price (as defined in the
Resale Warrants), the exercise price shall be multiplied by the number of shares
of Key Common Stock outstanding before the transaction plus the number of shares
which could be purchased at Market Price with the aggregate offering price. That
figure is then divided by the number of shares of Key Common Stock outstanding
plus the number of shares offered for purchase in the transaction. If Key
proposes to make a distribution of (i) any class of stock other than Key Common
Stock, (ii) debt, (iii) certain assets or (iv) rights, options, warrants or
convertible securities which are not covered by the above scenarios, the
exercise price shall be multiplied by a fraction, the numerator of which will be
the number of shares of Key Common Stock outstanding on the record date
multiplied by the Market Price less the aggregate fair market value (as
determined by the Board of Directors) of the assets or securities being
distributed and the denominator of which will be the number of shares of Key
Common Stock outstanding before the transaction multiplied by the market price
per share. The Market Price on any given date shall be the average of the daily
closing price of the Key Common Stock for 20 trading days prior to the date. No
adjustment to the exercise price must be made unless it will result in at least
a 1% change in the exercise price. Transactions which do not meet this threshold
carry over and count toward future transactions. Reorganizations or mergers will
not affect the validity of the Resale Warrant, but the Board of Directors may
adjust the application of the above-mentioned provisions.
Voting and Information Rights. A holder of a Resale Warrant is not entitled
to vote or to consent as a stockholder in respect of any stockholder meeting.
Key must furnish the Resale Warrant holder with copies of all financial
statements, reports, notices and proxy statements as they become available.
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<PAGE>
Notice of Certain Actions. In the event Key (i) declares any dividend
payable in stock or makes a distribution other than cash to the holders of Key
Common Stock, (ii) offers to the holders of Key Common Stock the right to
subscribe for or purchase any shares of any class of stock or any other rights
or options or (iii) effects any reclassification of its Key Common Stock,
capital reorganization, consolidation or merger, sale, transfer or other
disposition of all or substantially all of its assets, or liquidation,
dissolution or winding up of the corporation, it will serve a notice of such
proposed action to the holders of the Resale Warrants. Such notice shall specify
the record date for determining eligibility to receive a dividend or
distribution, the date on which any action described in (iii) shall take place,
and the date as of which it is expected that the holders of record of Key Common
Stock shall be entitled to receive securities or other property deliverable upon
such action.
Transfers. A Resale Warrant may be transferred by surrendering it and
submitting a written instrument of transfer, duly executed by the registered
holder. Another Resale Warrant shall be issued to the transferee and the
surrendered Resale Warrant shall be canceled. If a transfer is not made pursuant
to an effective registration statement under the Securities Act, Key may request
that the Resale Warrant holder deliver a legal opinion that the Resale Warrant
may be sold publicly without registration under the Securities Act, an
investment covenant signed by the proposed transferee, an agreement by such
transferee to adhere to the restrictive investment covenant on the face of the
Resale Warrant and an agreement to be bound by the terms of the Resale Warrant.
Amendment. A Resale Warrant may not be amended or modified except by a
written instrument signed by Key and the holder of the Resale Warrant.
LEGAL MATTERS
Certain legal matters relating to the validity of the Securities will
be passed upon by Sullivan & Worcester LLP, which will rely as to all matters of
Maryland law on the opinion of Piper & Marbury L.L.P.
EXPERTS
The consolidated financial statements of Key and subsidiaries
incorporated in this Prospectus by reference have been so incorporated in
reliance upon the reports of KPMG Peat Marwick LLP and Coopers & Lybrand,
L.L.P., independent certified public accountants, given the authority of said
firms as experts in accounting and auditing.
The consolidated financial statements of WellTech and subsidiaries
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
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No dealer, sales person or other individual has been authorized to give
any information or make any representations not contained in the Prospectus in
connection with the offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by Key or the Selling Securityholders. This Prospectus does not constitute and
offer to sell or a solicitation of an offer to buy, any securities other than
the registered securities to which it relates in any jurisdiction where, or to
any person to whom, it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus or any sale made hereunder shall, under any
circumstances, create an implication that there has not been any change in the
facts set forth in this Prospectus or in the affairs of Key since the date
hereof.
TABLE OF CONTENTS
Page
Available Information...................... 2
Incorporation of Certain Documents
by Reference.......................... 2
Use of Proceeds............................ 2
The Company................................ 3
Risk Factors............................... 3
Selling Securityholders.................... 6
Plan of Distribution....................... 7
Description of Securities.................. 7
Legal Matters.............................. 9
Experts.................................... 9
KEY ENERGY GROUP, INC.
4,242,046 Shares of
Common Stock,
$.10 Par Value Per Share
Five-Year Warrants
to Purchase
469,551 Shares of
Common Stock,
$.10 Par Value Per Share
---------------------
PROSPECTUS
---------------------
March 28, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the amount of fees and expenses to be
incurred in connection with the issuance and distribution of the Securities
registered hereby, other than underwriting discounts and commissions.
Registration Fee Under Securities Act...................... $ 1,485.85
Blue Sky Fees and Expenses................................. 5,000.00
Legal Fees................................................. 5,000.00
Accounting Fees............................................ 2,500.00
Printing and Engraving..................................... 500.00
Miscellaneous Fees.................................. ...... 2,000.00
-----------
Total............................................... $15,485.85
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-418 of the Maryland General Corporation Law provides that a
corporation may indemnify any director made a party to any proceeding against
judgments, penalties, fines, settlements and reasonable expenses, unless it is
established that (i) the act or omission of the directors was material to the
matter giving rise to the proceeding, and was committed in bad faith or was a
result of deliberate dishonesty, (ii) director actually received an improper
personal benefit or (iii) in a criminal proceeding, director had reasonable
cause to believe the act or omission was unlawful. A director may not be
indemnified in any proceeding charging improper personal benefit, if director
was adjudged to be liable and, in a derivative action, there shall not be
indemnification if the director has been adjudged liable to the corporation. A
director or officer of a corporation who has been successful in the defense of
any proceeding shall be indemnified against reasonable costs incurred in such
defense. Indemnification may not be made unless authorized pursuant to a
determination that the director has met the requisite standard of conduct.
Article Seventh of the Key Charter provides that Key shall indemnify (i)
its directors and officers, whether serving Key or at its request any other
entity, to the full extent required or permitted by the Maryland Law, including
the advance of expenses under the procedures and to the full extent permitted by
law and (ii) other employees and agents to such extent as shall be authorized by
the Board of Directors or Key's By-Laws and be permitted by law. The foregoing
rights of indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of Directors may take
such action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by Maryland Law. Furthermore,
no director or officer of Key shall be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director
or an officer, except to the extent that exculpation from liability is not
permitted under Maryland Law as in effect when such breach occurred. No
amendment of the Key Charter or repeal of any of its provisions shall limit or
eliminate the limitations on liability provided to directors and officers with
respect to acts or omissions occurring prior to such amendment or repeal.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
Exhibit No. Item Exhibit
<S> <C> <C>
4.1 Form of Common Stock Purchase Warrant Incorporated by reference to Exhibit 4.1
to Purchase shares of Key Common Stock of Amendment No. 1 to Key's
issued to the WellTech Shareholders Registration Statement on Form S-4
filed with the Commission on
March 1, 1996 (No. 333-369)
4.2 Form of Registration Rights Agreement Incorporated by Reference to
between Key and Certain Holders of Key Exhibit 4.3 of Key's Registration
Common Stock Statement on Form S-4 filed with
the Commission on January 23, 1996
(No. 333-369)
4.3 Registration Rights Agreement dated as of Incorporated by reference to Exhibit 4.6
January 19, 1996 between Key and CIT of Amendment No. 2 to Key's
Registration Statement on S-4 filed with
the Commission on March 8, 1996
(333-369)
5.1 Opinion of Sullivan & Worcester LLP Filed herewith as Exhibit 5.1
5.2 Opinion of Piper & Marbury L.L.P. Filed herewith as Exhibit 5.2
23.1 Consent of Sullivan & Worcester LLP Included in Exhibit 5.1 filed herewith
23.2 Consent of Piper & Marbury L.L.P. Included in Exhibit 5.2 filed herewith
23.3 Consent of KPMG Peat Marwick LLP Filed as Exhibit 23.3 to the initial filing
of this Registration Statement
23.4 Consent of Coopers & Lybrand, L.L.P. Filed herewith as Exhibit 23.4
23.5 Consent of Arthur Andersen LLP Filed herewith as Exhibit 23.5
25 Power of Attorney Page II-4 of the initial filing of this
Registration Statement
</TABLE>
ITEM 17. UNDERTAKINGS.
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 section 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 this
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities and Exchange Act of 1934 that
are incorporated by reference in this registration statement.
II-2
<PAGE>
(2) That for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the Securities offered herein, and the
offering of such Securities at that time shall be deemed to be the initial bona
fide offering thereof. (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.
The undersigned Registrant hereby further undertakes that, for the purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to officers, directors and controlling persons of the
Registrant pursuant to the provisions described under Item 15 of this
registration statement, 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 such 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 trustee,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, 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 public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Key
Energy Group, Inc. 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 New Brunswick, State of New Jersey on March 26,
1996.
KEY ENERGY GROUP, INC.
By: /s/Francis D. John
Francis D. John, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form
S-3 has been signed below by the following persons in the capacities and on the
dates indicated .
Witness our hands and seals on the dates set forth below.
Signatures Title Date
By: /s/Francis D. John President, Chief Executive March 26, 1996
Francis D. John Officer, Chief Financial
Officer and Director
By: /s/William S. Manly* Director March 26, 1996
William S. Manly
By: /s/Morton Wolkowitz* Director March 26, 1996
Morton Wolkowitz
By: /s/Van D. Greenfield* Director March 26, 1996
Van D. Greenfield
By: /s/D. Kirk Edwards* Director March 26, 1996
D. Kirk Edwards
By: /s/Danny R. Evatt* Chief Accounting Officer March 26, 1996
Danny R. Evatt and Treasurer
*By: /s/Francis D. John
Francis D. John
Attorney-in-Fact
II-4
Exhibit 5.1
SULLIVAN & WORCESTER LLP
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(617) 338-2800
FAX NO. 617-338-2880
IN WASHINGTON, D.C. IN NEW YORK CITY
1025 CONNECTICUT AVENUE, N.W. 767 THIRD AVENUE
WASHINGTON, D.C. 20036 NEW YORK, NEW YORK 10017
(202) 775-8190 (212) 486-8200
FAX NO. 202-293-2275 FAX NO. 212-758-2151
March 26, 1996
Key Energy Group, Inc.
255 Livingston Avenue
New Brunswick, NJ 08901
Re: Registration Statement on Form S-3 No. (333-01777)
Dear Sir or Madam:
In accordance with the Securities Act of 1933, as amended, Key Energy
Group, Inc., a Maryland corporation ("Key"), has filed a registration statement
on Form S-3 (No. 333-01777) (the "Registration Statement") with the Securities
and Exchange Commission (the "Commission") to register (i) 3,697,495 shares (the
"Merger Shares") of Common Stock, par value $.10 per share (the "Common Stock");
(ii) the resale of five-year warrants (the "Merger Warrants") to purchase
469,551 shares of Common Stock at an exercise price of $6.75 per share; and
(iii) 544,551 shares of Common Stock issuable upon exercise of the Merger
Warrants and upon exercise of a warrant issued to CIT Group/Credit Finance, Inc.
(the "Warrant Shares"). The Merger Shares and the Merger Warrants will be issued
as consideration under the Agreement and Plan of Merger, dated November 18,
1995, as amended, providing for the merger of WellTech, Inc. with and into Key.
This opinion is furnished to you to be filed as Exhibit 5.1 to Amendment No. 1
to the Registration Statement.
We have acted as counsel to Key in connection with the preparation of
the Registration Statement, and we have examined originals or copies, certified
or otherwise identified to our satisfaction, of the Registration Statement, the
Articles of Incorporation of Key, as amended to date, as well as a proposed
amendment to such Articles of Incorporation, corporate records, certificates and
statements of officers and accountants of Key and of public officials, and such
other documents as we have considered necessary in order to furnish the opinion
hereinafter set forth.
We express no opinion herein as to the laws of any jurisdiction other
than The Commonwealth of Massachusetts. Insofar as this opinion involves matters
of Maryland law, we have relied solely upon the opinion of Piper & Marbury
L.L.P., a copy of which is filed with the Registration Statement as Exhibit 5.2.
<PAGE>
Key Energy Group, Inc.
March 26, 1996
Page 2
Presently, Key's charter authorizes for issuance of 10,000,000 shares
of Common Stock. At a Special Meeting in Lieu of the Annual Meeting, held on
March 26, 1996, the stockholders of Key approved a charter amendment which will,
inter alia, increase the total number of authorized shares of Common Stock from
10,000,000 to 25,000,000. When the Articles of Amendment and Restatement
reflecting the same have been filed with the State of Maryland, the Merger
Shares and the Warrant Shares will be authorized for issuance.
Based on and subject to the foregoing, we are of the opinion that the
Merger Shares, the Merger Warrants and the Warrant Shares have been duly and
validly authorized by Key and, when issued, said Merger Shares, Merger Warrants
and the Warrant Shares will be validly issued, fully paid and nonassessable.
The opinions expressed in this letter are solely for use by Key and its
stockholders in connection with the filing of the Registration Statement. This
opinion may not be relied on by any other person or by you without our prior
written approval. The opinions expressed in this letter are limited to the
matters set forth herein, and no other opinions should be inferred beyond the
matters expressly stated.
All of the opinions set forth herein are rendered as of the date
hereof, and we assume no obligation to update such opinions or advise you of
changes in our opinions to reflect facts or circumstances which may hereafter
come to our attention or changes in the law which may hereafter occur.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm made therein under the
caption "Legal Matters." In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act or the Rules and Regulations of the Commission promulgated
thereunder.
Very truly yours,
/s/ SULLLIVAN & WORCESTER LLP
SULLIVAN & WORCESTER LLP
Exhibit 5.2
PIPER & MARBURY L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3018
410-539-2530
Fax: 410-539-0459
March 26, 1996
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Re: Key Energy Group, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Key Energy Group, Inc., a
Maryland corporation (the "Company"), in connection with the Company's
registration on Form S-3 (the "Registration Statement") of (i) 3,697,495 shares
(the "Merger Shares") of common stock, $.10 par value ("Common Stock"), (ii) the
resale of warrants (the "Merger Warrants") to purchase 469,551 shares of Common
Stock granted in connection with the merger of WellTech, Inc., a Delaware
corporation, with and into the Company (the "Merger"), and (iii) 544,551 shares
(the "Warrant Shares") issuable upon exercise of the Merger Warrants and upon
exercise of a warrant issued to CIT Group/Credit Finance (the "CIT Warrant").
We have examined the Charter and By-Laws of the Company, the Agreement
and Plan of Merger dated as of November 18, 1995 (the "Merger Agreement") by and
between the Company and WellTech, Inc., as amended, the form of warrant to be
issued to WellTech, Inc., the form of the CIT Warrant, certain minutes of
proceedings of the Board of Directors of the Company and a good standing
certificate dated February 27, 1996 from the State Department of Assessments and
Taxation of Maryland ("SDAT"), and originals or copies, certified or otherwise
identified to our satisfaction, of such other documents, corporate records,
certificates of public officials and officers of the Company and other
instruments, and have conducted such other investigations of fact and law, as we
have deemed necessary or advisable for the purposes of rendering this opinion.
In rendering this opinion we have assumed, without independent
investigation, the genuineness of all signatures, the legal capacity of all
individuals who have executed any of the aforesaid documents, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic
<PAGE>
Sullivan & Worcester LLP
March 26, 1996
Page 2
copies, the authenticity of the originals of such copies and the accuracy and
completeness of all public records reviewed. We have assumed that any filings
required under the laws of the State of Delaware in connection with the Merger
have been made. We have assumed that all representations as to factual matters
set forth in the certificates of offices of the Company are true and correct,
and we have not independently verified the matters stated therein.
The Company plans to amend its Charter prior to the Merger to increase
the number of authorized shares of Common Stock to 25,000,000 shares. For
purposes of this opinion, we have assumed that such charter amendment has been
duly approved by the Board of Directors and Stockholders of the Company and
filed with the SDAT.
Based upon the subject to the foregoing, we are of the opinion that:
1. The Merger Shares have been duly and validly authorized for issuance
by the Board of Directors of the Company by resolutions adopted on November 18,
1995, and the Merger Shares, when issued as authorized in accordance with the
terms of the Merger Agreement and upon acceptance for filing of Articles of
Merger by the SDAT, will be fully paid and nonassessable by the Company, with no
personal liability attached to the ownership thereof.
2. The Merger Warrants have been duly and validly authorized for
issuance by the Board of Directors of the Company by resolutions adopted on
November 18, 1995, and the Merger Warrants, when issued in accordance with the
terms of the Merger Agreement, will be fully paid and nonassessable by the
Company, with no personal liability attached to the ownership thereof.
3. The Warrant Shares have been duly and validly authorized for
issuance by the Board of Directors of the Company by resolutions adopted on
November 18, 1995 and December 19, 1995, and the Warrant Shares, when issued
upon the exercise of the Merger Warrants or the CIT Warrant, as the case may be,
and delivered against payment therefor, will be fully paid and nonassessable by
the Company, with no personal liability attached to the ownership thereof.
The opinions expressed in this letter are solely for your use in
connection with the Registration Statement. This opinion may not be relied on by
any other person or by you in any other connection without our prior written
approval. The opinions expressed in this letter are limited to the matters set
forth in this letter, and no other opinions should be inferred beyond the
matters expressly stated.
All of the opinions set forth herein are rendered as of the date
hereof, and we assume no obligation to update such opinions or advise you of
changes in our opinions to reflect facts or circumstances which may hereafter
come to our attention or changes in the law which may hereafter occur.
<PAGE>
Sullivan & Worcester LLP
March 26, 1996
Page 3
The opinions expressed above are limited to the law of the State of
Maryland. We hereby consent to the filing of this opinion as Exhibit 5.2 to the
Registration Statement and to the reference to our firm in the Registration
Statement. In giving our consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the
Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/Piper & Marbury L.L.P.
PIPER & MARBURY, L.L.P.
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 (Registration No. 333-01777) of our report dated September 7, 1993 on
our audits of the consolidated statements of operations, stockholders' equity
(deficit) and cash flows of Key Energy Group, Inc. and Subsidiaries for the
seven months ended June 30 and the five months ended November 30, 1992 which
report is included in the Key Energy Group, Inc. Form 10-K/A dated March 22,
1996, and to the reference to our firm under the heading "Experts".
/s/ Coopers & Lybrand, L.L.P.
Coopers & Lybrand, L.L.P.
Dallas, Texas
March 26, 1996
Exhibit 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated August 31, 1995
(except with respect to the matters discussed in Note 12, as to which the date
is January 19, 1996), on the WellTech, Inc. consolidated financial statements as
of December 31, 1994 and 1993 and for the three years in the period ended
December 31, 1994 included in Key Energy Group, Inc.'s Form S-4 registration
statement (Registration No. 333-369) and to all references to our Firm included
in or made a part of this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Houston, Texas
March 26, 1996
