<PAGE> 1
Registration No. 333-24497
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
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)
TWO TOWER CENTER, TENTH FLOOR, EAST BRUNSWICK, NEW JERSEY 08816
(908) 247-4822
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OR REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------
FRANCIS D. JOHN
Key Energy Group, Inc.
Two Tower Center, Tenth Floor
East Brunswick, New Jersey 08816
(908) 247-4822
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------------
Copy to:
JACK D. LOFTIS, JR. SAMUEL N. ALLEN
Key Energy Group, Inc. Porter & Hedges, L.L.P.
Two Tower Center, Tenth Floor 700 Louisiana, Suite 3500
East Brunswick, New Jersey 08816 Houston, Texas 77002
(908) 247-4822 (713) 226-0600
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]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Share Aggregate Offering Price Registration Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7% Convertible
Debentures Due 2003 $52,000,000 100% $52,000,000 (1) $15,758
- ------------------------------------------------------------------------------------------------------------------------
Common Stock, par value
$.10 per share 125,070(2) $16.39(1) $2,049,897 $622(3)
========================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) An indeterminate number of shares of Common Stock issuable upon
conversion of the Debentures also is being registered hereby.
(3) Relates to 125,070 shares being added pursuant to the Amendment. The
registration fee with respect to the remaining 477,153 shares being sold
by Selling Securityholders has been paid. Pursuant to Rule 457(i), no
registration fee is payable in connection with the Common Stock issuable
upon conversion of the Debentures.
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<PAGE> 2
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 an 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 JUNE 4, 1997
PROSPECTUS
KEY ENERGY GROUP, INC.
$52,000,000
7% CONVERTIBLE SUBORDINATED DEBENTURES
6,062,804 SHARES OF COMMON STOCK
Certain selling securityholders of the Company (the "Selling
Securityholders") are hereby offering for resale up to $52,000,000 aggregate
principal amount of 7% Convertible Subordinated Debentures due 2003 (the
"Debentures") of Key Energy Group, Inc., a Maryland corporation (the
"Company"), along with an indeterminate number of shares of the common stock,
par value $.10 per share, of the Company ("Common Stock") issuable upon
conversion of the Debentures. In addition, certain Selling Securityholders are
offering for sale 477,223 shares of Common Stock, and one Selling
Securityholder is offering for sale 125,000 shares of Common Stock issuable
upon exercise of a warrant held by such Selling Securityholder (the "Warrant").
The Company will not receive any of the proceeds from the sale of the
Debentures or Common Stock offered hereby.
The Common Stock is listed on the American Stock Exchange (the "AMEX")
under the symbol KEG. On June 2, 1997, the closing price of the Common Stock,
as reported on the AMEX, was $16.63 per share. The Debentures are not listed on
any securities exchange, but are traded in the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") market of the National
Association of Securities Dealers, Inc.
The Debentures and the Common Stock may be offered and sold from time
to time by the Selling Securityholders named under "Selling Securityholders" or
named in a Prospectus Supplement through underwriters, dealers or agents or
directly to one or more purchasers in fixed price offerings, in negotiated
transactions, at market prices prevailing at the time of sale or at prices
related to such market prices. The terms of the offering and sale of the
Debentures and the Common Stock in respect of which this Prospectus is being
delivered, including any initial public offering price, any discounts,
commissions or concessions allowed, reallowed or paid to underwriters, dealers
or agents, the purchase price of the Debentures and the Common Stock and the
proceeds to the Selling Securityholders, and any other material terms shall be
as set forth in the applicable Prospectus Supplement. See "Plan of
Distribution" for indemnification arrangements, including indemnification of
agents, dealers and underwriters.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 4.
--------------------
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 June 6, 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company 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 Debentures and Common Stock offered
hereby. 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 the Company and the Debentures and Common Stock, reference is made
to the Registration Statement. Copies of the Registration Statement may be
obtained from the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the prescribed fee.
The Company is subject to the information requirements of the
Securities and 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, as well as such reports, proxy
statements and other information can be inspected and copied at the Public
Reference Facilities maintained by the Commission at its principal offices at
450 Fifth Street, N.W., Washington, D.C. 20549, and its regional offices at 7
World Trade Center, 13th Floor, New York, New York 10048, and the Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Such
information also may be obtained on the Internet through the Commission's EDGAR
database at http://www.secgov. Copies of such materials also can be inspected
at the offices of the American Stock Exchange, 86 Trinity Place, New York, New
York 10006. With respect to each contract, agreement or other document filed as
an exhibit to the Registration Statement reference is made to such exhibit for
a more complete description of the matter involved and each such statement
shall be deemed qualified in all respects by such reference.
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) the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1996; (ii) the Company's Quarterly
Reports on Form 10-Q for the quarters ended September 30, 1996 and December 31,
1996 and March 31, 1997; (iii) the description of the Common Stock contained in
the Company's Form 8-A filed on May 21, 1981, as amended on January 27, 1986 and
October 19, 1989; (iv) the Company's Current Reports on Form 8-K dated July 3,
1996 and September 17, 1996; and Registration Statement No. 333-369 on Form S-4.
All other documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering of the Debentures and the Common Stock covered by
this Prospectus 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.
The Company 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 the Company at its
principal executive offices, Two Tower Center, Tenth Floor, East Brunswick, New
Jersey 08816, telephone number (908) 247-4822, Attn: Jack D. Loftis, Jr.
2
<PAGE> 4
THE COMPANY
Key Energy Group, Inc. (the "Company") operates 415 well service and
workover rigs, which is the third largest fleet of well service and workover
rigs in the United States. In addition, the Company operates 10 workover rigs,
three drilling rigs in Argentina and six drilling rigs in West Texas. The
Company operates in Texas, Oklahoma, Michigan, New Mexico, the Appalachian
Basin and Argentina and is a leader in each of its domestic markets. The
Company generally provides a full range of maintenance and workover rigs
services to producers in each of its operating regions. These services also
include the completion of newly drilled wells, the recompletion of existing
wells (including horizontal recompletions) and the plugging and abandonment of
wells at the end of their useful lives. Other services include hot oiling, oil
field liquid transportation, fishing tools and services, storage and disposal
services, vacuum truck services, frac tank rental and salt water injection. The
Company also is engaged in the production of oil and natural gas in the Permian
Basin of West Texas.
The Company has become a leader in its domestic markets by
establishing a reputation for high quality equipment and well-trained crews
that operate within stringent safety guidelines. The Company believes it has a
distinctive business strategy designed to take advantage of growth
opportunities within the fragmented but consolidating well service industry.
The strategy emphasizes a decentralized management philosophy that encourages
decision making at the local level. The strategy has resulted in growth through
the enhancement of services and strategic acquisitions, control of overhead and
operating expenses, and the implementation of an alliance program designed to
better serve the Company's significant customers. In addition, the Company
acquires interests in oil and gas producing properties for cash or securities,
or in exchange for providing well services and equipment. The Company's
strategy is designed to minimize the business risks associated with unexpected
downturns in one or more of its business segments. The primary components of
the Company's business strategy are as follows:
ENHANCEMENT OF SERVICES: The Company has implemented a strategy to
provide its customers with a single source of well services and
equipment. The Company's ability to provide an increasing array of
services, along with the Company's reputation for reliability and
safety, has enabled the Company to increase its market share in its
primary areas of operations.
ACQUISITION STRATEGY: The Company's acquisition strategy focuses on
companies or equipment that either expand the range of services that
the Company provides or present opportunities to expand the Company's
business into new markets. The Company attempts to acquire businesses
with strong customer relationships, a history of superior customer
service and the potential to be assimilated efficiently into the
Company's existing regional management structure with a minimal
increase in overhead costs. In the last three years, the Company has
completed the acquisition of over 20 well servicing companies, one oil
and gas production company and one drilling company.
DECENTRALIZED OPERATIONS: The Company's decentralized management
philosophy is consistent with the regional nature of the well service
business. This structure allows the Company's senior management to
establish the Company's policies, and permits the Company's regional
managers to implement those policies in each of the Company's business
segments and markets. As a result, local managers are able to deal
efficiently with local and time-sensitive issues, thereby allowing
them to be more responsive to customer needs.
LOW OPERATING COSTS: Because of its cost controls and lower corporate
overhead, among other factors, the Company has one of the lowest
general and administrative costs to revenue ratios and one of the
highest EBITDA to revenue ratios in the well service industry.
"ALLIANCE" PROGRAM: The Company has successfully implemented an
"alliance" program strategy to provide certain customers with all of
their well servicing requirements in particular markets for fixed
prices. The Company has entered into alliances with various major and
independent oil and gas producers.
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The Company's principal offices are located at Two Tower Center, Tenth
Floor, East Brunswick, New Jersey 08816, and its telephone number is (908)
247-4822.
RISK FACTORS
The following should be considered carefully with the information
provided elsewhere in this Prospectus and the documents incorporated by
reference herein in reaching a decision regarding an investment in the
Debentures and the Common Stock offered hereby.
DEPENDENCE ON OIL AND GAS INDUSTRY; INDUSTRY CONDITIONS. The Company's
business is substantially dependent upon conditions in the oil and gas industry
and, specifically, the production expenditures of oil and gas companies. The
demand for well servicing and workover activities is directly influenced by oil
and gas prices, expectations about future prices, the cost of producing and
delivering oil and gas, government regulation, including environmental
regulations, local and international political and economic conditions, and
governmental policies regarding exploration and development of oil and gas
reserves. The demand for well servicing and related services in the United
States was severely depressed for most of the last decade due in large part to
prolonged weakness and uncertainty in oil and gas prices. As a consequence,
diminished demand during that period led to lower day rates and lower use of
available equipment. Demand for well services has stabilized over the last
several years, and prices for such services have stabilized or increased during
that period. Nonetheless, there can be no assurance that periods of diminished
demand in the well service industry will not occur.
OPERATING RISKS; INSURANCE. The Company's operations are subject to
many hazards inherent in the maintenance, workover, drilling and operation of
oil and gas wells, the occurrence of which could result in the suspension of
operations, damage to or destruction of equipment and injury or death to field
personnel. These hazards include explosions, blow-outs, reservoir damage, loss
of well control, cratering and fires. Damage to the environment also could
result from the Company's operations. The Company maintains insurance coverage
in such amounts and against such risks as it believes to be in accordance with
normal industry practice. Such insurance does not, however, provide coverage
for all liabilities (including liabilities for certain events involving
pollution), and there can be no assurance that such insurance will be adequate
to cover all losses or liabilities that the Company may incur in its
operations. Moreover, no assurance can be given that the Company will be able
to maintain insurance at levels it deems adequate and at rates it considers
reasonable or that any particular types of coverage will be available.
The well service business also is subject to seasonal risks caused by
adverse weather conditions such as severe winter storms. The Company's
operations in Michigan and the Appalachian Basin are subject to limitations on
transporting equipment during the spring thaw.
COMPETITION. Competition is intense in all markets in which the
Company operates. The Company competes on the basis of the quality of its
equipment and service, its safety record and pricing. While management believes
that the Company's reputation for quality of equipment and service and its
safety record are among the best in the industry, several competitors have
access to greater financial and other resources than those of the Company,
which could allow those companies to price their services more aggressively
than the Company.
CERTAIN CUSTOMERS. During fiscal 1996, the Company's two largest
customers, Parker & Parsley and Texaco, accounted for approximately 20% and 11%
of net revenues, respectively. The loss of those customers, or of certain
others, could have a material adverse effect on the Company's operations and
financial condition.
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS. The Company's
operations are subject to local, state and federal governmental regulations.
The Company's operations routinely involve the handling of waste materials,
some of which are classified as hazardous substances. Consequently, the
regulations applicable to the Company's operations include those with respect
to protection of the environment, including containment, disposal and
controlling the discharge of hazardous oil field waste and other non-hazardous
waste material into the environment, or requiring
4
<PAGE> 6
removal and cleanup under certain circumstances. Laws and regulations
protecting the environment have become more stringent in recent years, and in
certain circumstances impose "strict liability," rendering a party liable for
environmental damage without regard to negligence or fault on the part of such
party. Such laws and regulations may expose the Company to liability for the
conduct of, or conditions caused by, others, or for acts of the Company which
were in compliance with all applicable laws at the time such acts were
performed. The application of these regulations or the adoption of new
regulations could have a material adverse effect on the Company. In addition,
the modification of existing laws or regulations or the adoption of new laws or
regulations curtailing exploratory or development drilling for oil and gas for
economic, environmental or other reasons could have a material adverse effect
on the Company's operations by limiting well servicing opportunities.
ACQUISITION STRATEGY. The Company maintains an aggressive acquisition
strategy. Inherent in such strategy are certain risks, such as increasing
leverage and debt service requirements, combining disparate Company cultures
and facilities, and conducting operations in many geographically diverse
markets. Certain of these risks may be increased to the extent that the
Company's future acquisitions are in new markets or involve international
operations. Accordingly, there can be no assurance that one or more of the
Company's past or future acquisitions may not have an adverse effect on its
business. The Company's credit arrangements require approval from its lenders
to acquisitions above a certain dollar amount and, in addition, contain
borrowing limits. There can be no assurance that the lenders will consent to
any particular acquisition that the Company desires to make or to increased
borrowing levels, which could inhibit the Company's ability to implement its
acquisition strategy. Any borrowings used to finance acquisitions will increase
the Company's leverage and any offering of equity securities to finance
acquisitions will dilute the ownership of existing stockholders. The Company
competes and will continue to compete with other buyers for acquisitions, many
of which have greater financial resources than the Company.
DEPENDENCE ON KEY PERSONNEL. The Company's business is partially
dependent upon the performance of certain of its executive officers. The
Company has entered into employment agreements that contain non-compete
provisions with these executive officers. Notwithstanding such agreements,
there can be no assurance that the Company will be able to retain such officers
or that it will be able to enforce the non-compete provisions in the event of
their departure. While the Company maintains key man life insurance on the
lives of certain of such officers, including its Chief Executive Officer, the
existence of such insurance does not mean that the death or disability of one
or more of them would not have a material adverse effect upon the Company.
INTERNATIONAL INVESTMENTS. The Company has investments in Argentina.
The Company also may make investments in 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
political, social and economic structures of those countries. Risks may include
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.
SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON FUTURE
MARKET PRICES. The Company has a total of 12,057,752 shares of Common Stock
outstanding. An additional 7,568,803 shares of Common Stock are issuable upon
the conversion or exercise of outstanding convertible securities. All of such
shares have been registered for resale under the Securities Act are subject to
registration rights or are otherwise freely tradeable. Sales of a substantial
number of such shares in the public market, or the perception that such sales
could occur, could adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise capital through an offering
of its equity securities.
PRINCIPAL STOCKHOLDER CONTROL. One group of affiliated entities owns
approximately 31% of the outstanding Common Stock. These stockholders have
substantial influence over the election of and may be deemed to control the
Board of Directors of the Company. Further, so long as such stockholders own
such a large percentage of the Common Stock of the Company, such ownership may
have the effect of discouraging certain types of transactions involving an
actual or potential change of control, including transactions in which holders
of Common Stock might otherwise receive a premium for their shares over the
then-current market prices.
5
<PAGE> 7
UNAUDITED WELLTECH FINANCIAL STATEMENTS. In March 1996, the Company
completed the acquisition of WellTech, Inc. ("WellTech") through the merger of
WellTech into the Company (the "WellTech Merger"). WellTech was an established
well services company providing a broad range of workover and production
services in Texas, Oklahoma, Michigan, Pennsylvania, West Virginia and
Argentina. The WellTech Merger approximately doubled the size of the Company.
Although the Company's financial statements incorporated by reference into this
Prospectus include the combined results of the Company and WellTech after the
WellTech Merger, this Prospectus does not contain all of the financial
statements of WellTech normally required in a registration statement filed with
the Commission, including audited financial statements as of and for the year
ending December 31, 1995. There can be no assurance that audited financial
statements for WellTech for 1995 would not differ materially from those
presented therein.
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<PAGE> 8
SELLING SECURITYHOLDERS
The following table sets forth information concerning the principal
amount of Debentures and Common Stock beneficially owned by certain Selling
Securityholders.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP
DEBENTURES BEFORE OFFERING(1) OF COMMON STOCK(1)
------------------------------ -----------------------
PRINCIPAL % OF NUMBER OF % OF
NAME AMOUNT OWNED CLASS SHARES(2)(3) CLASS(3)
- --------- ------------- ------- ------------ ---------
<S> <C> <C> <C> <C>
Green-Cohn Group, LLC . . . . . . . . . . . . . . . . . . . . . $5,180,000 10% 531,282 3.0%
Lincoln National Life Insurance . . . . . . . . . . . . . . . . $2,775,000 5.3% 284,615 1.6%
UMB Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . . $2,675,000 5.1% 274,358 1.5%
ZPG Securities, LLC . . . . . . . . . . . . . . . . . . . . . . $2,625,000 5.0% 269,230 1.5%
Chase Manhattan Bank trustee for IBM Corp Retirement Plan . . . $2,425,000 4.7% 248,717 1.4%
Soundshore Partners . . . . . . . . . . . . . . . . . . . . . . $2,200,000 4.2% 225,641 1.6%
DFG Corporation . . . . . . . . . . . . . . . . . . . . . . . . $1,975,000 3.8% 202,564 1.1%
KA Trading, L.P. . . . . . . . . . . . . . . . . . . . . . . . $1,922,000 3.7% 197,128 1.1%
Merrill Lynch Convertible Holdings, Inc. . . . . . . . . . . . $1,855,000 3.6% 190,256 1.1%
HBK Finance L.P. . . . . . . . . . . . . . . . . . . . . . . . $1,825,000 3.5% 187,179 1.0%
HBK Securities Ltd. . . . . . . . . . . . . . . . . . . . . . . $1,825,000 3.5% 187,179 1.0%
Pacific Horizon Capital Income Fund . . . . . . . . . . . . . . $1,700,000 3.3% 174,358 1.0%
JMG Convertible Investment, L.P. . . . . . . . . . . . . . . . $1,700,000 3.3% 174,358 1.0%
Bankers Trust Co. Trustee for Chrysler Corp. Emp #1 Pension . . $1,525,000 2.9% 156,410 *
Carrigaholt Capital (Bermuda) L.P. . . . . . . . . . . . . . . $1,451,000 2.8% 148,820 *
The Class 1C Company Ltd. . . . . . . . . . . . . . . . . . . . $1,284,000 2.5% 131,692 *
Lincoln National Convertible Securities Fund . . . . . . . . . $1,275,000 2.5% 130,769 *
Evergreen Income & Growth Fund. . . . . . . . . . . . . . . . . $1,250,000 2.4% 128,205 *
Stark International . . . . . . . . . . . . . . . . . . . . . . $1,278,000 2.5% 131,076 *
Shepherd Investments International, Ltd.. . . . . . . . . . . . $1,217,000 2.3% 124,820 *
KA Management Ltd. . . . . . . . . . . . . . . . . . . . . . . $1,178,000 2.3% 120,820 *
TQA Vantage Fund, Ltd. . . . . . . . . . . . . . . . . . . . . $1,175,000 2.3% 120,512 *
TQA Arbitrage Fund, L.P. . . . . . . . . . . . . . . . . . . . $1,096,000 2.1% 112,410 *
McMahan Securities Co. L.P. . . . . . . . . . . . . . . . . . . $1,033,000 2.0% 105,948 *
Triton Capital Holding, Ltd. . . . . . . . . . . . . . . . . . $ 750,000 1.4% 76,923 *
Evergreen American Retirement Fund . . . . . . . . . . . . . . $ 500,000 1.0% 51,282 *
LDG Limited Fund . . . . . . . . . . . . . . . . . . . . . . . $ 331,000 * 33,948 *
Weirton Trust . . . . . . . . . . . . . . . . . . . . . . . . . $ 325,000 * 33,333 *
Evergreen Small Cap Equity Fund . . . . . . . . . . . . . . . . $ 250,000 * 25,641 *
</TABLE>
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<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP
DEBENTURES BEFORE OFFERING(1) OF COMMON STOCK(1)
---------------------------- ---------------------------
PRINCIPAL % OF NUMBER OF % OF
NAME AMOUNT OWNED CLASS SHARES(2)(3) CLASS(3)
-------- ------------- ------- ------------ ---------
<S> <C> <C> <C> <C>
TQA Leverage Fund, L.P. . . . . . . . . . . . . . . . . $ 216,000 * 22,153 *
Greyhound Lines, Inc. Pension Plan . . . . . . . . . . . $ 214,000 * 21,948 *
Walker Art Center. . . . . . . . . . . . . . . . . . . . $ 145,000 * 14,878 *
Bank of America Convertible Securities Fund . . . . . . $ 125,000 * 12,820 *
Bank of America Employee Benefit Convertible Fund . . . $ 75,000 * 7,692 *
United National Life Insurance . . . . . . . . . . . . . $ 55,000 * 5,641 *
Others . . . . . . . . . . . . . . . . . . . . . . . . $2,688,000 5.2% 275,692 1.5%
Michael P. and Georgia M. McDermett . . . . . . . . . . -- -- 175,000 1.0%
The CIT Group/Credit Finance, Inc. . . . . . . . . . . -- -- 125,000 *
Dennis and Le Wanda Hagerheide . . . . . . . . . . . . -- -- 77,998 *
James McMurphy . . . . . . . . . . . . . . . . . . . . -- -- 75,000 *
Tri-State Wellhead & Valve, Inc. . . . . . . . . . . . -- -- 83,770 *
Elvin Brownlee, Jr. . . . . . . . . . . . . . . . . . . -- -- 45,802 *
Reo Brownlee . . . . . . . . . . . . . . . . . . . . . -- -- 12,214 *
Elvin Brownlee, III . . . . . . . . . . . . . . . . . . -- -- 3,053 *
Dale Rennels. . . . . . . . . . . . . . . . . . . . . . -- -- 4,386 *
</TABLE>
- --------------------
* Under one percent.
(1) No information is given with respect to beneficial ownership after the
Offering under the assumption that all Debentures and shares of Common
Stock offered hereby will be sold.
(2) Assumes a conversion price of Debentures of $9.75 per share.
(3) Assumes (i) conversion of all of the Debentures and full exercise of
the Warrant and (ii) no shares of Common Stock will be issuable as a
Premium Protection Payment.
The information in the table with respect to Selling Securityholders
who are holders of Debentures has been prepared based upon information
furnished to the Company by American Stock Transfer & Trust Company (the
trustee under the Indenture pursuant to which the Debentures were issued), by
the Depository Trust Company and by or on behalf of the Selling
Securityholders.
The per share conversion price and, therefore, the number of shares of
Common Stock issuable upon conversion of the Debentures or exercise of the
Warrant is subject to adjustment under certain circumstances. Accordingly, the
number of shares of Common Stock issuable upon conversion of the Debentures or
exercise of the Warrant may increase or decrease. As of the date of this
Prospectus, the aggregate principal amount of Debentures outstanding is
$52,000,000, which may be converted into 5,333,333 shares of Common Stock
assuming a conversion rate of $9.75 per share. In addition, holders of
Debentures are entitled to a Premium Protection Payment generally equal to 50%
of the interest otherwise payable on the converted Debentures from the date of
conversion through July 1, 1999, payable in cash or Common Stock at the
Company's option. Since the number of shares potentially issuable as Premium
Protection Payments is based on the market price of the Common Stock at the
time of conversion, the number of shares of Common Stock so issuable cannot be
determined at this time. However, as of the date hereof, assuming that (i) 100%
of the Debentures were converted, (ii) the Company determined to pay the entire
Premium Protection Payment in Common Stock rather than cash and (iii) the
conversion price relating to the Premium Protection Payment was $16.50 per
share (which was the closing price of the Common Stock as reported on the AMEX
on May 28, 1997), the aggregate number of shares of Common Stock issuable as
Premium Protection Payments would be 127,248 shares.
8
<PAGE> 10
The information concerning the Selling Securityholders may change from
time to time and will be set forth in Supplements to this Prospectus. Other
than their ownership of the Company's securities, none of the Selling
Securityholders has had any material relationship with the Company within the
past three years.
PLAN OF DISTRIBUTION
This Prospectus relates to the resale of (i) the Debentures, (ii) the
Common Stock issuable upon conversion of Debentures (including shares payable
as Premium Protection Payments), (iii) up to 125,000 shares of Common Stock
issuable upon exercise of the Warrant and (iv) up to 477,223 shares of Common
Stock (the "Resale Shares") owned by certain of the Company's shareholders. The
Debentures were issued by the Company pursuant to a Purchase Agreement dated
June 28, 1996, and were acquired by the Selling Securityholders in resale
transactions pursuant to Rule 144A, Regulation S or Rule 501(a)(1), (2), (3) or
(7) under the Securities Act, or from other holders acquiring such Debentures
from prior holders thereof. The Warrant and the Resale Shares were issued by
the Company in a series of unrelated unregistered transactions pursuant to the
exemption provided in Section 4(2), of the Securities Act. The Registration
Statement of which this Prospectus is a part does not cover the issuance of
Common Stock upon (i) conversion of the Debentures into shares of Common Stock
or (ii) exercise of the Warrant.
The Company will not receive any of the proceeds from the sale of the
Debentures and the shares of Common Stock offered hereby. The Company has been
advised by the Selling Securityholders that the Selling Securityholders may
sell all or a portion of the Debentures and the shares of Common Stock
beneficially owned by them on any exchange or market on which the Debentures or
the Common Stock are listed or quoted, as applicable, on terms to be determined
at the times of such sales. The Selling Securityholders also may make private
sales directly or through a broker. Alternatively, any of the Selling
Securityholders may from time to time offer the Debentures or the Common Stock
offered hereby through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, commissions or concessions
from the Selling Securityholders.
To the extent not described herein and as otherwise required by law,
the specific amount of the Debentures and Common Stock 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.
In order to comply with the securities laws of certain states, if
applicable, the Debentures and the Common Stock offered hereby will be sold in
such jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the Debentures and the shares of Common Stock
offered hereby may not be sold unless they have been offered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and compliance therewith is effected.
The Selling Securityholders and any brokers, dealers, agents or
underwriters that participate with the Selling Securityholders in the
distribution of the Debentures and the Common Stock offered hereby may be
deemed to be "underwriters" within the meaning of the Securities Act, in which
event any commissions or discounts received by such brokers, dealers, agents or
underwriters and any profit on the resale of the Debentures and the Common
Stock offered hereby and purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Company and the Selling Securityholders have agreed to indemnify
each other against certain liabilities arising under the Securities Act. The
Company has agreed to pay all expenses incident to the offer and sale of the
Debentures and Common Stock pursuant to this Prospectus other than selling
commissions and fees.
The Common Stock issuable upon conversion of the Debentures have been
authorized for listing on the AMEX upon official notice of issuance. The
Debentures are not listed on the AMEX and are not expected to be listed on any
securities exchange. The Debentures are eligible for trading through the Portal
Market.
9
<PAGE> 11
DESCRIPTION OF DEBENTURES
The Debentures were issued under an indenture (the "Indenture")
between the Company and American Stock & Transfer Trust Company, as trustee
(the "Trustee"). The following summaries of certain provisions of the Indenture
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to all of the provisions of the Indenture, the Debentures
and the Registration Rights Agreement dated as of July 3, 1996, among the
Company, McMahan Securities Co. L.P. and Rauscher Pierce Refsnes, Inc. (the
"Registration Rights Agreement"), including the definition therein of certain
terms. Wherever particular sections or defined terms of the Indenture are
referred to, such sections or defined terms are incorporated herein by
reference. Copies of the Indenture and Registration Rights Agreement are
available from the Company.
GENERAL
The Debentures are unsecured obligations of the Company, are
$52,000,000 in aggregate principal amount and mature on July 1, 2003. The
Debentures are subordinated in right of payment to certain other obligations of
the Company. See "--Subordination." The Debentures bear interest at the rate 7%
per annum from the date of original issuance of Debentures pursuant to the
Indenture or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semiannually on July 1 and January 1 of each
year, commencing January 1, 1997 to the Person in whose name the Debentures (or
any predecessor Debenture) is registered at the close of business on the
preceding June 15 or December 15, as the case may be. Interest on the Debentures
will be paid on the basis of a 360-day year of twelve 30-day months.
Principal of, premium on, if any, and interest on, the Debentures will
be payable (i) in respect of Debentures held of record by the Depository Trust
Company ("DTC") or its nominee in same day funds on or before the payment dates
with respect to such amounts and (ii) in respect of Debentures held of record
by holders other than DTC or its nominee, at the office of the Trustee in New
York, New York. The Debentures may be surrendered for transfer, exchange or
conversion at the office of the Trustee in New York, New York. In addition,
with respect to Debentures held of record by holders, other than DTC or its
nominee, payment of interest may be made, at the option of The Company, by
check mailed to the address of the persons entitled thereto as they appear in
the register for the Debentures on the Regular Record Date for such interest.
The Debentures have been issued only in registered form, without
coupons and in denominations of $1,000 or any integral multiple thereof. No
service charge will be made for any transfer or exchange of the Debentures, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge and any other expenses (including the fees and expenses of
the Trustee) payable in connection therewith. The Company is not required (i)
to register the transfer of or exchange any Debentures for a period of 15 days
before a selection of Debentures to be redeemed, or (ii) to register the
transfer of or exchange any Debenture selected for redemption in whole or in
part.
All moneys paid by the Company to the Trustee or any Paying Agent for
the payment of principal of and premium and interest on any Debenture which
remain unclaimed for two years after such principal, premium or interest become
due and payable may be repaid to The Company. Thereafter, the Holder of such
Debenture may, as an unsecured general creditor, look only to the Company for
payment thereof.
The Indenture does not contain any financial covenants or restrictions
on payment of dividends or any provisions that would provide protection to
Holders of the Debentures against a sudden and dramatic decline in credit
quality of the Company resulting from any takeover, recapitalization or similar
restructuring, except as described below under "--Certain Rights to Require
Repurchase of Debentures."
Pursuant to the terms of the Indenture, the Company was required to
obtain Servicios' guarantee of the Company's indebtedness under the Debentures
and agreed to increase the interest rate payable on the offering to 7 1/2% in
the event such guarantee was not obtained. To date, such guarantee has not been
obtained, and, therefore, the Debentures are currently accruing interest at a
rate of 7 1/2%, which rate will continue in effect until such guarantee is
obtained.
10
<PAGE> 12
CONVERSION RIGHTS
The Debentures are convertible into Common Stock prior to redemption
or final maturity, currently at a conversion price equal to $9.75 per share. In
addition, if conversion occurs before July 1, 1999, Holders are entitled to
receive a payment (the "Premium Protection Payment") generally equal to 50% of
the interest otherwise payable on the converted Debentures from the date of
conversion through July 1, 1999, payable in cash or Common Stock, at the
Company's option; provided, however, that no Premium Protection Payments will
be made if an all cash tender offer for the Common Stock is consummated at a
price per share representing a 40% or greater premium above the conversion
price. The right to convert Debentures which have been called for redemption
will terminate at the close of business on the date fixed for redemption or the
second trading day preceding a Change in Control Payment Date, as the case may
be. See "-- Optional Redemption" below.
The conversion price is subject to adjustment upon the occurrence of
any of the following events: (i) the Company pays a dividend, or makes a
distribution, in shares of its Common Stock on its Common Stock; (ii) the
Company subdivides its outstanding Common Stock into a greater number of shares
or combines its Common Stock into a smaller number of shares; (iii) the Company
grants rights or warrants to all holders of Common Stock entitling them to
subscribe for or purchase Common Stock at a price less than the Current Market
Price per share; (iv) the Company distributes to all holders of its Common
Stock any shares of capital stock of the Company (other than Common Stock) or
evidences of its indebtedness or assets (excluding cash dividends or other
distributions to the extent paid from its retained earnings or current
earnings) or rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in (iii) above); (v) the Company, by
dividend or otherwise, distributes to all holders of its Common Stock cash in
an aggregate amount that, combined together with (A) the aggregate amount of
any other distributions to all holders of its Common Stock made exclusively in
cash within the 12 months preceding the date of payment of such distribution
and in respect of which no adjustment pursuant to this section (v) has been
made and (B) the aggregate of any cash plus the fair market value of
consideration payable in respect of any tender offer by the Company or its
Subsidiaries for all or any portion of the Common Stock concluded with the 12
months preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to section (vi) has been made, exceeds 10% of The
Company's market capitalization (being the product of the Current Market Price
times the number of shares of Common Stock then outstanding); and (vi) a tender
offer made by the Company or any Subsidiary for all or any portion of the
Common Stock shall expire and such tender offer shall require payment to
stockholders of an aggregate consideration having a fair market value that
combined with (Y) the aggregate of the cash plus the fair market value, as of
the expiration of such tender offer of consideration payable in respect of any
other tender offer by the Company or any Subsidiary for all or any portion of
the Common Stock expiring within the 12 months preceding the expiration of such
tender offer and in respect of which no adjustment to this section (vi) has
been made and (Z) the aggregate amount of any distributions to all holders of
Common Stock made exclusively in cash within 12 months preceding the expiration
of such tender offer and in respect of which no adjustment pursuant to section
(v) has been made, exceeds 10% of the product of the current market price per
share to the Common Stock as of the last time tenders could have been made
pursuant to such tender offer times the number of shares of Common Stock
outstanding (including tendered shares). No adjustment of the conversion price
will be required to be made unless such adjustments amount to at least one
percent of the conversion price, as last adjusted. Any adjustment that would
otherwise be required to be made shall be carried forward and taken into
account in any subsequent adjustment.
In addition to the foregoing adjustments, the Company is permitted to
reduce the conversion price as it considers to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or stock
rights will not be taxable to the holders of the Common Stock or, if that is
not possible, to diminish any income taxes that are otherwise payable because
of such event or for any other reason. In the case of any consolidation or
merger of the Company with any other corporation (other than one in which no
change is made in the Common Stock), or any sale or transfer of all or
substantially all of the assets of The Company, the Holder of any Debenture
then outstanding will, with certain exceptions, have the right thereafter to
convert such Debenture only into the kind and amount of securities, cash
11
<PAGE> 13
and other property receivable upon such consolidation, merger, sale or transfer
by a holder of the number of shares of Common Stock into which such Debenture
might have been converted immediately prior to such consolidation, merger, sale
or transfer, and adjustments will be provided for events subsequent thereto
that are as nearly equivalent as practical to the conversion price adjustments
described above.
Fractional shares of Common Stock, including fractional shares issued
as Premium Protection Payments, will not be issued upon conversion, but, in
lieu thereof, the Company will pay a cash adjustment based upon the Closing
Price at the close of business on the day of conversion. If any Debentures are
surrendered for conversion during the period from the close of business on the
record date for any Interest Payment Date to the opening of business on such
Interest Payment Date (except any such Debentures called for redemption), such
Debentures when surrendered for conversion must be accompanied by payment in
funds acceptable to the Company of an amount equal to the interest otherwise
payable on such Interest Payment Date on the principal amount being converted.
Except as described in the preceding sentence and except for Premium Protection
Payments, no interest will be payable by the Company on converted Debentures
with respect to any Interest Payment Date subsequent to the date of conversion.
No other payment or adjustment for interest or dividends is to be made upon
conversion.
SUBORDINATION
The payment of the principal of and premium, if any, and interest on
the Debentures are, to the extent set forth in the Indenture, subordinated in
right of payment to the prior payment in full of all Senior Indebtedness. If
there is any distribution (which may consist of cash, securities or other
property) to creditors in a liquidation, dissolution, or winding up, or in a
bankruptcy, reorganization, insolvency, receivership or similar proceedings of
The Company, the holders of Senior Indebtedness shall be entitled to receive
payment in full, in cash or in a manner satisfactory to the holders of such
Senior Indebtedness, of all Senior Indebtedness before Holders shall be entitled
to receive any payments of principal of or premium, if any, or interest on
Debentures, and until the Senior Indebtedness is so paid, any distributions to
which Holders would have been entitled but for the subordination shall be made
to holders of Senior Indebtedness as their interests may appear, except that
Holders may receive securities that are subordinated to Senior Indebtedness to
at least the same extent as the Debentures. In the event of the maturity of any
Senior Indebtedness, all principal thereof, premium, if any, and interest
thereon and any other amounts owing in respect thereof must be paid in full, or
provisions for such payment in cash or in a manner satisfactory to the holders
of such Senior Indebtedness, before the Holders of the Debentures will be
entitled to receive any payment for the principal of or premium, if any, or
interest on the Debentures. No payments on account of principal of or premium,
if any, or interest on the Debentures or payments to acquire any of the
Debentures may be made if there has occurred a default with respect to Senior
Indebtedness, permitting holders of to accelerate the maturity thereof (and if
the default is other than default in payment of the principal of, premium, if
any, or interest on or any other amount owing in respect of such Senior
Indebtedness, upon written notice thereof given to the Company and the Trustee
by the holders of the Senior Indebtedness) unless such default has been cured or
waived, or has ceased to exist.
Senior Indebtedness is defined in the Indenture as (a) the principal or
interest (including, to the extent permitted by applicable law, interest on or
after the commencement of any bankruptcy proceeding whether or not representing
an allowed claim in such proceeding) and premium, if any, on and any other
amount owing with respect to (i) any indebtedness of The Company, now or
hereafter outstanding, in respect of borrowed money (other than the Debentures),
(ii) any indebtedness of The Company, now or hereafter outstanding, evidenced by
a bond, note, debenture, capitalized lease, letter of credit or other similar
instruments, (iii) any other written obligations of The Company, now or
hereafter outstanding, to pay money issued or assumed as all or part of the
consideration for the acquisition of property, assets or securities and (iv) any
guarantee or endorsement (other than for collection or deposit in the ordinary
course of business) or discount with recourse of, or other agreement (contingent
or otherwise) to purchase, repurchase or otherwise acquire, to supply or advance
funds or to become liable with respect to (directly or indirectly), any
indebtedness or obligation of any Person of the type referred to in the
preceding subclauses (i), (ii) and (iii) now or hereafter outstanding; and (b)
any refundings, renewals or extensions of any indebtedness or other obligation
described in clause (a).
12
<PAGE> 14
The Debentures are obligations exclusively of The Company. A portion
of the operations of the Company are currently conducted through Subsidiaries,
which are separate and distinct legal entities and likewise no obligation,
contingent or otherwise, to pay any amounts due pursuant to the Debentures or
to make any funds available therefor, whether by dividends, loans or other
payments (except for Subsidiaries acting as Subsidiary Guarantors as described
below under "--Subsidiary Guarantees"). In addition, the payment of dividends
and certain loans and advances to the Company by such Subsidiaries may be
subject to certain statutory or contractual restrictions, are contingent upon
the earnings of such Subsidiaries and are subject to various business
considerations.
The Debentures are effectively subordinated to all Senior Indebtedness
of The Company's Subsidiaries. Any right of the Company to receive assets of
any such Subsidiary upon the liquidation or reorganization of any such
Subsidiary (and the consequent right of the Holders of the Debentures to
participate in those assets) will be effectively subordinated to the claims of
that Subsidiary's creditors, except to the extent that the Company is itself
recognized as a creditor of such Subsidiary, in which case the claims of the
Company would still be subordinate to any security interest in the assets of
such Subsidiary and any indebtedness of such Subsidiary senior to that held by
the Company.
The Indenture does not limit or prohibit the incurrence of Senior
Indebtedness. The Company expects to incur Senior Indebtedness from time to
time in the future.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Debentures are jointly and
severally guaranteed (the "Subsidiary Guarantees") by the Subsidiary Guarantors.
The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee are
limited to the maximum amount that will not constitute a fraudulent conveyance
under state or federal law.
The Indenture provides that in the event of a sale or other
disposition of all or substantially all of the assets of any Subsidiary
Guarantor (including, if applicable, all of the capital stock of any Subsidiary
Guarantor), by way of merger, consolidation or otherwise, such Subsidiary
Guarantor (in the event of a sale or other disposition of all of the Capital
Stock of such Subsidiary Guarantor) or the corporation acquiring the property
(in the event of a sale or other disposition of all or substantially all of the
assets of such Subsidiary Guarantor) shall be released and relieved of any
obligations under its Subsidiary Guarantee provided that such surviving or
acquiring entity is not a Subsidiary of the Company.
OPTIONAL REDEMPTION
The Debentures are redeemable, at The Company's option, in whole or
from time to time in part, at any time on or after July 15, 1999, upon not less
than 15 nor more than 60 days' notice mailed to each Holder of Debentures to be
redeemed at its address appearing in the Security Register and prior to
Maturity at the following Redemption Prices (expressed as percentages of the
principal amount) plus accrued interest to the Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date to receive
interest due on an Interest Payment Date that is on or prior to the Redemption
Date).
If redeemed during the 12-month period beginning July 15, in the year
indicated, the redemption price shall be:
<TABLE>
<CAPTION>
REDEMPTION
----------
YEAR PRICE
---- -----
<S> <C>
1999 . . . . . . 104%
2000 . . . . . . 103%
2001 . . . . . . 102%
2002 . . . . . . 101%
</TABLE>
No sinking fund is provided for the Debentures.
13
<PAGE> 15
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, convey, transfer or
lease all or substantially all of its properties and assets to any Person
(other than a merger between the Company and any wholly-owned Subsidiary of the
Company), unless (a) the Company survives such merger or such Person is a
corporation, organized and validly existing under the laws of the United States
or any state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations under the Debentures and the
Indenture, (b) immediately after consummating such consolidation, merger,
transfer or lease, no Default or Event of Default will occur and be continuing,
(c) immediately after giving effect to such transaction, the consolidated net
worth of the resulting surviving corporation is not less than that of the
Company immediately before the transaction, and the Company has delivered to
the Trustee an Officer's Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, transfer or lease and, if
applicable, such supplemental indenture complies with the provisions of the
Indenture.
CERTAIN RIGHTS TO REQUIRE REPURCHASE OF DEBENTURES
In the event of any Change in Control occurring after the date of
issuance of the Debentures and on or prior to Maturity, each Holder of
Debentures has the right, at the Holder's option, to require the Company to
repurchase all or any part of the Holder's Debentures on the date (the
"Repurchase Date") that is no later than 60 days following the date of the
Repurchase Event as described below at a price (the "Repurchase Price") equal
to 100% of the principal amount thereof, together with accrued and unpaid
interest to the Repurchase Date. On or prior to the Repurchase Date, the
Company shall deposit with the Trustee or a Paying Agent an amount of money
sufficient to pay the Repurchase Price of the Debentures which are to be repaid
on or promptly following the Repurchase Date.
Failure by the Company to provide timely notice of a Change in
Control, as provided for below, or to repurchase the Debentures when required
under the preceding paragraph will result in an Event of Default under the
Indenture whether or not such repurchase is permitted by the subordination
provisions of the Indenture.
The Company is obligated to mail to all Holders of Debentures, a
notice no less than 30 days nor more than 45 days before any Repurchase Date,
of the occurrence of such Change in Control, the Repurchase Date, the date by
which the repurchase right must be exercised, the Repurchase Price for
Debentures and the procedures which the Holder must follow to exercise this
right. To exercise the repurchase right, the Holder of a Debenture must
deliver, on or before the close of business on the Repurchase Date, irrevocable
written notice to the Company (or an agent designated by the Company for such
purpose) and to the Trustee of the Holder's exercise of such right, together
with the certificates evidencing the Debentures with respect to which the right
is being exercised, duly endorsed for transfer. Such written notice is
irrevocable.
A "Change in Control" shall occur when: (i) all or substantially all
of The Company's assets are directly or indirectly, leased, exchanged or
otherwise transferred or sold to any Person or related group of Persons; (ii)
there shall be consummated any consolidation or merger of the Company with the
effect that immediately after such transaction the stockholders of the Company
hold less than a majority of the combined voting power of the then outstanding
voting stock of the Person surviving such transaction; or (iii) any Person, or
any Persons acting together which would constitute a "group" for purposes of
Section 13(d) of the Exchange Act, together with any affiliates thereof, shall
beneficially own (as defined in Rule 13d-3 under the Exchange Act) at least 50%
of the total voting power of the then outstanding voting stock and warrants or
options to acquire such voting stock calculated on a fully-diluted basis, of
the Company.
The right to require the Company to repurchase Debentures as a result
of the occurrence of a Change in Control could create an event of default under
Senior Indebtedness of The Company, as a result of which any repurchase could,
absent a waiver, be blocked by the subordination provisions of the Debentures.
See "-- Subordination." Failure by the Company to repurchase the Debentures
when required will result in an Event of Default with respect to the Debentures
whether or not such repurchase is permitted by the subordination provisions.
The Company's ability to pay cash to the Holders of Debentures upon a Change in
Control may be limited by certain financial covenants contained in the
14
<PAGE> 16
Company's Senior Indebtedness. In addition, there can be no assurance that the
Company will have the cash necessary to satisfy its repurchase obligation.
The foregoing provisions would not necessarily afford Holders of the
Debentures protection in the event of highly leveraged or other transactions
involving the Company that may adversely affect Holders. In addition, the
foregoing provisions may discourage open market purchases of the Common Stock
or a non-negotiated tender or exchange offer for such stock and, accordingly,
may limit a stockholder's ability to realize a premium over the market price of
the Common Stock in connection with any such transaction.
In the event a Repurchase Event occurs and the Holders exercise their
rights to require the Company to repurchase Debentures, the Company intends to
comply with applicable tender offer rules under the Exchange Act, including
Rules 13e-4 and 14e-1, as then in effect, with respect to any such repurchase.
RULE 144A INFORMATION REQUIREMENT
The Company has agreed to furnish to the Holders or beneficial holders
of the Debentures and prospective purchasers of the Debentures designated by
the Holders of the Debentures, upon their request, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND ACCELERATION
The following are Events of Default under the Indenture with respect
to the Debentures: (a) default in the payment of principal of or any premium,
if any, on any Debenture when due; (b) default in the payment of any interest
on any Debenture when due, which default continues for more than 30 days; (c)
default in the performance, or breach, of any other covenant or warranty of the
Company or any Subsidiary in the Indenture continuing for 60 days after written
notice by the Trustee or the Holders of at least 25% in aggregate principal
amount of the outstanding Debentures; (d) default on any other Indebtedness of
the Company or any Subsidiary if such Default results from the failure to pay
principal of, premium, if any, or interest on any such Indebtedness when due in
excess of $1,000,000 or as a result of such Default, the maturity of such
Indebtedness has been accelerated, without such Default and acceleration having
been rescinded or annulled within 10 days, and the principal amount of any
other such Indebtedness in Default, or the maturity of which has been so
accelerated, aggregate $1,000,000 or more; (e) except as otherwise permitted by
the Indenture, any Subsidiary Guarantee is held in any judicial proceeding to
be unenforceable or invalid or ceases, for any reason, to be in full force and
effect, or any Subsidiary Guarantor, or any person acting on behalf of any
Subsidiary Guarantor, denies or disaffirms its obligations under its Subsidiary
Guarantee; (f) the entry by a court of a judgment or order against the Company
or any Subsidiary in an aggregate amount in excess of $1,000,000 that is not
covered by insurance written by third parties that has not been vacated,
discharged, satisfied or stayed pending approval within 60 days after the entry
thereof; and (g) certain events in bankruptcy, insolvency or reorganization of
the Company or any Subsidiary of the Company.
If an Event of Default with respect to the Debentures shall occur and
be continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the then outstanding Debentures may declare the unpaid
principal of and any accrued interest on all such Debentures to be due and
payable immediately by notice to the Company. However, the Holders of a
majority in principal of the then outstanding Debentures may, by written notice
to the Trustee, rescind an acceleration and its consequences if such rescission
would not conflict with any judgment or decree and if all existing Events of
Default (except nonpayment of principal or interest that has become due solely
because of the acceleration) have been cured or waived. If an Event of Default
shall occur as a result of an event of bankruptcy, insolvency or reorganization
of the Company or any Subsidiary of the Company, such an amount shall become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder. The Company is required to furnish to the
Trustee annually a statement as to the performance by the Company of certain of
its obligations under Indenture and as to any default in such performance.
15
<PAGE> 17
MODIFICATION, AMENDMENTS AND WAIVERS
Modifications and amendments of the Indenture and the Debentures may be
made by the Company and the Trustee without the consent of the Holders to: (a)
cure any ambiguity, defect or inconsistency; (b) provide for any uncertificated
Debentures in addition to certificated Debentures; (c) make any change that does
not adversely affect the legal rights of any Holder under the Indenture; and (d)
provide for assumption of obligations of the Company or a Subsidiary Guarantor
to Holders.
Modifications and amendments of the Indenture and the Debentures may
be made by the Company and the 'Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount of the outstanding
Debentures. The Holders of a majority in principal amount of the Debentures
then outstanding may waive compliance in a particular instance by the Company
with any provision of the Indenture or the Debentures. However, without the
consent of each Holder affected, an amendment or waiver may not (with respect
to any Debentures held by a nonconsenting Holder): (a) reduce the principal
amount of Debentures whose Holders must consent to an amendment or waiver; (b)
reduce the rate of interest or change the time for payment of interest,
including default interest, on any Debenture; (c) reduce the principal of or
change the maturity of any Debenture or alter the redemption provisions or the
price at which the Company shall offer to purchase such Debentures; (d) make
any Debenture payable in money other than that stated in the Debenture; (e)
make any changes as regards provisions for the waiver of past Defaults and the
rights of Holders to receive payment, as contained in the Indenture; (f) waive
a default in the payment of, premium or interest on, or redemption payment with
respect to, any Debenture; or (g) release any Subsidiary Guarantor from its
obligations under the Subsidiary Guarantee or make any change in its Subsidiary
Guarantee that would adversely affect the Holders, subject to certain
exceptions.
BOOK ENTRY, DELIVERY AND FORM
Debentures sold to Qualified Institutional Buyers in reliance on Rule
144A under the Securities Act will be initially deposited with, or on behalf
of, DTC and registered in the name of Cede & Co., as DTC's nominee, in the form
of a global Debenture (the "Rule 144A Global Debenture"). Interests in the Rule
144A Global Debenture will be shown in, and transfers thereof will be effected
only through, records maintained by DTC and its participants. The Rule 144A
Global Debenture will be reduced in principal amount to reflect the subsequent
transfer by owners of beneficial interest in the Rule 144A Global Debenture to
another person who is not a Qualified Institutional Buyer. If DTC is at any
time unwilling or unable to continue as depositary for Debentures represented
by the Rule 144A Global Debenture and a successor depositary is not named
within 90 days, the Company will issue certificated Debentures in exchange for
Debentures represented by the Rule 144A Global Debenture, which will bear any
legend required under the caption "Transfer Restrictions." Transfer of the
Debentures, whether as an interest in the Rule 144A Global Debenture or as
certificated Debentures, must be made in accordance with the Indenture. For a
description of the restrictions on transfer of the Debentures, see "Transfer
Restrictions."
DTC has advised the Company that DTC is a limited-purpose trust company
that was created to hold securities for its participating organizations
(collectively, the "Participants or DTC's Participants") and to facilitate the
clearance and settlement of transactions in such securities between Participants
through electronic book-entry changes in accounts of its Participants. DTC's
Participants include securities brokers and dealers, banks and trust companies,
clearing corporations and certain other organizations. Access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or "DTC's Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through DTC's
Participants or DTC's Indirect Participants.
So long as DTC or its nominee is the registered owner of any
Debentures, DTC or such nominee will be considered the sole holder under the
Indenture of any Debentures evidenced by the Rule 144A Global Debenture.
Beneficial owners of Debentures evidenced by the Rule 144A Global Debenture
will not be considered the owners or holders thereof under the Indenture for
any purpose, including with respect to the giving of any directions,
instructions or approvals to the Trustee thereunder. Neither the Company nor
the Trustee will have any responsibility or liability for
16
<PAGE> 18
any aspect of the records of DTC or for maintaining, supervising or reviewing
any records of DTC relating to the Debentures.
Payments in respect of the principal of, premium, if any, and interest
on any Debentures registered in the name of DTC or its nominee on the applicable
record date will be payable by the Trustee to or at the direction of DTC or its
nominee in its capacity as the registered holder under the Indenture. Under the
terms of the Indenture, the Company and the Trustee may treat the persons in
whose names Debentures, including Debentures represented by the Rule 144A Global
Debenture, are registered as the owners thereof for the purpose of receiving
such payments. Consequently, neither the Company nor the Trustee has or will
have any responsibility or liability for the payment of such amounts to
beneficial owners of Debentures. The Company believes, however, that it is
currently the policy of DTC to immediately credit accounts of the relevant
Participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in relevant security as shown on the records of
DTC. Payments by DTC's Participants and DTC's Indirect Participants to the
beneficial owners of Debentures will be governed by standing instructions and
customary, practice and will be the responsibility of DTC's Participants and
DTC's Indirect Participants.
Neither the Company nor the Trustee will be liable for any delay by
DTC or its nominee in identifying the beneficial owners of Debentures DTC and
the Company and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from DTC or its nominees for all purposes.
GOVERNING LAW
The Indenture and Debentures are governed by and construed in
accordance with the laws of the State of New York, without giving effect to
such State's conflicts of laws principles.
INFORMATION CONCERNING THE TRUSTEE
The Company and its Subsidiaries may maintain deposit accounts and
conduct other banking transactions with the Trustee in the ordinary course of
business.
LEGAL MATTERS
Certain legal matters relating to the validity of the Debentures and
the Common Stock have been passed upon by Porter & Hedges, L.L.P., Houston,
Texas.
EXPERTS
The consolidated financial statements of the Company and subsidiaries
as of June 30, 1996 and 1995, and for each of the years in the three-year
period ended June 30, 1996, have been incorporated by reference in this
Prospectus in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, upon the authority of said firm as experts in
accounting and auditing.
The audited 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
incorporated herein in reliance upon the authority of said firm as experts in
giving said report.
17
<PAGE> 19
================================================================================
NO DEALER, SALES PERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS 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 THE COMPANY 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 THE COMPANY, SINCE THE DATE HEREOF.
--------------------
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Selling Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Description of Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
================================================================================
================================================================================
KEY ENERGY
GROUP, INC.
$52,000,000
7% CONVERTIBLE SUBORDINATED
DEBENTURES DUE 2003
6,062,804 SHARES
OF
COMMON STOCK
--------------------
PROSPECTUS
--------------------
JUNE 6, 1997
================================================================================
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT NO. DESCRIPTION
----------- -----------
* 4.1 Indenture dated as of July 3, 1996, among Key Energy
Group, Inc., Yale E. The Company, Inc., WellTech Eastern,
Inc., Odessa Exploration, Inc., the Company Energy
Drilling, Inc., d/b/a Clint Hurt Drilling, Servicios
WellTech, S.A., and American Stock Transfer & Trust
Company, as Trustee, relating to the Company's
$52,000,000 7% Convertible Subordinated Debentures due
2003 (incorporated by reference to Exhibit 4.2 of the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996).
* 4.2 First Supplemental Indenture dated as of November 20,
1996 by and between Key Energy Group, Inc. and American
Stock Transfer & Trust Company, as Trustee (incorporated
by reference to Exhibit 10(i) of the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended December
31, 1996).
* 5.1 Opinion of Porter & Hedges, L.L.P.
* 23.1 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5)
** 23.2 Consent of KPMG Peat Marwick LLP
** 23.3 Consent of Arthur Andersen LLP
* 24.1 Power of Attorney (included on signature page)
** 25.1 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of American Stock
Transfer and Trust Company.
- --------------------
* Previously filed.
** Filed herewith.
II-1
<PAGE> 21
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 East Brunswick, State of
New Jersey on June 4, 1997.
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.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ FRANCIS D. JOHN President, Chief Executive June 4, 1997
---------------------------- Officer, Chief Financial
Francis D. John Officer and Director
* Director June 4, 1997
----------------------------
William S. Manly
* Director June 4, 1997
----------------------------
Morton Wolkowitz
* Director June 4, 1997
----------------------------
Van D. Greenfield
* Director June 4, 1997
----------------------------
Kevin P. Collins
* Director June 4, 1997
----------------------------
W. Phillip Marcum
* Chief Accounting Officer June 4, 1997
---------------------------- and Treasurer
Danny R. Evatt
/s/ JACK D. LOFTIS, JR.
------------------------------------------
By: *Jack D. Loftis, Jr., Attorney-In-Fact
</TABLE>
II-2
<PAGE> 22
EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
* 4.1 Indenture dated as of July 3, 1996, among Key Energy Group,
Inc., Yale E. Key, Inc., WellTech Eastern, Inc., Odessa
Exploration, Inc., Key Energy Drilling, Inc., d/b/a Clint Hurt
Drilling, Servicios WellTech, S.A., and American Stock Transfer
& Trust Company, as Trustee, relating to the Company's
$52,000,000 7% Convertible Subordinated Debentures due 2003
(incorporated by reference to Exhibit 4.2 of the Company's
Annual Report on Form 10-K for the fiscal year ended June 30,
1996).
* 4.2 First Supplemental Indenture dated as of November 20, 1996 by
and between Key Energy Group, Inc. and American Stock Transfer &
Trust Company, as Trustee (incorporated by reference to Exhibit
10(i) of the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 1996).
* 5.1 Opinion of Porter & Hedges, L.L.P.
* 23.1 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1)
** 23.2 Consent of KPMG Peat Marwick LLP
** 23.3 Consent of Arthur Andersen LLP
* 24.1 Power of Attorney (included on signature page)
** 25.1 Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of American Stock Transfer and Trust
Company.
</TABLE>
- --------------------
* Previously filed.
** Filed herewith.
II-3
<PAGE> 1
EXHIBIT NO. 23.2
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Key Energy Group, Inc.
We consent to incorporation by reference in the registration statement (No.
333-24497) on Form S-3 of Key Energy Group, Inc. of our report dated September
13, 1996, relating to the consolidated balance sheets of Key Energy Group, Inc.
and subsidiaries as of June 30, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended June 30, 1996, which report appears in the
June 30, 1996 annual report on Form 10-K of Key Energy Group, Inc.
KPMG PEAT MARWICK LLP
Midland, Texas
June 4, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report on the consolidated
financial statements of WellTech, Inc. and subsidiaries dated August 31, 1995
included in Key Energy Group, Inc.'s previously filed registration statement on
Form S-4 (File No. 333-369), and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
June 4, 1997
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
____________________________________
AMERICAN STOCK TRANSFER & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-3439945
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
40 Wall Street 10005
New York, New York (Zip Code)
(Address of trustee's
principal executive offices)
___________________________________
KEY ENERGY GROUP, INC.
(Exact name of obligor as specified in its charter)
Maryland 04-2648081
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Two Tower Center, 10th Floor
East Brunswick, New Jersey 08816
(Address of principal executive (Zip Code)
offices)
_____________________________________
7% Convertible Subordinated Debentures Due 2003
(Title of the Indenture Securities)
<PAGE> 2
-2-
GENERAL
1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust
powers.
2. Affiliations with Obligor and Underwriters.
If the obligor or any underwriter for the obligor is an affiliate of
the trustee, describe each such affiliation.
None.
3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting
securities of the trustee:
As of March 1, 1997
- --------------------------------------------------------------------------------
COL. A COL. B
- --------------------------------------------------------------------------------
Title of Class Amount Outstanding
- --------------------------------------------------------------------------------
Common Shares - par value $600 per share. 1,000 shares
4. Trusteeships under Other Indentures.
None.
5. Interlocking Directorates and Similar Relationships with the
Obligor or Underwriters.
None.
<PAGE> 3
-3-
6. Voting Securities of the Trustee Owned by the Obligor or its
Officials.
None.
7. Voting Securities of the Trustee Owned by Underwriters or their
Officials.
None.
8. Securities of the Obligor Owned or Held by the Trustee.
None.
9. Securities of Underwriters Owned or Held by the Trustee.
None.
10. Ownership or Holdings by the Trustee of Voting Securities of
Certain Affiliates or Security Holders of the Obligor.
None.
11. Ownership or Holdings by the Trustee of any Securities of
a Person Owning 50 Percent or More of the Voting Securities
of the Obligor.
None.
12. Indebtedness of the Obligor to the Trustee.
None.
13. Defaults by the Obligor.
None.
14. Affiliations with the Underwriters.
None.
15. Foreign Trustee.
Not applicable.
<PAGE> 4
-4-
16. List of Exhibits.
<TABLE>
<S> <C>
T-1.1 - A copy of the Organization Certificate of American Stock
Transfer & Trust Company, as amended to date including
authority to commence business and exercise trust powers was
filed in connection with the Registration Statement of Live
Entertainment, Inc., File No. 33-54654, and is incorporated
herein by reference.
T-1.4 - A copy of the By-Laws of American Stock Transfer & Trust
Company, as amended to date was filed in connection with the
Registration Statement of Live Entertainment, Inc., File No.
33-54654, and is incorporated herein by reference.
T-1.6 - The consent of the Trustee required by Section 312(b) of the
Trust Indenture Act of 1939. - Exhibit A.
T-1.7 - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority. - Exhibit B.
</TABLE>
_______________________________________
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
American Stock Transfer and Trust Company, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 3rd day of June 1997.
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
Trustee
By: /s/ Herbert Lemmer
--------------------
Vice President
<PAGE> 5
EXHIBIT A
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321 (b) of the Trust Indenture Act of
1939, and subject to the limitations therein contained, American Stock Transfer
& Trust Company hereby consents that reports of examinations of said
corporation by Federal, State, Territorial or District authorities may be
furnished by such authorities to you upon request therefor.
Very truly yours,
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By /s/ HERBERT LEMMER
-----------------------------
Vice President
<PAGE> 6
FFIEC 034
EXHIBIT B Page RC-1
AMERICAN STOCK TRANSFER & TRUST CO. 9
NEW YORK
NEW YORK, 10005
FDIC CERTIFICATE NUMBER |_|_|_|_|_|
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
C100 <-
Dollar Amounts in Thousands Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions:
a. Noninterest-bearing balances and currency and coin(1,2)............................... 0081 2 035 1.a
b. Interest bearing balnaces(3).......................................................... 0071 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)............................ 1754 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 9 984 2.b
3. Federal funds sold and securiites purchased under agreements to resell:
a. Federal funds sold (4) ............................................................... 0276 0 3.a
b. Securities purchased under agreements to resell (5) .................................. 0277 0 3.b
RCON
-----
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)... 2122 4.a
b. LESS: Allowance for loan and lease losses....................... 3123 4.b
c. LESS: Allocated transfer risk reserve........................... 3128 4.c
d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b
and 4.c).............................................................................. 2125 4.d
5. Trading assets (from Schedule RC-D)........................................................ 3545 5.
6. Premises and fixed assets (including capitalized leases)................................... 2145 3 298 6.
7. Other real estate owned (from Schedule RC-M)............................................... 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule
RC-M)...................................................................................... 2130 8.
9. Customers' liability to this bank on acceptances outstanding............................... 2155 9.
10. Intangible assets (from Schedule RC-M)..................................................... 2143 10.
11. Other assets (from Schedule RC-F).......................................................... 2160 4 824 11.
12. a. Total assets (sum of items 1 through 11)................................................ 2170 20 141 12.a
b. Losses deferred pursuant to12 U.S.C. 1823(j)............................................ 0306 12.b
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823 (j) (sum of items 12.a
and 12.b)............................................................................... 0307 20 141 12.c
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to the sum
of Schedule RC-M, items 3.a and 3.b
(3) Includes time certificates of deposit not held for trading.
(4) Report term federal funds sold in Schedule RC, item 4.a, 'Loans and leases,
net of unearned income', and in Schedule RC-C, part 1.
(5) Report securities purchased under agreements to resell that involve the
receipt of immediately available funds and mature in one business day or
roll over under a continuing contract in Schedule RC, item 3.a, 'Federal
funds sold.'
<PAGE> 7
FFIEC 034
Page RC-2
10
Schedule RC -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Mil Thou
- ---------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
LIABILITIES
Deposits:
13. a. In domestic offices (sum of totals of columns A and C from Schedule RC-E..... 2200 13.a
(1) Noninterest-bearing(1).................................................... 6631 13.a.1
(2) Interest-bearing.......................................................... 6636 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs................
(1) Noninterest-bearing.......................................................
(2) Interest-bearing..........................................................
14. Federal funds purchased and securities sold under agreements to repurchase:
a. Federal funds purchased...................................................... 0278 14.a
b. Securities sold under agreements to repurchase............................... 0279 14.b
15. a. Demand notes issued to the U.S. Treasury..................................... 2840 15.a
b. Trading liabilities.......................................................... 3548 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less............................... 2332 16.a
b. With original maturity of more than one year................................. 2333 16.b
17. Mortgage indebtedness and obligations under capitalized leases................. 2910 17.
18. Bank's liability on acceptances executed and outstanding....................... 2920 18.
19. Subordinated notes and debentures.............................................. 3200 19.
20. Other liabilities (from Schedule RC-G)......................................... 2930 6 418 20.
21. Total liabilities (sum of items 13 through 20)................................. 2948 6 418 21.
22. Limited-life preferred stock and related surplus............................... 3282 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................. 3838 23.
24. Common stock................................................................... 3230 600 24.
25. Surplus (exclude all surplus related to preferred stock)....................... 3839 9 289 25.
26. a. Undivided profits and capital reserves...................................... 3632 3 834 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities...... 8434 26.b
27. Cumulative foreign currency translation adjustments............................
28. a. Total equity capital (sum of items 23 through 27)........................... 3210 13 723 28.a
b. Losses deferred pursuant to 12 U.S.C. 1823(j)............................... 0306 28.b
c. Total equity capital and losses deferred pursuant to 12 U.S.C. 1823(j) (sum
of items 28.a and 28.b)..................................................... 3559 13 723 28.c
29. Total liabilities, limited-life preferred stock, and equity capital (sum of
items 21, 22 and 28.c)......................................................... 2257 20 141 29.
MEMORANDUM
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external auditors as of any date during 1995.................... 6724 M.1
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a
certified public accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
</TABLE>
- ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Report 'term federal funds purchased' in Schedule RC, item 16, 'Other
borrowed money.'
(3) Report securities sold under agreements to repurchase that involve the
receipt of immediately available funds and mature in one buisness day or
roll over under a continuing contract in Schedule RC, itme 14.a, 'Federal
funds purchased.'
