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Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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
OF INCORPORATION OR ORGANIZATION) (IDENTIFICATION NUMBER)
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)
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FRANCIS D. JOHN
Key Energy Group, Inc.
Two Tower Center, Tenth Floor
East Brunswick, New Jersey 08816
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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Copy to:
SAMUEL N. ALLEN
Porter & Hedges, L.L.P.
700 Louisiana, Suite 3500
Houston, Texas 77002
(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 Securityholder.
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>
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TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, Par
Value $.10 per share 917,500 $14.00 $12,845,000 $3,893(2)
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</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating
the registration fee.
(2) Pursuant to Rule 457(c), the registration fee is calculated on the
basis of the high and low sale prices for the Common Stock on the
American Stock Exchange on April 1, 1997.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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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 APRIL 3, 1997
PROSPECTUS
917,500 SHARES
KEY ENERGY GROUP, INC.
COMMON STOCK
All of the 917,500 shares of common stock, par value $.10 per share
(the "Common Stock"), of Key Energy Group, Inc., a Maryland corporation (the
"Company") offered hereby are being offered for sale by a shareholder of the
Company. See "Selling Securityholder". The Company will not receive any of the
proceeds from the sale of the Common Stock offered hereby.
The Common Stock is listed on the American Stock Exchange (the "AMEX")
under the symbol KEG. On April 1, 1997, the closing price of the Common Stock,
as reported on the AMEX, was $13.875 per share.
The Common Stock may be offered and sold from time to time by the
Selling Securityholder 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 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 Common Stock and the
proceeds to the Selling Securityholder, and any other material terms shall be
as set forth in a 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.
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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.
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The date of this Prospectus is April , 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 with respect to the 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 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.sec.gov. 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; (iii) the Company's Current Reports on Form 8-K dated July 3, 1996 and
September 17, 1996; and (iv) 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; and (v) the Company's Registration Statement No. 333-369 on
Form S-4 filed on January 28, 1996, and as amended on March 1, 1996. 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 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.
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<PAGE> 4
THE COMPANY
Key Energy Group, Inc. (the "Company") operates 403 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
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 provides maintenance
and workover rigs to service producing oil and gas wells. These services
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. Related 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.
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.
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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 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 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
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<PAGE> 6
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 11,894,899 shares of Common Stock
outstanding. An additional 7,703,333 shares of Common Stock are issuable upon
the conversion or exercise of outstanding debentures, warrants, options and
other convertible securities. All of such shares of Common Stock have been
registered for resale under the Securities Act, are subject to registration
rights or 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.
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,
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including audited financial statements as of and for the year ending December
31, 1995. There can be no assurance that audited financial statements would not
differ materially from those presented therein.
SELLING SECURITYHOLDER
The following table sets forth information concerning the number of
shares of Common Stock offered by the Selling Securityholder.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
BEFORE OFFERING(1)
------------------------------------- NUMBER OF
NUMBER OF PERCENT OF SHARES
NAME SHARES CLASS OFFERED
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<S> <C> <C> <C>
Hunt Oil Company............................ 917,500 7.8% 917,500
</TABLE>
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(1) No information is given with respect to beneficial ownership after the
offering because the Company is unable to determine the number of
shares of Common Stock that will be sold in the Offering.
PLAN OF DISTRIBUTION
This Prospectus relates to the resale of up to 917,500 shares of
Common Stock owned by the Selling Securityholder. The Company will not receive
any of the proceeds from the offering of the shares of Common Stock offered
hereby. The Company has been advised by the Selling Securityholder that the
Shares may be sold or distributed from time to time by the Selling Shareholder
directly to one or more purchasers (including pledgees) or through brokers,
dealers or underwriters who may act solely as agents or may acquire Shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices negotiated prices, or at fixed prices, which
may be changed. The distribution of the Shares may be effected in one or more
of the following methods: (i) ordinary brokers' transactions, which may include
long or short sales; (ii) transactions involving cross or block trades or
otherwise in any market or markets where the Company's Common Stock is traded;
(iii) purchases by brokers, dealers or underwriters as principal and resale by
such purchasers for their own accounts; (iv) "at the market" to or through
market makers or into an existing market for the Common Stock; (v) in other
ways not involving market makers or established trading markets, including
direct sales to purchasers or sales effected through agents; (vi) through
transactions in options, swaps or other derivatives (whether exchange-listed or
otherwise), or (vii) any combination of the foregoing, or by any other legally
available means.
To the extent not described herein and as otherwise required by law,
the Company will file, during any period in which offers or sales are being
made, a supplement to this Prospectus or a post-effective amendment to the
Registration Statement of which this Prospectus is a part, which sets forth,
with respect to a particular offering, the specific number of Shares to be
sold, the name of the selling shareholder, the sales price, the name of any
participating broker, dealer, underwriter or agent, any applicable commission
or discount and any other material information with respect to the plan of
distribution.
In order to comply with the securities laws of certain states, if
applicable, 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 shares of Common Stock offered hereby may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and
compliance therewith is effected.
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The Selling Securityholder and any brokers, dealers, agents or
underwriters that participate with the Selling Securityholder in the
distribution of 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 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 Securityholder 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
Common Stock pursuant to this Prospectus other than selling commissions and
fees.
The Common Stock is listed for trading on the AMEX.
LEGAL MATTERS
Certain legal matters relating to the validity of 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 reports.
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NO DEALER, SALES PERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN 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 SECURITYHOLDER. THIS PROSPECTUS GROUP,
INC. 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.
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CONTENTS
Page
Available Information.............................. 2
Incorporation of Certain Documents
by Reference.................................. 2
The Company........................................ 3
Risk Factors....................................... 4
Selling Securityholder............................. 6
Plan of Distribution............................... 6
Legal Matters...................................... 7
Experts............................................ 7
================================================================================
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KEY ENERGY
GROUP, INC.
COMMON STOCK
917,500 SHARES
$.10 PAR VALUE PER SHARE
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PROSPECTUS
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APRIL , 1997
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<PAGE> 10
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the amount of fees and expenses to
be incurred in connection with the issuance and distribution of the Securities
registered hereby, other than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee Under Securities Act................. $ 3,893
Legal Fees............................................ 5,000
Accounting Fees....................................... 3,500
Printing and Engraving................................ 500
Miscellaneous Fees.................................... 2,107
-------------
Total........................................ $ 15,000
=============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-418 of the Maryland General Corporation Law (the "MGCL")
provides that a corporation may indemnify any director made a party to any
proceeding against judgments, penalties, fines, settlements and reasonable
expenses, unless it is established that (i) the act or omission of the director
was material to the matter giving rise to the proceeding and was committed in
bad faith or was a result of deliberate dishonesty, (ii) the director actually
received an improper personal benefit or (iii) in a criminal proceeding, the
director had reasonable cause to believe the act or omission was unlawful. A
director may not be indemnified in any proceeding charging improper personal
benefit if the director was adjudged to be liable and, in a derivative action,
there shall not be indemnification if a director has been adjudged liable to
the corporation. A director or officer of a corporation who has been successful
in the defense of any proceeding shall be indemnified against reasonable costs
incurred in such defense. Indemnification may not be made unless authorized
pursuant to a determination that the director has met the requisite standard of
conduct.
Article Seven of the Key Charter provides that Key shall indemnify
(i) its directors and officers, whether serving Key or at its request any other
entity, to the full extent required or permitted by the MGCL, including the
advance of expenses under the procedures and to the full extent permitted by
law and (ii) other employees and agents to such extent as shall be authorized
by the Board of Directors or Key's By-Laws and be permitted by law. The
foregoing rights of indemnification shall not be exclusive of any other rights
to which those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time to
time such by-laws, resolutions or contracts implementing such provisions or
such further indemnification arrangements as may be permitted by the MGCL.
Furthermore, no director or officer of Key shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director or an officer, except to the extent that exculpation from
liability is not permitted under the MGCL as in effect when such breach
occurred. No amendment of the Key Charter or repeal of any of its provisions
shall limit or eliminate the limitations on liability provided to directors and
officers with respect to acts or omissions occurring prior to such amendment or
repeal.
II-1
<PAGE> 11
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<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).
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
25 Power of Attorney (included on signature page)
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement; provided, however, that subparagraphs
(i) and (ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in the periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities and
Exchange Act of 1934 that are incorporated by reference in
this registration statement.
(2) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the Securities offered
herein, and the offering of such Securities at that time shall be
deemed to be the initial bona fide offering thereof. (3) To remove
from registration by means of a post-effective amendment any of the
Securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby further undertakes that, for the
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange of 1934 that is incorporated by reference in
this registration statement shall be deemed
II-2
<PAGE> 12
to be a new registration statement relating to the Securities offered herein,
and the offering of such Securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to officers, directors and controlling
persons of the Registrant pursuant to the provisions described under Item 15 of
this registration statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the Securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
public policy as expressed in such Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Key Energy Group, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New Brunswick, State of
New Jersey on April 2, 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; and each of the
undersigned officers and directors of Key Energy Group, Inc. hereby severally
constitutes and appoints Francis D. John and Jack D. Loftis, and each of them,
to sign for him, and in his name in the capacity indicated below, such
Registration Statement on Form S-3 and for the purpose of registering such
securities under the Securities Act of 1933, as amended, and any and all
amendments thereto, including without limitation any registration statements or
post-effective amendment thereof filed under and meeting the requirements of
Rule 462(b) under the Securities Act, hereby ratifying and confirming our
signatures as they may be signed by our attorneys to such Registration
Statement and any and all amendments thereto.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ FRANCIS D. JOHN President, Chief Executive Officer, Chief March 31, 1997
- ----------------------------------- Financial Officer and Director
Francis D. John
/s/ WILLIAM S. MANLEY Director March 31, 1997
- ----------------------------------
William S. Manley
/s/ MORTON WOLKOWITZ Director March 31, 1997
- ----------------------------------
Morton Wolkowitz
/s/ VAN D. GREENFIELD Director March 31, 1997
- ----------------------------------
Van D. Greenfield
/s/ KEVIN P. COLLINS Director March 31, 1997
- ----------------------------------
Kevin P. Collins
/s/ PHILLIP W. MARCUM Director March 31, 1997
- ----------------------------------
Phillip W. Marcum
/s/ DANNY R. EVATT Chief Accounting Officer and Treasurer March 31, 1997
- ----------------------------------
Danny R. Evatt
</TABLE>
II-4
<PAGE> 14
EXHIBIT INDEX
<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).
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
25 Power of Attorney (included on signature page)
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5.1
[PORTER & HEDGES, L.L.P. LETTERHEAD]
April 3, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Key Energy Group, Inc.: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to Key Energy Group, Inc., a Maryland
corporation (the "Company"), in connection with the registration on Form S-3
under the Securities Act of 1933, as amended, of 917,500 shares of the common
stock, par value $.10 per share (the "Common Stock"), of the Company. In such
capacity, we have examined the certificate of incorporation, bylaws and
corporate proceedings of the Company, and based upon such examination and
having regard for applicable legal principles, it is our opinion that the
917,500 shares of Common Stock to be offered and sold pursuant to the
Registration Statement are validly issued, fully paid and nonassessable
outstanding shares of the Company's Common Stock.
We consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the heading
"Legal Matters" in the Prospectus included as part of the Registration
Statement.
Very truly yours,
PORTER & HEDGES, L.L.P.
<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-XXXXX) 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
April 2, 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
April 3, 1997
