SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(a)
(Amendment No. 3)
DAWSON PRODUCTION SERVICES, INC.
-------------------------------------
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
-------------------------------------
Title of Class of Securities
239423106
---------------
(CUSIP Number)
Jack D. Loftis, Jr.
Key Energy Group, Inc.,
Two Tower Center, Twentieth Floor
East Brunswick, NJ 08816
(732) 247-4822
-------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 5, 1998
---------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box [_].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
CUSIP NO. 239423106 13D
1 Name of Reporting Person
I.R.S. Identification No. of Above Person (ENTITIES ONLY)
Key Energy Group, Inc. (I.R.S. Identification No.: 04-2648081)
2 Check the Appropriate Box If a Member of a Group
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds
WC
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Maryland
7 Sole Voting Power
Number of 805,700
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 805,700
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
805,700
12 Check Box If the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
7.2%
14 Type of Reporting Person
CO
CUSIP NO. 239423106 13D
1 Name of Reporting Person
I.R.S. Identification No. of Above Person (ENTITIES ONLY)
Midland Acquisition Corp. (I.R.S. Identification No. 22-3598563)
2 Check the Appropriate Box If a Member of a Group
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds
WC; AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
New Jersey
7 Sole Voting Power
Number of 15,100
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 15,100
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
15,100
12 Check Box If the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
0.1%
14 Type of Reporting Person
CO
This Amendment No. 3 (this "Amendment") to Schedule 13D amends and
supplements the Schedule 13D filed by Key Energy Group, Inc. (the
"Reporting Person") on June 15, 1998, as amended on June 29, 1998 and as
further amended on July 21, 1998 (as amended, the "Schedule 13D").
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to such terms in the Schedule 13D. Except as amended and
supplemented hereby, the Schedule 13D remains in effect.
ITEM 2. IDENTITY AND BACKGROUND
Item 2 is hereby amended and supplemented by adding the following
thereto:
Midland Acquisition Corp. ("Midland"), a New Jersey corporation, is a
wholly owned subsidiary of the Reporting Person formed for the purposes of
commencing the Offer (as defined below) and consummating the acquisition of
the Issuer by the Reporting Person. Midland's principal business and
principal executive office address is Two Tower Center, 20th Floor, East
Brunswick, New Jersey 08816. Midland has not been convicted in a criminal
proceeding in the last five years nor has it been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which Midland was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or State securities laws or finding any violation with
respect to such laws.
Set forth below are the names and respective offices of the directors
and executive officers of Midland and the information required by this Item
2:
Name Business Address Title Principal Occupation
Francis D. John Two Tower Center, Director Chairman, President
Twentieth Floor, and Chief Executive
East Brunswick, NJ Officer of
08816 Reporting Person
Stephen E. McGregor Two Tower Center, President Chief Financial
Twentieth Floor, and Chief Officer of the
East Brunswick, NJ Executive Reporting Person
08816 Officer
Kenneth V. Huseman 6 Desta Drive, Vice Chief Operating
Suite 5900, President Officer of the
Midland, Texas and Reporting Person
79705 Treasurer
Each of the above-listed persons is a United States citizen. To the
best of the Reporting Person's knowledge, except as set forth in this
Statement, none of the above persons:
(a) has been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), or (ii) a party to
any civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he was or is subject
to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, Federal or
State securities laws, or finding any violation with respect to
such laws;
(b) has sole or shared voting or sole or shared dispositive power
over any Shares;
(c) has any contracts, arrangements, understandings or
relationships with respect to the Shares or any other securities
of the Issuer; and
(d) has engaged in any transactions involving the Shares in the past
60 days prior to the date hereof.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is hereby amended and supplemented by adding the following
thereto:
Midland used working capital to purchase 100 Shares on July 31, 1998.
Midland received 15,000 Shares from the Reporting Person on August 3, 1998
as a capital contribution. See Item 5(c) below.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is hereby amended and supplemented by adding the following
thereto:
On August 5, 1998 the Reporting Person issued a press release (the
"Press Release") announcing, among other things, that Midland would be
commencing a tender offer for all outstanding shares of common stock, par
value $0.01 per share (the "Shares"), of Dawson Production Services, Inc.,
(the "Issuer") at a price of $14.00 per Share, not later than August 11,
1998 (the "Offer"). The Press Release also stated that the Reporting
Person would seek to effect a merger of Midland and the Issuer following
consummation of the Offer at the same cash price paid in the Offer (the
"Proposed Merger"). The purpose of the Offer and the Proposed Merger is to
acquire the entire equity interest in, and control of, the Issuer.
The Press Release also announced that Midland intends to file
preliminary materials with the Securities and Exchange Commission to
solicit (i) consents to call a special meeting of the Issuer's shareholders
(the "Special Meeting"), and (ii) proxies to vote at the Special Meeting
to (a) remove the Issuer's current board of directors and replace it with
Midland's slate of nominees, and (b) take certain other actions with
respect to the Issuer's bylaws to facilitate the Offer and the Proposed
Merger (the "Solicitation"). The Press Release announced that, if elected,
Midland's nominees would, subject to their fiduciary duties as directors of
the Issuer, take all actions to facilitate the consummation of the Offer
and the Proposed Merger.
The Reporting Person also announced that Midland had filed a complaint
in the United States District Court for the Western District of Texas,
Midland/Odessa Division, against the Issuer and its directors, seeking,
among other things, to have certain provisions of the Issuer's shareholder
rights plan ("poison pill") declared illegal under Texas law and injunctive
relief prohibiting the Issuer and its directors from taking certain actions
to thwart or interfere with the Offer and the Solicitation.
A copy of the Press Release is filed with this Amendment as Exhibit H.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 of the Schedule 13D is hereby amended and supplemented by
adding the following thereto:
(a) The Reporting Person is the beneficial owner of 805,700 Shares
and Midland is the beneficial owner of 15,100 Shares.
(b) The Reporting Person has sole voting and dispositive power with
respect to 805,700 Shares. Midland has sole voting and dispositive power
with respect to 15,100 Shares.
(c) Since the most recent filing on Schedule 13D on July 21, 1998,
the following transactions in Shares have been consummated by the Reporting
Person and Midland:
(i) On July 30, 1998, the Reporting Person purchased 100 Shares
in an open market transaction executed on the New York Stock Exchange at a
price of $13.63 per Share;
(ii) On July 31, 1998, the Reporting Person purchased 100 Shares
in an open market transaction executed on the New York Stock Exchange at a
price of $ 13.63 per Share;
(iii) On July 31, 1998, Midland purchased 100 Shares in an open
market transaction executed on the New York Stock Exchange at a price of
$13.69 per Share; and
(iv) On August 3, 1998, the Reporting Person transferred to the
account of, and assigned all rights to, 15,000 Shares to Midland as a
capital contribution.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is hereby amended and supplemented by adding the following
exhibit thereto:
Exhibit H. Press Release, dated August 5, 1998, of the
Reporting Person and Midland.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: August 5, 1998
KEY ENERGY GROUP, INC.
By: /s/ Francis D. John
___________________________
Name: Francis D. John
Title: Chairman, President
and Chief Executive Officer
MIDLAND ACQUISITION CORP.
By: /s/ Stephen E. McGregor
____________________________
Name: Stephen E. McGregor
Title: President
and Chief Executive Officer
EXHIBIT INDEX
EXHIBIT
-----------
A. Amended and Restated Credit Agreement, dated as of June 6, 1997, as
amended and restated through November 6, 1997, among the Reporting
Person, PNC Bank, National Association, as Administrative Agent, and
several other financial institutions (incorporated by reference to
Exhibit 10(s) to the Reporting Person's Form 10-Q for the quarterly
period ended December 31,1997, File No. 000-22665).
B. First Amendment to the Amended and Restated Credit Agreement of June
6, 1997, as amended and restated through November 6, 1997, dated
December 3, 1997 (incorporated by reference to Exhibit 10(t) to the
Reporting Person's Form 10-Q for the quarterly period ended December
31, 1997, File No. 000-22665).
C. Second Amendment to the Amended and Restated Credit Agreement of June
6,1997, as amended and restated through November 6, 1997, as amended
December 3, 1997, dated April 28, 1998 (previously filed).
D. Letter dated June 29, 1998, from Francis D. John to Michael E. Little
and the Board of Directors of the Issuer (previously filed).
E. Press Release dated June 29, 1998, of the Reporting Person (previously
filed).
F. Letter dated July 21, 1998 from Francis D. John to Michael E. Little
and the Board of Directors of the Issuer (previously filed).
G. Press Release dated July 21, 1998 of the Reporting Person
(previously filed).
H. Press Release dated August 5, 1998 of the Reporting Person (filed
herewith).
EXHIBIT H
KEY ENERGY GROUP, INC.
NEWS RELEASE
FOR IMMEDIATE RELEASE
KEY ENERGY ANNOUNCES $14.00 PER SHARE CASH TENDER OFFER FOR
DAWSON PRODUCTION SERVICES
AND CONSENT SOLICITATION TO CALL SPECIAL MEETING OF DAWSON'S SHAREHOLDERS
EAST BRUNSWICK, N. J., August 5, 1998 - Key Energy Group, Inc. (NYSE: KEG)
announced today that its wholly-owned subsidiary, Midland Acquisition
Corp., will commence a tender offer for all of the outstanding shares of
Dawson Production Services, Inc. (NYSE: DPS) for $14.00 per share in cash
not later than August 11, 1998. The tender offer would be followed by a
second step merger at the same cash price paid in the tender offer.
Based on the latest publicly available information, Dawson has
approximately 11.5 million shares on a fully diluted basis, giving the
transaction a total equity value of approximately $161 million. In
addition, Dawson had total debt of approximately $149 million on March 31,
1998, making the total value of the transaction approximately $310 million.
The acquisition is anticipated to be accretive to Key's earnings and cash
flow per share in the first year after the close of the transaction.
Francis D. John, Chairman and Chief Executive Officer of Key, said, "We
would have preferred to pursue a negotiated transaction with Dawson,
however, because of recent developments, we are taking our offer directly
to Dawson shareholders - the owners of the company. On the evening of
August 3, 1998 our financial advisor, Bear, Stearns & Co. Inc. was
contacted by Morgan Stanley & Co. Inc., Dawson's financial advisor. In
their conversation, Morgan Stanley told Bear, Stearns that Dawson's Board
had reviewed Key's proposal and was not interested in discussing it further
with Key. It was quite disturbing that in its conference call to investors
on August 4, 1998, Dawson's management indicated Morgan Stanley was still
reviewing the Key proposal and could not comment on it. Dawson's statements
in this conference call served only to mislead its shareholders as to
Dawson's true intentions regarding the Key proposal and to discourage Key's
efforts to complete a negotiated transaction. Fortunately, as a result of
the actions Key is now undertaking, Dawson's shareholders will have the
opportunity to decide the future of the company for themselves," Mr. John
said.
"Other events in the past two days have also influenced our decision to
initiate a tender offer. After the close of the market on August 3, 1998,
Dawson disclosed its operating results for the quarter ended June 30, 1998,
which were significantly less than last year and substantially below street
estimates. At the same time, Dawson announced it had entered into a letter
of intent to acquire companies comprising the HSI Group, without regard to
its impact on Key's proposal to acquire Dawson. That Dawson would announce
its second largest acquisition ever, claim it will be immediately
accretive, and not disclose to its shareholders any of the terms of the
proposed transaction is inexplicable. Dawson's pattern of conduct in the
HSI matter, its refusal to respond to, and its ultimate rejection of, Key's
generous proposal, and its failure to come close to meeting its first
quarter earnings estimates leaves us no recourse but to go directly to
Dawson's shareholders," Mr. John said.
Key also announced today that Midland will file preliminary materials with
the Securities and Exchange Commission to solicit consents to call a
special meeting of Dawson's shareholders, as well as proxy materials for
the proposed special meeting. According to Dawson's bylaws and consistent
with the Texas Business Corporation Act, consents from holders of at least
20% of Dawson's common stock are required to call the special meeting. Key
and Midland's present investments of a total of 820,800 shares represent
approximately 7.3% of Dawson's outstanding shares.
At the special meeting, Midland would, among other things, seek to:
o Remove Dawson's board of directors and replace it with Midland's
slate of nominees. Midland's nominees, if elected, subject to their
fiduciary duties as Dawson directors, would take all action needed
to facilitate consummation of the tender offer; and
o Take certain other actions with respect to Dawson's bylaws designed
to facilitate the tender offer.
Removal of Dawson's directors requires the affirmative vote of a majority
of the outstanding shares of Dawson common stock.
Key also announced that Midland is filing suit in the United States
District Court for the Western District of Texas (Midland/Odessa Division)
against Dawson and its directors seeking, among other things, to have
certain provisions of Dawson's shareholder rights plan ("poison pill")
declared illegal under Texas law and injunctive relief prohibiting Dawson
and its directors from taking certain actions to thwart or interfere with
the tender offer and solicitation.
Mr. John added, "Subsequent to our proposal, oilfield service stocks have
declined by 30% to 50% as the outlook for oil and natural gas prices
remains uncertain. In today's environment, and in light of the poor
operating results announced Monday, we believe it is reasonable to conclude
that Dawson would be trading in the range of $6 to $7 if it were not for
Key. Therefore, we believe our $14.00 offer represents a premium of at
least 100% of Dawson's 'true current market value'. This price takes into
account both Dawson's surprisingly poor operating results for the quarter
ended June 30, 1998, and the costs associated with consummating a merger
transaction through a tender offer as opposed to a negotiated transaction."
"With continued uncertainty in the oil and gas industry, it is imperative
that service companies become more efficient and cost effective in
providing services. We continue to believe that Key and Dawson would be a
superb fit. The combined company would have substantial ability to reduce
costs, provide a wider range of services for customers and create a more
stable environment for employees. Together, Key and Dawson would be the
largest well service company in the world, positively staged for future
growth, with leading positions in nearly all major domestic producing
regions and expansion opportunities throughout the world," concluded Mr.
John.
The tender offer will be conditioned upon, among other things, there being
validly tendered and not withdrawn before the expiration date, a number of
shares, which when added to the number of shares beneficially owned by Key
and Midland, will represent a majority of the total number of outstanding
shares of Dawson on a fully diluted basis; termination, redemption or
inapplicability of Dawson's poison pill; receipt of financing;
inapplicability of Texas anti-takeover statutes; and expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. Key has a financing commitment from PNC
Bank, N.A. to complete the acquisition of Dawson as well as the refinancing
of Key's existing debt. Key has also received a highly confident letter
from Dain Rauscher Wessels to arrange financing in the event the holders of
Dawson's 9 3/8% Senior Notes exercise certain put rights triggered upon a
change of control of Dawson. The complete terms and conditions of the
tender offer, including financing arrangements, will be set forth in the
offering documents to be filed with the Securities and Exchange Commission.
Bear, Stearns & Co. Inc. will act as Dealer Manager for the offer and
Innisfree M&A Incorporated will act as Information Agent.
Key Energy Group, Inc. is a holding company with diversified energy
operations, including well servicing, oilfield services, contract drilling
and oil and natural gas production. Key has operations in most major
domestic onshore producing regions and in Argentina.
INFORMATION REGARDING PARTICIPANTS AND CERTAIN OTHER PERSONS
Key Energy Group, Inc. and certain persons named below may be deemed to be
"participants" (within the meaning of Regulation 14A under the Securities
Exchange Act of 1934) in the solicitation of consents to call a special
meeting of Dawson Production Services, Inc.'s shareholders (the "Special
Meeting") and proxies for the Special Meeting. At the Special Meeting, if
called, Key presently intends to introduce proposals to (i) remove Dawson's
board of directors (the "Board"); (ii) elect Midland's nominees to the
Board; (iii) amend certain of Dawson's Bylaws to facilitate consummation of
Midland's tender offer. The participants in this solicitation may include
the persons named below, after the name of each of whom is indicated the
number of shares of Dawson common stock, par value $.01 per share,
beneficially owned by each as of August 4, 1998 (if any) (including shares
which each has the right to acquire within 60 days of such date): the
directors of Key - Francis D. John, Kevin P. Collins (9,354 shares),
William Manly, W. Phillip Marcum (6,054 shares), David J. Breazzano, and
Morton Wolkowitz; and the following executive officers of Key (other than
Mr. John, who is also a director) - Stephen E. McGregor, Kenneth V. Huseman
and Danny R. Evatt.
CONTACT: Key Energy Group, Inc Abernathy MacGregor Frank
Jim Dean Joele Frank / Dan Katcher
(732) 247-4822 (212) 371-5999
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