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As filed with the Securities and Exchange Commission on June 2, 1999.
REGISTRATION NO. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------------
KEY ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 04-2648081
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
TWO TOWER CENTER, 20TH FLOOR
EAST BRUNSWICK, NEW JERSEY 08816
(732) 247-4822
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
FRANCIS D. JOHN
TWO TOWER CENTER, 20TH FLOOR
EAST BRUNSWICK, NEW JERSEY 08816
(732) 247-4822
(Name, address and telephone number, including area code, of agent for service)
-----------------------------
WITH COPIES TO
JACK D. LOFTIS, JR. SAMUEL N. ALLEN
KEY ENERGY SERVICES, INC. PORTER & HEDGES, L.L.P.
TWO TOWER CENTER, 20TH FLOOR 700 LOUISIANA, 35TH FLOOR
EAST BRUNSWICK, NEW JERSEY 08816 HOUSTON, TEXAS 77002
(732) 247-4822 (713) 226-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
-----------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Warrants.................................... 150,000 -- -- --
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Common Stock, par value $.10 per share...... 2,173,433(1) 4.88125(2) $10,609,070 3,215(3)
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(1) The number of shares of common stock indicated is based on an exercise rate
of 14.4896 shares of common stock per warrant. Pursuant to Rule 416 under
the Securities Act of 1933, there are also registered an indeterminate
number of shares of common stock that may be issued upon exercise of the
warrants because of the antidilution provisions of the warrants.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) under the Securities Act based on the price at
which the Warrants may be exercised.
(3) Pursuant to Rule 457(g), no registration fee is required for the warrants
since the shares of common stock underlying the warrants are being
registered hereby.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED JUNE 2, 1999.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT OFFER THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE
ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
PROSPECTUS
[LOGO]
KEY ENERGY SERVICES, INC.
150,000 WARRANTS
2,173,433 OF COMMON STOCK
This prospectus relates to:
- The resale of 150,000 warrants that we previously issued;
- The issuance of common stock upon exercise of the warrants; and
- If required by applicable law, the resale of the common stock issued
upon exercise of the warrants.
We will not receive any of the proceeds from the resale of the warrants or
the resale of the common stock issuable upon exercise of the warrants. We will,
however, receive proceeds from any exercise of the warrants. Each warrant, when
exercised, will entitle the holder to receive 14.4896 shares of our common stock
at an exercise price of $4.88125 per share. Therefore, if all of the warrants
are exercised, we will issue an aggregate of 2,173,433 shares of common stock
and we will receive aggregate proceeds of $10,609,070.
You should read this prospectus carefully before you invest.
Our common stock is listed and traded on the New York Stock Exchange under
the symbol "KEG." The warrants are not listed for trading on any exchange.
On June 1, 1999, the last reported sale price of our common stock was $3.00
per share.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 IN THIS PROSPECTUS.
Neither the SEC nor any state securities commission has approved these
securities or determined that this prospectus is accurate or complete. Any
representation to the contrary is illegal.
This prospectus is dated June , 1999.
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TABLE OF CONTENTS
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SECTION PAGE
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<S> <C>
Where You Can Find More Information...........................................3
Key Energy Services, Inc......................................................4
The Offering..................................................................4
Forward-Looking Statements....................................................5
Risk Factors..................................................................5
Use of Proceeds...............................................................9
Selling Securityholders......................................................10
Plan of Distribution.........................................................11
Description of Capital Stock.................................................12
Description of Warrants......................................................13
Legal Matters................................................................15
Experts......................................................................15
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 (Reg.
No. _________) with respect to this offering. This prospectus, which is a
part of the registration statement, does not contain all the information
contained in the registration statement, including its exhibits and
schedules. For further information about us, you should refer to the
registration statement, including the exhibits and schedules. Statements we
make in this prospectus about certain contracts or other documents are not
necessarily complete. When we make such statements, we refer you to the
copies of the contracts or documents that are filed as exhibits to the
registration statement, because those statements are qualified in all
respects by reference to those exhibits. The registration statement,
including exhibits and schedules, is on file at the offices of the SEC and
may be inspected without charge.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings, including the registration
statement, are available to the public over the Internet at the SEC's web site
at http://www.sec.gov. You also may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C.; New York, New York; and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms.
SEC rules allow us to include some of the information required to be in the
registration statement by incorporating that information by reference to
documents we file with the SEC. That means we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act:
- Annual Report on Form 10-K for the year ended June 30, 1998, as
amended on October 28, 1998 and as further amended on March 31, 1999;
- Quarterly Report on Form 10-Q for the quarter ended September 30,
1998, as amended on March 31, 1999;
- Quarterly Report on Form 10-Q for the quarter ended December 31, 1998,
as amended on March 31, 1999, and as further amended April 30, 1999;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
- Current Reports on Form 8-K, filed on September 28, 1998, May 6, 1999,
April 20, 1999, February 3, 1999, December 21, 1998 and Form 8-K/A
filed on October 28, 1998 and March 31, 1999;
- Our prospectus dated April 16, 1999, as filed with the SEC under
Rule 424(b) on April 16, 1999, as supplemented by the prospectus
supplement dated May 4, 1999, filed with the SEC pursuant to
Rule 424(b) on May 4, 1999;
- Proxy Statement on Schedule 14A, dated November 17, 1998; and
- The description of the our common stock contained in Form 8-A dated
March 27, 1998, including any amendments or reports that have been
filed to update the description.
You may request a copy of these filings, which we will provide to you at no
cost, by writing or telephoning us at the following address:
Key Energy Services, Inc.
Two Tower Center, 20th Floor
East Brunswick, New Jersey 08816
(732) 247-4822
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KEY ENERGY SERVICES, INC.
BUSINESS
We are the world's largest onshore oil and gas well service and workover
company based on the number of rigs we own and available industry data. We
provide a complete range of rig-based well maintenance, workover, completion,
recompletion, contract drilling and non-rig ancillary well services to major and
independent oil and gas companies. We believe that we have the most
comprehensive array of services of any participant in the market and have
differentiated ourselves from our competitors by our position as a single-source
provider of multiple well-head based services and products across multiple
geographic regions. In addition to maintenance and workover services, we
provide services that include:
- The completion of newly drilled wells
- the recompletion of existing wells (including horizontal
recompletions)
- plugging and abandonment of wells at the end of their useful
lives
- oilfield fluid and equipment transportation
- oilfield fluid storage and disposal services
- fishing and rental tools
- wireline services
- air drilling
- hot oiling
- production testing services
AREAS OF OPERATION. Our principal operating regions in the United States
include West Texas, the Gulf Coast, Oklahoma, Michigan, the Appalachian Basin,
the Rocky Mountains, the Ark La Tex region, the Four Corners area and
California. We also operate in Argentina and have limited operations in
Ontario, Canada.
OPERATING ASSETS. We estimate that our share of the domestic onshore well
service rig fleet is approximately 37% based on the number of rigs we own and
available industry data. Our operating assets consist of approximately 1,420
well service and workover rigs, 75 drilling rigs and 1,130 oil field trucks.
ACQUISITIONS. We have pursued an acquisition strategy designed to
consolidate a highly fragmented industry that is primarily comprised of small,
regional well service companies. Over the last three years, we have completed
over 50 acquisitions, for an aggregate consideration of approximately $807
million.
____________________________
Our principal executive offices are located at Two Tower Center, 20th
Floor, East Brunswick, New Jersey 08816 and our phone number is (732) 247-4822.
THE OFFERING
This prospectus relates to:
- The resale of 150,000 warrants we previously issued in an offering of
150,000 units, consisting of $150,000,000 principal amount of our 14%
Senior Subordinated Notes due 2009 and the warrants;
- The issuance of common stock upon exercise of the warrants; and
- If required by applicable law, the resale of the common stock issued
upon exercise of the warrants.
USE OF PROCEEDS. If all of the warrants are exercised in full, we will
receive aggregate proceeds of $10,609,070. These proceeds will be used for
general corporate purposes or as otherwise described herein.
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FORWARD-LOOKING STATEMENTS
The statements made in this prospectus or in the documents we have
incorporated by reference that are not statements of historical fact, are
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate" or "believe," or similar terminology.
The forward-looking statements include discussions about business strategy
and expectations concerning market position, future operations, margins,
profitability, liquidity and capital resources, and statements concerning the
integration into our business of the operations we have acquired. Although we
believe that the expectations in such statements are reasonable, we can not give
any assurance that those expectations will be correct.
We caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus.
Our operations are subject to several uncertainties, risks and other
influences, many of which are outside our control and any of which could
materially affect our results of operations and ultimately prove the statements
we make to be inaccurate.
Important factors that could cause actual results to differ materially from
our expectations are discussed under the heading "Risk Factors" and elsewhere in
this prospectus.
RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS BEFORE DECIDING TO BUY THE WARRANTS.
RECENT OPERATING LOSSES
We have experienced a significant decrease in the demand for our services
during the last three quarters that has resulted in operating losses. The
proceeds of our May 1999 public offering permitted us to reduce indebtedness and
has provided us with a cash reserve which, together with cash from operations,
should permit us to maintain operations for the balance of calendar 1999 and
through 2000. However, there must be a significant improvement in the demand
for our services for us to be able to generate cash from operations sufficient
to service our indebtedness or to return to profitability. No assurance can be
given when or if there will be any such improvement in demand for our services.
RISKS ASSOCIATED WITH OIL AND GAS INDUSTRY -- OUR BUSINESS IS DEPENDENT ON
CONDITIONS IN THE OIL AND GAS INDUSTRY, ESPECIALLY THE PRODUCTION EXPENDITURES
OF OIL AND GAS COMPANIES.
The demand for our services is directly influenced by current and
anticipated oil and gas prices, oil and gas production costs, and government
regulation and conditions in the worldwide oil and gas industry, and
particularly on the level of development, exploration and production activity
of, and corresponding spending by, oil and gas companies. Most of our
operations are in the United States where the demand for well servicing and
related services currently is depressed in many markets because of weak oil
prices, which recently were at a twelve-year low. Continued weakness in oil and
gas prices may cause lower day rates and lower utilization of available well
service equipment, which may influence the recoverability and carrying value of
our long-term assets and related goodwill balances, pursuant to the provisions
of SFAS 121 "Accounting for Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." In addition, when oil prices are weak, fewer wells
are drilled, resulting in less drilling and less maintenance work for us.
Periods of diminished or weakened demand may continue to occur. In light of
these and other factors relating to the oil and gas industry, our historical
operating results may not be indicative of future performance. In addition,
reductions in oil prices can result in a reduction in the trading prices of our
securities, even if the reduction in oil prices does not affect our business
generally.
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SUBSTANTIAL LEVERAGE -- OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR
FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER OUR
CURRENT INDEBTEDNESS.
We have a significant amount of indebtedness. Our substantial indebtedness
could:
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to fund future working capital, capital expenditures
and other general corporate requirements;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures and other general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- place us at a competitive disadvantage compared to our competitors
that have less debt; and
- limit, along with the financial and other restrictive covenants in our
credit facility, among other things, our ability to borrow additional
funds. Our failure to comply with these covenants could result in an
event of default which, if not cured or waived, could have a material
adverse effect on us.
ADDITIONAL BORROWINGS AVAILABLE -- DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND
OUR SUBSIDIARIES STILL MAY BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD
FURTHER INCREASE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. Our credit facility currently permits additional
borrowings of up to approximately $9.0 million. If new debt is added to our and
our subsidiaries' current debt levels, the related risks that we and they now
face could intensify.
ABILITY TO SERVICE DEBT -- TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY
FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness, and to
fund planned capital expenditures will depend on our ability to generate cash in
the future. This, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond our control.
We cannot assure you that our business will generate sufficient cash flow
form operations to service our outstanding debt, that currently anticipated cost
savings and operating improvements will be realized or that future borrowings
will be available to us under our credit facility in an amount sufficient to
enable us to pay our indebtedness or to fund our other liquidity needs. We may
need to refinance all or a portion of our indebtedness on or before maturity.
We cannot assure you that we will be able to refinance any of our indebtedness,
including our credit facility, on commercially reasonable terms or at all.
RISKS ASSOCIATED WITH INTEGRATION OF ACQUISITIONS -- WE HAVE PURSUED, AND INTEND
TO CONTINUE TO PURSUE, ACQUISITIONS. OUR BUSINESS MAY BE ADVERSELY AFFECTED IF
WE CANNOT EFFECTIVELY INTEGRATE ACQUIRED OPERATIONS.
One of our business strategies has been to acquire operations and assets
that are complementary to our existing businesses. In the last 18 months,
our acquisitions have doubled the number of well service rigs we own. Our
revenues have grown from $44.7 million in fiscal 1995 to $645.6 million on a
pro forma basis in fiscal 1998, largely as a result of acquisitions.
Acquiring operations and assets involves financial, operational and legal
risks. These risks include the difficulty of assimilating operations,
systems and personnel of the acquired businesses and maintaining uniform
standards, controls, procedures and policies. We currently do not have an
active acquisition program, but we may make strategic acquisitions in the
future under certain circumstances. Any future acquisitions would likely
result in an increase in expenses. In addition, competition from other
potential buyers could cause us to pay a higher price than we otherwise might
have to pay and reduce our acquisition
6
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opportunities. Moreover, our past success in making acquisitions and in
integrating acquired businesses does not necessarily mean we will be
successful in making acquisitions and integrating businesses in the future.
OPERATING RISKS; INSURANCE -- OUR BUSINESS COULD BE ADVERSELY AFFECTED BY
CERTAIN OPERATING RISKS, AND OUR INSURANCE MAY NOT BE ADEQUATE TO COVER ALL
LOSSES OR LIABILITIES WE MIGHT INCUR IN OUR OPERATIONS.
Our operations are subject to many hazards. These hazards include
explosions, blow-outs, reservoir damage, loss of well control, cratering, fires
and damage to the environment. In addition, we are subject to seasonal risks
caused by adverse weather conditions such as rain and flooding, high winds and
severe winter storms. Operations in northern regions are subject to limitations
on transporting equipment during the spring thaw. These hazards and risks could
cause the suspension of operations, damage to or destruction of our equipment
and the property of others and injury or death to field personnel. Like most
companies in our industry, we have experienced some of these incidents in our
operations. The frequency and severity of these incidents affect our operating
costs and our relationships with customers, employees and regulators. Any
significant increase in the frequency or severity of such incidents, or the
general level of compensation awards, could affect our ability to obtain
insurance and could have a material adverse effect on our business. We have
insurance, customary in the industry, to protect against these liabilities.
However, this insurance is capped at $50 million per incident and does not
provide coverage for all liabilities. Our insurance may not be adequate to
cover all losses or liabilities that we might incur in our operations. To the
extent our liability for any particular loss or liability exceeds the $50
million cap, we would incur costs for the excess. Moreover, we may not be able
to maintain insurance at adequate levels or at reasonable rates and particular
types of coverage may not be available in the future.
COMPETITION
We experience intense competition in our markets. Certain of our
competitors have greater financial and other resources than we do.
POTENTIAL LABOR SHORTAGE -- WE HISTORICALLY HAVE EXPERIENCED A HIGH EMPLOYEE
TURNOVER RATE. ANY DIFFICULTY WE EXPERIENCE REPLACING OR ADDING WORKERS COULD
ADVERSELY AFFECT OUR BUSINESS.
We historically have experienced an annual employee turnover rate of over
50%. The high turnover rate is caused by the nature of the work, which is
physically demanding and performed outdoors. As a result, workers may choose to
pursue employment in fields that offer a more desirable work environment at wage
rates that are competitive with ours. Although we currently are downsizing our
workforce, we cannot assure that at times of high demand we will be able to
recruit and train workers. Potential inability or lack of desire by workers to
commute to our facilities and job sites and competition for workers from other
industries are factors that could affect our ability to attract workers. We
believe that our wage rates are competitive with the wage rates of our
competitors and other potential employers. A significant increase in the wages
other employers pay could result in a reduction in our workforce, increases in
our wage rates, or both. Either of these events could diminish our
profitability and growth potential.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS -- WE MAY BECOME LIABLE FOR
PENALTIES UNDER A VARIETY OF ENVIRONMENTAL LAWS AND GOVERNMENT REGULATIONS EVEN
IF WE DO NOT CAUSE ANY ENVIRONMENTAL PROBLEMS. CERTAIN CHANGES IN ENVIRONMENTAL
LAWS AND GOVERNMENT REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS.
Our operations are subject to foreign, federal, state and local laws and
regulations relating to protection of the environment, natural resources, health
and safety, waste management and transportation of waste and other materials
including hydrocarbons and chemicals. Our fluid services include injection
operations that pose certain risks of environmental liability. Although we
monitor the injection process, the possibility exists of leakage to surface or
subsurface soils or groundwater, which could result in cancellation of well
operations, fines and penalties, expenditures for remediation, and liability for
property damages and personal injuries. Sanctions for noncompliance with
applicable environmental laws and regulations also may include administrative,
civil and criminal penalties, revocation of permits and corrective action
orders. In addition, our operations may be subject to potential liability for
environmental clean up at currently or previously owned or operated properties
or off-site locations where we sent, disposed of, or arranged for disposal of
hazardous materials. A party can be liable for environmental
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damage without regard to its negligence or fault. Therefore, we could incur
liability based on the conduct of others, or for acts that were lawful at the
time we performed them. Environmental laws have become more stringent over
the years. The modification or interpretation of existing laws or
regulations, the adoption of new laws or regulations or the more vigorous
enforcement of environmental laws or regulations could curtail exploratory or
development drilling for oil and gas and could limit well servicing
opportunities.
FOREIGN INVESTMENTS -- OUR FOREIGN BUSINESS EXPOSES US TO RISKS RELATING TO
INCREASED REGULATION AND POLITICAL OR ECONOMIC INSTABILITY WITHIN CERTAIN
FOREIGN COUNTRIES.
We have investments and may make additional investments in Argentina and
Canada. We may make other investments outside the United States. Foreign
investments are subject to risks 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. In fiscal 1998,
our foreign operations accounted for less than 10% of our revenues.
DEPENDENCE ON KEY PERSONNEL -- OUR BUSINESS MAY BE ADVERSELY AFFECTED IF WE LOSE
OUR EXECUTIVE OFFICERS.
We depend upon the performance of our executive officers. We have entered
into employment agreements with these executive officers that contain
non-compete provisions. Notwithstanding these agreements, we may not be able to
retain our executive officers and may not be able to enforce the non-compete
provisions in the employment agreements. We maintain key person life insurance
on the lives of certain of our offices, including our chief executive officer.
This insurance does not mean that the death or disability of one or more of them
would not adversely affect our operations.
YEAR 2000 ISSUE -- THE YEAR 2000 PROBLEM MAY ADVERSELY AFFECT OUR BUSINESS IF
OUR SUPPLIERS AND CUSTOMERS DO NOT ADEQUATELY ADDRESS THEIR YEAR 2000 CONCERNS.
We currently are implementing a new integrated management information
system along with updated hardware that will replace most of our current
systems. The new management information system will be year 2000 compliant for
our systems as well as for those of our past and future acquisitions.
Implementation began in July 1998 and is scheduled to be substantially completed
by June 1999. Our new management information systems do not cover our Argentine
operations, but we have established a separate system, which is year 2000
compliant, that will be implemented in late 1999.
We have not yet developed a plan to formally communicate with our
significant suppliers and customers to determine if those parties have
appropriate plans to remedy year 2000 issues when their systems interface with
our systems or otherwise have an impact on our operations. We do not anticipate
that this will have a material impact on our operations. However, there can be
no assurance that the systems of other companies on which we rely will be timely
converted, or that failure to successfully convert by another company, or
conversion that is incompatible with our systems, would not have an impact on
our operations. We currently do not have a contingency plan to cover any
unforeseen problems encountered that relate to the year 2000, but we intend to
produce one before the end of the current fiscal year.
The cost of the new management information system is not anticipated to
have a material impact on our business. Although we are not aware of any
material operational issues or costs associated with preparing our internal
systems for the year 2000, there can be no assurance that there will not be a
delay in, or increased costs associated with, the implementation of the
necessary systems and changes to address the year 2000 issues.
If we are unable to adequately address the year 2000 issue in a timely
manner, the worst case scenario would be that we could suffer significant
computer downtime, and billings, payments and collections would revert to manual
accounting records. In addition, the inability of our principal suppliers and
major customers to be year 2000 compliant could result in delays in product
deliveries from those suppliers and collection of accounts receivable.
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SHARES ELIGIBLE FOR FUTURE SALE -- THE MARKET PRICE OF OUR COMMON STOCK COULD BE
ADVERSELY AFFECTED BY SALES OF SUBSTANTIAL AMOUNTS OF COMMON STOCK IN THE PUBLIC
MARKET OR THE PERCEPTION THAT SUCH SALES COULD OCCUR.
As of May 12, 1999, we had 77,302,401 shares of common stock outstanding.
Approximately 16.2 million additional shares of common stock were issuable upon
the exercise of outstanding options, warrants and convertible securities. All
of these shares will be registered under the Securities Act or are subject to
registration rights agreements. The market price of our common stock could be
adversely affected by sales of substantial amounts of common stock in the public
market or the perception that such sales could occur.
VOLATILITY -- THE TRADING PRICE OF OUR SECURITIES COULD BE SUBJECT TO
SIGNIFICANT FLUCTUATIONS.
The trading price of our common stock has been volatile. Factors such as
announcements of fluctuations in our or our competitors' operating results and
market conditions for oil and gas related stocks in general could have a
significant impact on the future trading prices of our securities. In
particular, the trading price of the common stock of many oil and gas companies
has experienced extreme price and volume fluctuations, which have at times been
unrelated to the operating performance of such companies whose stocks were
affected. The trading prices of our securities could be subject to significant
fluctuations in response to variations in our prospects and operating results,
which may in turn be affected by weakness in oil prices, changes in interest
rates and other factors. In addition, our May 1999 public offering of
58,508,772 shares of our common stock resulted in an approximate 317% increase
in the number of shares of our common stock issued and outstanding. The
historical volume of trading and historical trading price of our common stock
has been based on a substantially lower number of outstanding shares of our
common stock than were outstanding after the offering. Therefore, our prior
trading volume and prior market price may not be indicative of our future
trading volume and market price. There can be no assurance that these factors
will not have an adverse effect on the trading prices of our securities.
USE OF PROCEEDS
We will not receive any of the proceeds from the resale of the warrants or
the resale of the common stock issued upon exercise of the warrants. We will,
however, receive the proceeds from the exercise of the warrants. If all of the
warrants are exercised, we would receive aggregate proceeds of approximately
$10.61 million. The proceeds from the exercise of warrants will be used for
general corporate purposes, which may include refinancings of indebtedness,
working capital, capital expenditures, acquisitions and repurchases and
redemptions of securities.
9
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth certain information with respect to each
selling securityholder for whom we are registering warrants and common stock
issuable upon exercise of the warrants for resale. Beneficial ownership of the
warrants by the selling securityholders after this offering will depend on the
number of warrants sold by each selling securityholder; however, the table
assumes that all warrants owned by a beneficial owner are offered and resold
pursuant to this prospectus. This prospectus also covers the resale of common
stock issued upon the exercise of the warrants. However, since the distribution
of common stock upon exercise of the warrants also is covered by this
prospectus, we do not anticipate that this prospectus will be required for
resales of the common stock. Therefore, the table set forth below does not
include information concerning potential resales of the common stock issuable
upon exercise of the warrants. Other than the selling securityholders'
ownership of our securities, no material relationship exists between any of the
selling securityholders and us, nor have any such relationships existed within
the past three years.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
WARRANTS BEFORE OFFERING
--------------------------
NUMBER OF
WARRANTS % OF
NAME OWNED CLASS
- --------- ---------- -----------
<S> <C> <C>
The Bank of New York............................................. 35,000 23.33%
Bear, Stearns Securities Corp.................................... 6,000 4.00%
Brown Brothers Harriman & Co..................................... 2,750 1.83%
Chase Manhattan Bank............................................. 7,000 4.67%
Firstar Trust Company............................................ 4,000 2.67%
Investors Bank & Trust/M.F. Custody.............................. 30,250 20.17%
The Northern Trust Company....................................... 1,600 1.07%
State Street Bank and Trust Company.............................. 33,025 22.02%
UMB Bank, National Association................................... 6,500 4.33%
Bankers Trust Company............................................ 3,175 2.12%
Boston Safe Deposit and Trust Company............................ 3,900 2.60%
Bankers Trust Company/First Union Safekeeping.................... 5,000 3.33%
Citibank, N.A.................................................... 3,900 2.60%
FUNB-Philadelphia Main........................................... 1,150 *
Lehman Brothers, Inc............................................. 4,500 3.00%
FNC Bank, National Association................................... 2,000 1.33%
Swiss American Securities Inc.................................... 250 *
---------- -----------
Total..................................................... 150,000 100%
---------- -----------
---------- -----------
</TABLE>
- ---------------------
The information in the table with respect to selling securityholders who
are holders of warrants has been prepared based upon information furnished to
the company by or on behalf of the selling securityholders.
10
<PAGE>
PLAN OF DISTRIBUTION
This prospectus relates to:
- The resale of 150,000 warrants held by the selling securityholders;
- Our issuance of common stock upon exercise of the warrants; and
- If required by applicable law, the resale of the common stock issued
upon exercise of the warrants.
Although this prospectus relates to resales of common stock issued upon
exercise of warrants, we do not anticipate that a prospectus will be required to
be delivered with respect to those sales because the distribution of our common
stock upon the exercise of the warrants also is covered by this prospectus.
We will bear all costs, expenses and fees in connection with registration
of the securities covered by this prospectus. Brokerage commissions and similar
selling expenses, if any, attributable to the resale of warrants or common stock
issued upon the exercise of warrants will be borne by the selling
securityholders.
Sales of warrants or common stock issued upon exercise of the warrants may
be effected by selling securityholders from time to time in one or more types of
transactions (which may include block transactions) in the over-the-counter
market, in negotiated transactions, through put or call options transactions
relating to the securityholders, or a combination of such methods of sale, at
market prices prevailing at the time of sale, or at negotiated prices. Such
transactions may or may not involve brokers or dealers. The selling
securityholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their warrants or common stock issued upon exercise of the warrants,
nor is there an underwriter or coordinating broker acting in connection with the
proposed sale of warrants or common stock issued upon exercise of the warrants
by the selling securityholders.
The selling securityholders may effect such transactions by selling
warrants or common stock issued upon exercise of the warrants directly to
purchasers or to or through broker-dealers, which may act as agents or
principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling securityholders and/or
the purchasers of warrants for whom such broker-dealers may act as agents or to
whom they sell as principal, or both which compensation as to a particular
broker-dealer might be in excess of customary commissions.
The selling securityholders and any broker-dealers that act in connection
with the sale of warrants might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
such broker-dealers and any profit on the resale of the warrants or common
stock issued upon exercise of the warrants sold by them while acting as
principals might be deemed to be underwriting discounts or commissions under the
Securities Act. The selling securityholders may agree to indemnify any agent
dealer or broker-dealer that participates in transactions involving sales of the
warrants or common stock issued upon exercise of the warrants against certain
liabilities, including liabilities arising under the Securities Act.
Because selling securityholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling securityholders
may be subject to the prospectus delivery requirements of the Securities Act.
Selling securityholders also may resell all or a portion of the warrants or
common stock issued upon exercise of the warrants in open market transactions in
reliance upon Rule 144 under the Securities Act, provided they meet the criteria
and conform to the requirements of such rule.
After we are notified by a selling securityholder that any material
arrangement has been entered into with a broker-dealer for the sale of warrants
or common stock issued upon the exercise of warrants through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, a supplement to this prospectus will be filed, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the
name of each such selling securityholder and of the participating
broker-dealer(s), (ii) the type and number of securities involved, (iii) the
price at which such securities were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-
11
<PAGE>
dealer(s) did not conduct any investigations to verify the information set out
or incorporated by reference in this prospectus and (vi) other facts material
to the transaction.
DESCRIPTION OF CAPITAL STOCK
As of May 12, 1999, our authorized capital stock was 100,000,000 shares,
which may be issued as either shares of preferred stock or common stock. As of
that date, we had 77,302,401 shares of common stock outstanding and no shares of
preferred stock outstanding.
COMMON STOCK
LISTING. Our common stock is listed on the New York Stock Exchange under
the symbol "KEG." Any additional common stock we issue will also be listed on
the NYSE.
DIVIDENDS. Common stockholders may receive dividends when declared by the
board of directors. Dividends may be paid in cash, stock or another form.
However, certain of our existing debt agreements contain covenants that
currently restrict us from paying dividends. Additionally, in certain cases,
common stockholders may not receive dividends until we have satisfied our
obligations to any preferred stockholders.
FULLY PAID. All outstanding shares of common stock are fully paid and
non-assessable. Any additional common stock we issue will also be fully paid
and non-assessable.
VOTING RIGHTS. Each share of common stock is entitled to one vote in the
election of directors and other matters. Common stockholders are not entitled
to preemptive or cumulative voting rights.
OTHER RIGHTS. We will notify common stockholders of any stockholders'
meetings according to applicable law. If we liquidate, dissolve or wind-up our
business, either voluntarily or not, common stockholders will share equally in
the assets remaining after we pay our creditors and preferred stockholders.
TRANSFER AGENT AND REGISTRAR. Our transfer agent and registrar is American
Stock Transfer & Trust Company, New York, New York.
PREFERRED STOCK
Our board of directors can, without approval of our stockholders, issue one
or more series of preferred stock. The board can also determine the number of
shares of each series and the rights, preferences and limitations of each series
including the dividend rights, voting rights, conversion rights, redemption
rights and any liquidation preferences of any series of preferred stock, the
number of shares constituting each series and the terms and conditions of issue.
In some cases, the issuance of preferred stock could delay a change in control
of the Company and make it harder to remove present management. Under certain
circumstances, preferred stock could also restrict dividend payments to holders
of our common stock.
The registrar for shares of preferred stock will send notices to
stockholders of any meetings at which holders of the preferred stock have the
right to elect directors or to vote on any other matter.
12
<PAGE>
DESCRIPTION OF WARRANTS
The warrants were issued pursuant to a warrant agreement with The Bank of
New York, as Warrant Agent. The following summary of certain provisions of the
warrant agreement is not complete and is qualified in its entirety by reference
to the warrant agreement. A copy of the warrant agreement may be obtained by
contacting Key Energy Services, Inc. at Two Tower Center, 20th Floor, East
Brunswick, New Jersey 08816, Attention: General Counsel.
GENERAL
SHARES ISSUABLE UPON EXERCISE. Each warrant, when exercised, entitles a
holder to receive 14.4896 fully paid and non-assessable shares of our common
stock. The exercise price is $4.88125 per share of common stock. The exercise
price and the number of shares of common stock issuable upon exercise of a
warrant are both subject to adjustment in certain circumstances described below.
The warrants currently trade as a unit with our 14% senior subordinated notes
due 2009, and will continue to trade as a unit until the earlier of:
- The commencement of an exchange offer or the effectiveness of a
shelf-registration statement with respect to the registration of the
14% notes under the Securities Act;
- July 15, 1999;
- Or such date as the underwriter for the unit offering may determine.
EXERCISE PERIOD. Warrants are exercisable at any time on or after January
25, 2000. Unless earlier exercised, the warrants will expire on January 15,
2009. We will give notice of expiration not less than 90 nor more than 120 days
before the expiration date to the registered holders of the then outstanding
warrants. If we fail to give the notice when required, the warrants will not
expire until 90 days after notice is given.
The warrants are not listed for trading on any stock exchange, but the
common stock issuable upon exercise of the warrants has been listed on the New
York Stock Exchange.
EXERCISE PROCEDURES. In order to exercise all or any of the warrants,
holders are required, in the case of a warrant in certificated form, to
surrender to the warrant agent the certificate representing the warrants to be
exercised, and in the case of a warrant held in book-entry form, to comply with
the applicable procedures set forth in the warrant agreement, in each case with
the accompanying form of election to purchase properly completed and executed,
and to pay in full the exercise price for each share of common stock or other
securities issuable upon exercise of the warrants. The exercise price may be
paid:
(i) in cash or by certified or official bank check or by wire
transfer to an account that we have designated for that purpose; or
(ii) without the payment of cash, by reducing the number of shares
of common stock that would be obtainable upon the exercise of a warrant and
payment of the exercise price in cash so as to yield a number of shares of
common stock upon the exercise of the warrant equal to the product of (a)
the number of shares of common stock for which the warrant is exercisable
as of the date of exercise (if the exercise price were being paid in cash)
and (b) the "cashless exercise ratio," as defined in the warrant agreement.
VOTING RIGHTS; DIVIDENDS. If warrants are not exercised, warrant holders
will not be entitled to receive dividends, to vote, to consent, to exercise any
preemptive rights or to receive notice as a stockholder in respect of any
stockholders meeting for the election of our directors or any other purpose, or
to exercise any other rights whatsoever as a stockholder.
13
<PAGE>
ADJUSTMENTS. The number of shares of common stock issuable upon the
exercise of the warrants and the exercise price will be subject to adjustment in
certain circumstances, including:
(i) payment of dividends and other distributions on our common
stock payable in our common stock or our other equity interests;
(ii) subdivisions, combinations and certain reclassifications of
our common stock;
(iii) the issuance to all holders of common stock of rights, options
or warrants entitling them to subscribe for additional shares of common
stock, or of securities convertible into or exercisable or exchangeable for
additional shares of common stock at an offering price (or with an initial
conversion, exercise or exchange price plus such offering price) that is
less than the then current market value per share of common stock;
(iv) the distribution to all holders of common stock of any of our
assets (including cash), our debt securities or any rights or warrants to
purchase any securities (excluding those rights, options and warrants
referred to in clause (iii) above and cash dividends and other cash
distributions from current or retained earnings);
(v) the issuance of shares of common stock for a consideration per
share that is less than the then current market value per share of common
stock; and
(vi) the issuance of securities convertible into or exercisable or
exchangeable for common stock for a conversion, exercise or exchange price
per share that is less, than the then current market value per share of
common stock.
The events described in clauses (v) and (vi) above are subject to certain
exceptions described in the warrant agreement, including, without limitation,
certain BONA FIDE public offerings and private placements, issuances of common
stock under any option, warrant, right or convertible security exercisable upon
issuance of the warrants and certain issuances of common stock pursuant to
employee stock incentive plans.
No adjustment in the exercise price will be required unless the adjustment
would result in an increase or decrease of at least 1% in the exercise price;
PROVIDED, HOWEVER, that any adjustment that is not made as a result of this
paragraph will be carried forward and taken into account in any subsequent
adjustment. In addition, we may at any time reduce the exercise price (but not
to an amount that is less than the par value of the common stock) for any period
of time (but not less than 20 business days) as deemed appropriate by our board
of directors.
If we consolidate or merge, or sell all or substantially all of our assets
to another person, each warrant will thereafter be exercisable for the right to
receive the kind and amount of shares of stock or other securities or property
to which you would have been entitled as a result of such consolidation, merger
or sale had the warrants been exercised immediately prior thereto. However, if
(i) we consolidate, merge or sell all or substantially all of our assets to
another person and, in connection therewith, the consideration payable to the
holders of common stock in exchange for their shares is payable solely in cash
or (ii) we dissolve, liquidate or wind-up, then warrant holders will be entitled
to receive distributions on an equal basis with the holders of common stock or
other securities issuable upon exercise of the warrants, as if the warrants had
been exercised immediately before such event, less the exercise price.
AMENDMENT. Any amendment or supplement to the warrant agreement that has
an adverse effect on the interests of warrant holders will require the written
consent of the holders of a majority of the then outstanding warrants (excluding
any warrants held by us or any of our affiliates). Notwithstanding the
foregoing, from time to time, we and the warrant agent, without the consent of
warrant holders, may amend or supplement the warrant agreement for certain
purposes, including to cure any ambiguities, defects or inconsistencies or to
make any change that does not adversely affect your rights.
14
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the validity of the common stock and the
debt securities will be passed upon by Porter & Hedges, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of the Company and subsidiaries as of
June 30, 1998 and 1997, and for each of the years in the three-year period ended
June 30, 1998, have been incorporated by reference in this prospectus in
reliance upon the report of KPMG LLP, independent certified public accountants,
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Dawson Production Services, Inc.
and subsidiaries as of March 31, 1998 and 1997, and for each of the years in the
three-year period ended March 31, 1998, have been incorporated by reference in
this prospectus in reliance upon the report of KPMG LLP, independent certified
public accountants, incorporated by reference herein, upon the authority of said
firm as experts in accounting and auditing.
15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the amount of fees and expenses to be
incurred in connection with the issuance and distribution of the securities
registered hereby, other than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee Under Securities Act................. $ 3,215
Legal Fees............................................ 12,500
Accounting Fees....................................... 5,000
Printing and Engraving................................ 5,000
Miscellaneous Fees.................................... 4,285
-------
Total.......................................... $30,000
-------
-------
</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
- 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;
- the director actually received an improper personal benefit; or
- 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 on the basis that
personal benefit was improperly received 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 for
a specific proceeding after determination by the board of directors, special
legal counsel or the stockholders that indemnification is permissible because
the director has met the requisite standard of conduct.
Article Seventh of the Company's Amended and Restated Articles of
Incorporation, as amended (the "Charter"), provides that the Company shall
indemnify:
- its directors and officers, whether serving the Company or at its
request any other entity, to the full extent required or permitted by
Maryland law, including the advance of expenses under the procedures
and to the full extent permitted by law; and
- other employees and agents to such extent as shall be authorized by
the Board of Directors or the Company's Bylaws and be permitted by
law.
The foregoing rights of indemnification are 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
II-1
<PAGE>
expressly empowered to adopt, approve and amend from time to time such Bylaws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by Maryland law. Furthermore,
no director or officer of the Company shall be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director or an officer, except to the extent that exculpation from
liability is not permitted under Maryland law as in effect when such breach
occurred. No amendment of the 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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 -- Warrant Agreement, dated as January 22, 1999
between the Registrant and the Bank of New York,
a New York banking corporation as Warrant Agent
(incorporated by reference to Exhibit 99(c) to
the Registrant's Current Report on Form 8-K,
dated February 3, 1999.
4.2 -- Form of Warrant (attached as Exhibit A to the
Warrant Agreement filed as Exhibit 4.1 to this
R e gistration Statement, and incorporated by
reference to Exhibit 99(c) to the Registrant's
Current Report on Form 8-K, dated February 3,
1999).
*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 LLP
*23.3 -- Consent of KPMG LLP
*24.1 -- Power of Attorney (included on signature page)
- -----------------
* Filed herewith
(b) Financial Statement Schedules
Schedules are omitted since the information required to be submitted has
been included in the Consolidated Financial Statements of Key Energy Services,
Inc., or the notes thereto, or the required information is not applicable.
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-2
<PAGE>
(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.
(4) The undersigned Registrant hereby undertakes as follows: that prior
to any public offering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be
deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(5) The registrant undertakes that every prospectus: (I) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes
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 therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned Registrant hereby further undertakes that, for the purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Key
Energy Services, 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 2,
1999.
KEY ENERGY SERVICES, INC.
By: /s/ FRANCIS D. JOHN
------------------------------------
FRANCIS D. JOHN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
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 Services, Inc. hereby severally
constitutes and appoints Francis D. John and Jack D. Loftis, Jr., 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, June 2, 1999
- ------------------------------ and Director (Principal Executive Officer)
Francis D. John
/s/ WILLIAM S. MANLY Director June 2, 1999
- ------------------------------
William S. Manly
/s/ MORTON WOLKOWITZ Director June 2, 1999
- ------------------------------
Morton Wolkowitz
/s/ DAVID J. BREAZZANO Director June 2, 1999
- ------------------------------
David J. Breazzano
/s/ KEVIN P. COLLINS Director June 2, 1999
- ------------------------------
Kevin P. Collins
<PAGE>
/s/ PHILLIP W. MARCUM Director June 2, 1999
- ------------------------------
Phillip W. Marcum
Executive Vice President,
/s/ STEPHEN E. MCGREGOR Chief Financial Officer and
- ------------------------------ Treasurer (Principal Financial Officer) June 2, 1999
Stephen E. McGregor
/s/ DANNY R. EVATT Vice President of Financial June 2, 1999
- ------------------------------ Operations (Principal Accounting Officer)
Danny R. Evatt
</TABLE>
<PAGE>
EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 -- Warrant Agreement dated as January 22, 1999
between the Registrant and the Bank of New York,
a New York banking corporation as Warrant Agent
(incorporated by reference to Exhibit 99(c) to
the Registrant's Current Report on Form 8-K,
dated February 3, 1999.
4.2 -- Form of Warrant (attached as Exhibit A to the
Warrant Agreement filed as Exhibit 4.1 to this
Registration Statement, and incorporated by
reference to Exhibit 99(c) to the Registrant's
Current Report on Form 8-K, dated February 3,
1999).
*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 LLP
*23.3 -- Consent of KPMG LLP
*24.1 -- Power of Attorney (included on signature page)
- -----------------
* Filed herewith.
<PAGE>
[LETTERHEAD]
EXHIBIT 5.1
June 2, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Key Energy Services, Inc.: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to Key Energy Services, Inc., a Maryland
corporation (the "Company"), in connection with the registration on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") relating to:
(i) the resale of 150,000 warrants (the "Warrants") that the Company
originally issued to purchasers of its 14% Senior Subordinated
Notes due 2009 in an offering under Rule 144A under the
Securities Act;
(ii) the issuance of the common stock, par value $.10 per share, of
the Company (the "Common Stock") issuable upon exercise of the
Warrants; and
(iii) if required under applicable law, the resale of the Common Stock
issuable upon exercise of the Warrants.
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:
(i) the Warrants have been validly issued and are fully paid and
nonassessable outstanding securities of the Company; and
(ii) the Common Stock issuable upon exercise of the Warrants, when
exercised pursuant to the terms and conditions set forth in the
Warrants, will be validly issued, fully paid and nonassessable
outstanding shares of the Company's Common Stock.
<PAGE>
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,
/s/ PORTER & HEDGES, L.L.P.
---------------------------------
PORTER & HEDGES, L.L.P.
2
<PAGE>
EXHIBIT 23.2
CONSENT OF KPMG LLP
The Board of Directors
Key Energy Services, Inc.:
We consent to the use of our report on the consolidated financial
statements of Key Energy Services, Inc., incorporated herein by reference, and
to the reference to our firm under the heading "Experts" in the Prospectus.
KPMG LLP
Midland, Texas
June 2, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF KPMG LLP
The Board of Directors
Key Energy Services, Inc.:
We consent to the use of our report on the consolidated financial
statements of Dawson Production Services, Inc., incorporated herein by
reference, and to the reference to our firm under the heading "Experts" in the
Prospectus.
KPMG LLP
San Antonio, Texas
June 2, 1999
