As filed with the Securities and Exchange Commission on November 7, 1996.
Registration No. 333-14783
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
DI INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2144774
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
---------------
450 GEARS ROAD, SUITE 625
HOUSTON, TEXAS 77067
(713) 874-0202
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
Thomas P. Richards, President and Chief Executive Officer
450 Gears Road, Suite 625
Houston, Texas 77067
(713) 874-0202
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
COPIES TO:
John R. Boyer, Jr. Casey W. Doherty
Boyer, Ewing & Harris Incorporated Cokinos, Bosien & Young
Nine Greenway Plaza, Suite 3100 1500 Liberty Tower
Houston, Texas 77046 2919 Allen Parkway
(713) 871-2025 Houston, Texas 77019
(713) 535-5500
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement.
---------------
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 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, 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 Securties 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. [ ]
---------------
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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<PAGE>
PROSPECTUS
7,500,000 SHARES
DI INDUSTRIES, INC.
COMMON STOCK
(PAR VALUE $0.10 PER SHARE)
------------------------
The 7,500,000 shares (the "Shares") of common stock, par value $0.10 per
share (the "Common Stock"), of DI Industries, Inc., a Texas corporation (the
"Company"), offered hereby are held by certain shareholders of the Company (the
"Selling Shareholders"). The Company will not receive any part of the proceeds
of the sale of the Shares offered hereby. The Shares have been approved for
listing on the American Stock Exchange (the "AMEX").
Sales of the Shares by the Selling Shareholders may be made from time to
time in one or more transactions, including block transactions, on the AMEX, or
any other exchange or quotation system on which the Common Stock may be admitted
for trading (collectively, the "Exchanges"), pursuant to and in accordance with
the applicable rules of the Exchanges, in negotiated transactions or in a
combination of any such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Shares may be offered
directly, to or through agents designated from time to time, or to or through
brokers or dealers, or through any combination of such methods of sale. Such
agents, brokers or dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). A member firm of an Exchange may
be engaged to act as an agent in the sale of Shares by the Selling Shareholders.
To the extent required, specific additional information regarding the Shares
will be set forth in an accompanying Prospectus. See "Plan of Distribution." The
Selling Shareholders and any brokers, dealers, agents or others that participate
with the Selling Shareholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and any commissions or fees received by such persons and
any profit on the resale of the Shares purchased by such persons may be deemed
to be underwriting commissions or discounts under the Securities Act. The
Company has agreed to indemnify certain of the Selling Shareholders against
certain liabilities, including liabilities under the Securities Act. See "Plan
of Distribution."
The total costs, fees and expenses incurred in connection with the
registration of the Shares are estimated to be approximately $18,120.
The Common Stock is listed on the AMEX under the symbol "DRL." On November
6, 1996, the closing sales price of the Common Stock as reported on the AMEX
was $2.50 per share.
------------------------
Investors should review the information contained or incorporated by
reference herein. IN PARTICULAR, INVESTORS SHOULD CONSIDER CAREFULLY THE MATTERS
SET FORTH UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 6.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is November 7, 1996.
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commissioner's Regional Offices at Seven World Trade Center, New York, New
York 10048 and at Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, or otherwise available on the Commission's website
located at http://www.sec.gov. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W. Washington, D.C. 20549. The Common Stock is listed and traded
on the AMEX and certain of the Company's reports, proxy statements and other
information can be inspected at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York 10006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act with respect to the Shares. This Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits thereto, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Such additional information may be
obtained from the Commission's principal office in Washington, D.C. Statements
contained in this Prospectus (or in any document incorporated into this
Prospectus by reference) as to the contents of any contract or other document
referred to herein (or therein) 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.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission
pursuant to the Exchange Act, are incorporated herein by reference and made a
part of this Prospectus:
1. The Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1995.
2. The Company's Definitive Proxy Statement for the 1996 Annual Meeting
of Shareholders.
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996.
5. The Company's Current Report on Form 8-K dated June 24, 1996.
6. The Company's Current Report on Form 8-K dated October 2, 1996.
7. The description of the Common Stock, contained in the Company's
Registration Statement on Form 8-A dated June 26, 1981.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock covered hereby 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. All information
appearing in this Prospectus or in any document incorporated herein by reference
is not necessarily complete and is qualified in its entirety by the information
and financial statements (including notes thereto) appearing in the documents
incorporated herein by reference and should be read together with such
information and documents. Any statement contained in a document or information
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 subsequently filed document that also is,
or is deemed to be,
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<PAGE>
incorporated herein by reference, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, expect as so
modified or superseded, to constitute a part of this Prospectus.
THE COMPANY UNDERTAKES TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED,
UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE
DOCUMENTS OR INFORMATION REFERRED TO ABOVE THAT HAS BEEN OR MAY BE INCORPORATED
BY REFERENCE IN THIS PROSPECTUS (EXCLUDING EXHIBITS TO SUCH DOCUMENTS UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE). REQUESTS SHOULD BE
DIRECTED TO THE CORPORATE SECRETARY, DI INDUSTRIES, INC., 450 GEARS ROAD, SUITE
625, HOUSTON, TEXAS 77067, TELEPHONE (713) 874-0202.
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PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS
PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION AND
FINANCIAL STATEMENTS CONTAINED ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED
HEREIN BY REFERENCE.
THE COMPANY
DI Industries, Inc., a Texas corporation formed in 1980, is engaged
primarily in the business of providing onshore contract drilling services to the
oil and gas industry. The Company conducts domestic operations in Texas,
Louisiana, Arkansas, Oklahoma, Ohio, Pennsylvania, New York, Michigan and other
states; and currently has international operations in Venezuela, Argentina and
Mexico. The principal office of the Company is located at 450 Gears Road, Suite
625, Houston, Texas 77067, and its telephone number is (713) 874-0202.
On October 3, 1996, the Company entered into an Asset Purchase Agreement
(the "Asset Purchase Agreement") with Meritus, Inc., a Texas corporation, Mesa
Rig 4 L.L.C., a Texas limited liability company, and Mesa Venture, a Texas
general partnership (collectively, the "Sellers"), and Mesa Drilling, Inc., a
Texas corporation, pursuant to which the Company agreed to purchase from the
Sellers certain of the assets owned by the Sellers (the "Asset Purchase"). Of
the Shares, 5,500,000 have been issued in connection with or by reason of the
consummation of the Asset Purchase.
RISK FACTORS
See "Risk Factors" for certain considerations relevant to an investment
in the Common Stock.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Selling Shareholders ........ 7,500,000 shares
Common Stock to be outstanding after the offering
(excluding 2,000,000 shares registered hereby
issuable upon exercise of options) .................. 123,269,534 shares
Use of Proceeds.......................................... The Company will not receive any of the proceeds of
the Offering.
Dividends................................................ The Company has never paid dividends on the Common
Stock and has no plans to pay dividends on the
Common Stock in the foreseeable future.
AMEX Ticker Symbol....................................... DRL
</TABLE>
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<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE
FOLLOWING SHOULD BE CAREFULLY CONSIDERED IN EVALUATING THE COMPANY AND ITS
BUSINESS BEFORE PURCHASING THE COMMON STOCK OFFERED HEREBY.
INTENSE COMPETITION; INDUSTRY CONDITIONS
The Company experiences intense competition in its onshore drilling
markets. The contract drilling industry is cyclical and is characterized by high
capital and maintenance costs. Due to an oversupply of rigs, the onshore
drilling market is highly competitive and no one competitor is dominant. While
price is a primary factor in the selection of drilling contractors, a
contractor's safety record, crew quality, service record and equipment
capability are also important factors. Certain of the Company's competitors have
greater financial resources than the Company.
The Company's operations are materially dependent upon the levels of
activity in the exploration, development and production of oil and gas in the
United States and worldwide. Such activity levels are affected both by
short-term and long-term trends in the prices of oil and natural gas. In recent
years, oil and natural gas prices, and therefore the level of drilling and
exploration activity, have been volatile. Worldwide military, political and
economic events have contributed to, and are likely to continue to contribute
to, such price volatility. Any prolonged reduction in oil and natural gas prices
would depress the level of exploration and development activity and would result
in a corresponding decline in the demand for the Company's services and
therefore have a material adverse effect on the Company's revenues and
profitability.
LOSSES FROM OPERATIONS
The historical financial data for the Company reflect net losses of
$13,447,000 and $3,502,000 (unaudited) for the calendar years ended December 31,
1995 and 1994, which included a non-cash impairment provision of $5,290,000
during the fourth quarter of 1995 for certain drilling rigs and equipment. This
provision was the result of market indications that the carrying amount was not
fully recoverable based on appraisals, comparable sales data and management
estimates. The Company continues to experience losses, realizing a net loss
applicable to common stock of $1,267,000 for the six months ended June 30, 1996.
There can be no assurance that any capital needed for the future will be
available on acceptable terms.
LEVERAGE AND LIQUIDITY
The Company currently has approximately $16,000,000 of debt obligations.
The Company requires substantial cash flow to meet its debt service
requirements. Payment of principal and interest on these obligations will depend
on the Company's future performance, which is subject to general economic and
business factors beyond the Company's control.
Certain loan agreements governing the Company's term loan with
NorlandsBanken ASA (the "NorlandsBanken Loan Agreement") and an ancillary
guaranty by Norex Drilling Ltd., a Bermuda corporation, restrict, among other
things, the Company's ability to incur additional indebtedness, mortgage or
otherwise encumber certain of its properties and make certain asset
dispositions. Furthermore, the NorlandsBanken Loan Agreement prohibits the
payment of dividends by the Company and requires the Company to maintain a
minimum working capital balance of $7,000,000 and a minimum adjusted net worth
of $50,000,000. These restrictions could limit the Company's flexibility in
responding to changing market conditions.
INTERNATIONAL OPERATIONS
A major portion of the Company's revenues has been attributable to
international operations. Revenues from international sources accounted for
approximately 43.2 percent and 52.7 percent of the Company's operating revenues
for the six-month period ended June 30, 1996 and the year ended December 31,
1995, respectively. In addition to the risks inherent in the drilling business,
the Company's international operations are subject to certain political,
economic and other uncertainties, including, among others, risks of war and
civil disturbances, expropriation, nationalization,
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<PAGE>
renegotiation or modification of existing contracts, taxation policies, foreign
exchange restrictions, international monetary fluctuations and other hazards
arising out of foreign operations.
ABSENCE OF DIVIDENDS ON THE COMMON STOCK
The Company has not paid any cash dividends on the Common Stock and does
not anticipate paying dividends on the Common Stock at any time in the
foreseeable future. Additionally, certain debt covenants of the Company prohibit
the Company from paying dividends.
LIMITATIONS ON THE AVAILABILITY OF THE COMPANY'S NET OPERATING LOSS
CARRYFORWARDS
As a result of the Mergers (as defined hereinafter), the Company has
undergone an "ownership change" within the meaning of Section 382 of the
Internal Revenue Code of 1986, as amended. As a result, the right of the Company
to use its existing net operating loss carryforwards ("NOLs") (and certain other
tax attributes) for both regular tax and alternative minimum tax purposes during
each future year is limited to a percentage (currently approximately six
percent) of the fair market value of the Company's stock immediately before the
ownership change (the "Section 382 Limitation"). To the extent that taxable
income exceeds the Section 382 Limitation in any year subsequent to the
ownership change, such excess income may not be offset by NOLs from years prior
to the ownership change. To the extent the amount of taxable income in any
subsequent year is less than the Section 382 Limitation for such year, the
Section 382 Limitation for future years is correspondingly increased. There is
generally no restriction on the use of NOLs arising after the ownership change,
although Section 382 applies anew each time there is an ownership change. The
actual effect, if any, of such utilization of NOLs will depend on the Company's
profitability in future years. As of December 31, 1995, the Company had
approximately $64 million of NOLs, a significant portion of which are already
subject to a Section 382 Limitation resulting from ownership changes in years
prior to the year of the Mergers.
RIG FLEET AGE AND DEFERRED MAINTENANCE
The majority of the Company's existing drilling rigs were built during the
years 1979 - 1981, the period of the industry's most recent rig building cycle.
Some maintenance on its stacked rigs has been deferred. Through its programs of
rig upgrades and refurbishment, the Company believes that it will be able to
maintain its rig operations over time to meet its future needs; however, such
upgrading and refurbishment may require increasing amounts of capital and, to
the extent the Company is unable to continue such programs, it will have fewer
rigs available for service.
OPERATIONAL RISKS
The Company's operations are subject to the many hazards inherent in the
drilling business, including blowouts, cratering, fires and collisions. These
hazards could cause personal injury and loss of life, suspend drilling
operations or seriously damage or destroy the property and equipment involved
and, in addition to environmental damage, could cause damage to producing
formations and surrounding areas. Although the Company maintains insurance
against many of these hazards, the Company does not have casualty or other
insurance with respect to the rigs themselves, and such other insurance is
subject to substantial deductibles and provides for premium adjustments based on
claims. Certain other matters are also excluded from coverage, such as loss of
earnings on certain rigs.
GOVERNMENTAL AND ENVIRONMENTAL MATTERS
Many aspects of the Company's operations are affected by domestic and
foreign political developments and are subject to numerous domestic and foreign
governmental regulations that may relate directly or indirectly to the contract
drilling industry. The regulations applicable to the Company's operations
include certain regulations that control the discharge of materials into the
environment or require remediation of contaminations, under certain
circumstances. Usually these environmental laws and regulations impose "strict
liability," rendering a person liable without regard to negligence or fault on
the part of such person. Such environmental laws and regulations may expose the
Company to liability for the conduct of, or conditions caused by, others, or for
acts of the Company that were in compliance with all applicable laws at the time
such acts were performed.
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It has been the Company's experience that the environmental laws, rules
and regulations of the United States are more stringent than those found in
foreign jurisdictions, and therefore the requirements of foreign jurisdictions
do not, in general, impose an additional compliance burden on the Company.
RECENT CHANGES/DEPENDENCE ON KEY PERSONNEL
The Company began a management restructuring in April, 1996 with the
termination of its President and Chief Executive Officer, Max M. Dillard on
April 9, 1996. Since that date, the Company has hired a majority of its current
senior management team, including Thomas P. Richards, President and Chief
Executive Officer, Forrest M. Conley, Jr., Senior Vice President -
International, Donald J. Guedry, Treasurer, Ronnie E. McBride, Senior Vice
President - Operations, T. Scott O'Keefe, Senior Vice President and Chief
Financial Officer, and David W. Wehlmann, Vice President and Controller. Mr.
Wehlmann was hired in July, 1996 while Messrs. Conley, McBride, O'Keefe and
Richards began employment in September, 1996. Mr. Guedry joined the Company in
October, 1996.
The Company believes that its operations are dependent to some degree upon
a relatively small group of its management personnel, the loss of any of whom
could have a material adverse effect on the Company.
On August 29, 1996, the Company completed the transactions contemplated by
(1) that certain Agreement and Plan of Merger, as amended (the "Rig Merger
Agreement"), dated as of May 7, 1996, by and among the Company, DI Merger Sub,
Inc., a newly formed Delaware corporation and a wholly owned subsidiary of the
Company ("Merger Sub"), Roy T. Oliver, Jr., Mike L. Mullen, R.T. Oliver, Inc.,
an Oklahoma corporation ("RTO"), and Land Rig Acquisition Corporation, a
Delaware corporation ("LRAC"), pursuant to which RTO and Merger Sub were merged
with and into LRAC, which was the surviving corporation and a wholly owned
subsidiary of the Company (the "Rig Merger"), and (2) that certain Agreement and
Plan of Merger, as amended (the "Somerset Merger Agreement"), dated as of May 7,
1996, by and between the Company and Somerset Investment Corp., a Texas
corporation ("Somerset"), pursuant to which Somerset was merged with and into
the Company, which was the surviving corporation (the "Somerset Merger") (the
Rig Merger and the Somerset Merger collectively, the "Mergers"). The Rig Merger
Agreement, Somerset Merger Agreement and the Mergers were adopted and approved
by the shareholders of the Company on August 27, 1996.
On August 27, 1996, the shareholders of the Company elected Ivar Siem, Roy
T. Oliver, Steven A. Webster, William R. Ziegler and Peter M. Holt to the Board
of Directors of the Company.
CONTROL CONSIDERATIONS
On May 7, 1996, certain shareholders of the Company entered into a
Shareholders' Agreement (the "Shareholders' Agreement"), which shareholders
beneficially owned 74.2% of the issued and outstanding shares of Common Stock as
of the effective date of the Mergers. The Shareholders' Agreement provides that
all of the parties thereto will be required to vote their shares of Common Stock
so as to maintain the size of the Board of Directors at five, and to vote their
shares at any annual or special meeting of the shareholders for three directors
designated by such parties and two independent directors. By reason of their
shareholdings and the Shareholders' Agreement, the parties to the Shareholders'
Agreement will each exercise considerable influence over the Company and will be
able to collectively control all of its business and affairs for the foreseeable
future.
USE OF PROCEEDS
The Company will not receive any of the net proceeds from the sale of any
of the Shares offered pursuant to this Prospectus, all of which will be sold by
the Selling Shareholders.
DIVIDEND POLICY
The Company has never paid dividends on the Common Stock and has no plans
to pay dividends on the Common Stock in the foreseeable future. Additionally,
certain debt covenants prohibit the payment of dividends by the Company on the
Common Stock without the consent of the lender.
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THE SELLING SHAREHOLDERS
The following table sets forth certain information, as of the date hereof,
with respect to the number of Shares beneficially owned and being offered hereby
by the Selling Shareholders. The Company is filing with the Commission a
Registration Statement under the Securities Act on Form S-3, of which this
Prospectus forms a part, with respect to the secondary trading of the Shares.
See "Plan of Distribution."
Shares Beneficially Owned Number of
------------------------- Shares
Offered
Name of Beneficial Owner Number* Percent Hereby
- ------------------------------------------- ------------ -----------
Meritus, Inc. 4,534,516 3.68% 4,534,516
Spencer Finance Corp. 3,297,436(1) 2.68% 3,297,436
Scan Atlantic, Inc. 618,540(1) ** 618,540
B.F. Interests, Inc. 618,540(1) ** 618,540
Mesa Rig 4 L.L.C. 422,581 ** 422,581
Mesa Venture 542,903 ** 542,903
Vantage Industry Partners, Inc. 542,903(2) ** 542,903
Gilbo Invest A/S 422,581(3) ** 422,581
Thomas P. Richards 2,000,000(4) 1.60% 2,000,000
- ------------
* Unless otherwise noted, all Shares reflected are owned
beneficially and of record.
** Number of Shares beneficially owned represents less than one
percent of all of the outstanding shares of the Common Stock.
(1) Spencer Finance Corp., Scan Atlantic, Inc. and B. F. Interests,
Inc. are the sole shareholders of Meritus, Inc. The number of Shares
listed reflects the number of Shares that Meritus, Inc. anticipates it
will distribute to such shareholders.
(2) All of the 542,903 shares are owned beneficially through Mesa
Venture, a general partnership controlled by Vantage Industry Partners,
Inc.
(3) All of the 422,581 shares are owned beneficially through Mesa
Rig 4 L.L.C., a limited liability company controlled by Gilbo Invest A/S.
(4) All shares reflected have not been issued as of the date hereof
but may be issued upon the exercise of certain options. See "Plan of
Distribution - Original Issuance of the Shares."
- ------------
Thomas P. Richards is the President and Chief Executive Officer of the
Company. None of the other Selling Shareholders have held any position or office
or had any other material relationship with the Company.
PLAN OF DISTRIBUTION
GENERAL
Sales of the Shares by the Selling Shareholders may be made from time to
time in one or more transactions, including block transactions, on the AMEX or
any other exchange or quotation system on which the Common Stock may be listed
or quoted pursuant to and in accordance with the applicable rules of the
Exchanges, in negotiated transactions or in a combination of any such methods of
sale, at fixed prices that may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Shares may be offered directly, to or through agents
designated from time to time or to or through brokers or dealers, or through any
combination of these methods of sale. Such agents, brokers or dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Shareholders and/or the purchasers of the Shares for whom such
broker-dealers may
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<PAGE>
act as agents or to whom they sell as principals, or both (which compensation as
to a particular broker-dealer might be in excess of customary commissions). A
member firm of an Exchange may be engaged to act as an agent in the sale of
Shares by the Selling Shareholders. To the extent required, specific additional
information regarding the Shares will be set forth in a Prospectus Supplement.
The Selling Shareholders and any brokers, dealers, agents or others that
participate with the Selling Shareholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions or fees received by such persons and any profit on the resale of the
Shares purchased by such persons may be deemed to be underwriting commissions or
discounts under the Securities Act.
Agents, brokers and dealers may be entitled under agreements entered into
by the Selling Shareholders and/or the Company to indemnification against
certain civil liabilities, including liabilities under the Securities Act.
There is no assurance that the Selling Shareholders will sell any or all
of the Shares offered hereby.
ORIGINAL ISSUANCE OF THE SHARES
Of the Shares, 5,500,000 have been issued directly to certain of the
Selling Shareholders in a private placement in connection with the consummation
of the Asset Purchase and the other transactions contemplated by the Asset
Purchase Agreement.
Of the Shares, 2,000,000 may be issued to Thomas P. Richards upon the
exercise of options granted pursuant to a Non-Qualified Stock Option Agreement
dated September 3, 1996 (the "Option Agreement"). The options were granted to
Mr. Richards as partial consideration for his employment as the President and
Chief Executive Officer of the Company. The options may be exercised as to 20%
of the total option shares beginning on December 31, 1996, and as to 20% of the
total option shares beginning on the next four annual anniversaries of the date
of the Option Agreement.
EXPERTS
The financial statements and the related financial statement schedules
incorporated by reference in this Prospectus from the Company's Annual Report on
Form 10-K/A and incorporated by reference from the Company's Definitive Proxy
Statement for the 1996 Annual Meeting of Shareholders for the year ended
December 31, 1995 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports which are incorporated herein by reference,
and have been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the Shares have been passed upon
for the Company by Cokinos, Bosien & Young, Houston, Texas.
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NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, NOR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION
TO OR FROM ANY PERSON TO OR FROM WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
Available Information ..................................................... 2
Incorporation of Certain Documents by Reference ........................... 2
Prospectus Summary ........................................................ 4
Risk Factors .............................................................. 5
Use of Proceeds ........................................................... 7
Dividend Policy ........................................................... 7
The Selling Shareholders .................................................. 8
Plan of Distribution ...................................................... 8
Experts ................................................................... 9
Legal Matters ............................................................. 9
7,500,000 SHARES
DI INDUSTRIES, INC.
COMMON STOCK
(PAR VALUE $0.10 PER SHARE)
[DI LOGO]
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee...................... $ 4,120
Blue Sky fees and expenses*............... $ 0
Legal fees and expenses*.................. $ 7,000
Printing expenses*........................ $ 1,000
Accounting fees and expenses*............. $ 1,000
Miscellaneous*............................ $ 5,000
Total Expenses................ $ 18,120
----------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Article 1302-7.06 of the Texas Miscellaneous Corporation Laws Act,
the articles of incorporation of a Texas corporation may provide that a director
of that corporation shall not be liable, or shall be liable only to the extent
provided in the articles of incorporation, to the corporation or its
shareholders for monetary damages for acts or omissions in the director's
capacity as a director, except that the articles of incorporation cannot provide
for the elimination or limitation of liability of a director to the extent that
the director is found liable for (i) a breach of the director's duty of loyalty
to the corporation or its shareholders, (ii) acts or omissions not in good faith
that constitutes a breach of duty of the director to the corporation or an act
or omission that involves intentional misconduct or a knowing violation of the
law, (iii) any transaction from which the director received an improper personal
benefit, or (iv) an act or omission for which the liability of a director is
expressly provided by an applicable statute. Article XII of the Company's
Articles of Incorporation, as amended, states that a director of the Company
shall not be liable to the Company or its shareholders for monetary damages
except to the extent otherwise expressly provided by the statutes of the State
of Texas.
In addition, Article 2.02-1 of the Texas Business Corporation Act
authorizes a Texas corporation to indemnify a person who was, is, or is
threatened to be made a named defendant or respondent in a proceeding, including
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative because the person is or
was a director. The indemnification is permitted only if it is determined that
the person (1) conducted himself in good faith; (2) reasonably believed (a) in
the case of conduct in his official capacity as a director of the corporation,
that his conduct was in the corporation's best interests; and (b) in all other
cases, that his conduct was at least not opposed to the corporation's best
interests; and (3) in the case of any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. A person may be indemnified under
Article 2.02-1 against judgments, penalties (including excise and similar
taxes), fines, settlements, and reasonable expenses actually incurred by the
person (including court costs and attorneys' fees), but if the person is found
liable to the corporation or is found liable on the basis that personal benefit
was improperly received by him, the indemnification is limited to reasonable
expenses actually incurred and may not be made in respect of any proceeding in
which the person has been found liable for willful or intentional misconduct in
the performance of his duty to the corporation. A corporation is obligated under
Article 2.02-1 to indemnify a director or officer against reasonable expenses
incurred by him in connection with a proceeding in which he is named defendant
or respondent because he is or was a director or officer if he has been wholly
successful, on the merits or otherwise, in the defense of the proceeding. Under
Article 2.02-1 a corporation may (i) indemnify and advance expenses to an
officer, employee, agent or other person who are or were serving at the request
of the corporation as a director, officer, partner venturer, proprietor,
trustee, employee, agent or similar functionary of another entity to the same
extent that it may indemnify and advance expenses to directors, (ii) indemnify
and advance expenses to directors and such other persons to such further extent,
consistent with law, as may be provided in the corporation's articles of
incorporation, bylaws, action of its board of directors, or contract or as
permitted by common law and (iii) purchase and maintain insurance or another
arrangement on behalf of directors and such other persons against any liability
asserted against him and incurred by him in such a capacity or arising out of
his status as such a
<PAGE>
person. The Bylaws of the Company set forth specific provisions for
indemnification of directors, officers, agents and other persons which are
substantially identical to the provisions of Article 2.02-1 described above. The
Company maintains directors and officers insurance.
ITEM 16. EXHIBITS
(A) EXHIBITS
The exhibits listed in the Exhibit Index below are filed as part of the
Registration Statement:
Exhibit
Number Description
------- -----------
2.1* -- Asset Purchase Agreement dated October 3, 1996 by and between
the Company and Meritus, Inc., a Texas corporation, Mesa Rig 4
L.L.C., a Texas limited liability company, Mesa Venture, a Texas
general partnership and Mesa Drilling, Inc., a Texas corporation.
5.1 -- Opinion of Cokinos, Bosien & Young.
10.1* -- Employment Agreement dated September 3, 1996 by and between the
Company and Thomas P. Richards.
10.2* -- Stock Option Agreement dated September 3, 1996 by and between the
Company and Thomas P. Richards.
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Cokinos, Bosien & Young contained in their opinion
filed as Exhibit 5.1.
24.1* -- Powers of Attorney.
- ------------------------
* Filed with original registration statement on Form S-3
(Registration No. 333-14783).
ITEM 17. UNDERTAKINGS
(a) 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 (the "Securities Act");
(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 the registration statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that clauses (a)(1)(i) and (a)(1)(ii) of this paragraph
do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, 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; and
(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;
(b) The undersigned Registrant hereby undertakes that, for 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 Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, 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 the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, 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 against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
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 AMENDMENT NO. 1 TO
REGISTRATION STATEMENT ON FORM S-3 (NO. 333-14783) TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF
TEXAS, ON NOVEMBER 7, 1996.
DI INDUSTRIES, INC.
By: /s/ THOMAS P. RICHARDS
Thomas P. Richards,
President and Chief Executive Officer
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT ON FORM S-3 (NO. 333-14783) HAS BEEN SIGNED BY
THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
---------- ----- ----
/s/ THOMAS P. RICHARDS President and Chief November 7, 1996
(THOMAS P. RICHARDS) Executive Officer
/s/ T. SCOTT O'KEEFE Senior Vice President and November 7, 1996
(T. SCOTT O'KEEFE) Chief Financial Officer
/s/ DAVID W. WEHLMANN Vice President and November 7, 1996
(DAVID W. WEHLMANN) Controller
/s/ IVAR SIEM Director November 7, 1996
(IVAR SIEM)
/s/ ROY T. OLIVER, JR. Director November 7, 1996
(ROY T. OLIVER, JR.)
/s/ STEVEN A. WEBSTER Director November 7, 1996
(STEVEN A. WEBSTER)
/s/ WILLIAM R. ZIEGLER Director November 7, 1996
(WILLIAM R. ZIEGLER)
Director November _, 1996
- ------------------------------
(PETER M. HOLT)
/s/ THOMAS P. RICHARDS
(THOMAS P. RICHARDS, ATTORNEY-IN-FACT)
[DI INDUSTRIES, INC. LETTERHEAD]
November 7, 1996
DI Industries, Inc.
450 Gears Road, Suite 625
Houston, Texas 77067
RE: Registration with the Securities & Exchange Commission of
certain shares of the Common Stock of DI Industries, Inc.
Ladies and Gentlemen:
We have acted as counsel to DI Industries, Inc., a Texas corporation
(the "Company"), in connection with that certain (i) Asset Purchase Agreement
dated October 3, 1996 by and among the Company, Drillers, Inc., Meritus, Inc.,
Mesa Rig 4 L.L.C., Mesa Venture and Mesa Drilling, Inc. and (ii) that certain
Stock Option Agreement between DI Industries, Inc. and Thomas P. Richards dated
September 3, 1996 (the "Agreements").
In connection with the Agreements, the Company is registering 7,500,000
shares of its Common Stock (the "Shares") pursuant to a Registration Statement
on Form S-3 filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Registration Statement"). As
set forth in the Registration Statement, certain legal matters are being passed
on for the Company by us. This opinion is being furnished to the Company for
filing as Exhibit 5 to the Registration Statement.
In connection with rendering this opinion, we have examined copies of
the Agreements represented to us to be in the form executed and delivered by the
Company. Further, we have examined and relied upon a copy of the articles of
incorporation of the Company, as amended, certified by the Secretary of State of
Texas, and a copy of the bylaws of the Company, certified by the secretary of
the Company.
In such examination, we have assumed, without any independent
verification or investigation, (i) the genuineness and authenticity of all
signatures on documents and instruments we have examined and reviewed, (ii) the
genuineness and authenticity of all documents submitted to us as originals, and
the conformity with the original documents of all documents submitted to us as
certified or photostatic copies, and (iii) the Merger Agreements will be duly
approved and adopted by the shareholders of the Company. We have also examined
such certificates of officers of the Company and public officials and such other
documents and records as we deem necessary as the basis for the opinions set
forth below.
Based solely upon our examination of the documents described above and
having regard for such legal considerations as we deem relevant, and subject to
the qualifications set forth below, we are of the opinion that:
<PAGE>
1. The Shares will be, at the time of issuance, duly and validly
authorized for issuance.
2. The Shares, when issued, will be fully paid and non-assessable,
with no personal liability attached to the ownership thereof
under the Texas Business Corporation Act.
We are not licensed to practice law in any jurisdiction other than the
state of Texas. We express no opinion as to the laws of any jurisdiction other
than the state of Texas.
This opinion is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage, and other limitations, all as
more particularly described in the Accord, and this opinion should be read in
conjunction therewith. To the extent, however, that any of the express
qualifications, exceptions, definitions, or limitations set forth in this
opinion shall conflict with the Accord, the express provisions of this opinion
shall control.
This opinion is solely for the use by the Company in filing the
Registration Statement and may not be relied upon for any other purpose without
the express written consent of the undersigned firm. This opinion is given as of
the date hereof, and we undertake no, and hereby disclaim any, obligation to
advise you of any change in any matter set forth herein.
Yours very truly,
COKINOS, BOSIEN & YOUNG
BY:/s/ BRIAN BOSIEN
Brian Bosien
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of DI Industries, Inc. on Form S-3 of our report dated March 28, 1996 appearing
in the Annual Report on Form 10-K/A of DI Industries, Inc. for the year ended
December 31, 1995, and to the incorporation by reference of our report dated
March 28, 1996 (June 10, 1996 as note 13), appearing in the Definitive Proxy
Statement for the 1996 Annual Meeting of Shareholders. We also consent to the
reference to us under the headings "Experts" in this Prospectus, which is a part
of this Registration Statement.
DELOITTE & TOUCHE LLP
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
November 5, 1996
