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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 13, 2000
REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------------
GREY WOLF, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2144774
(STATE OF JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10370 RICHMOND AVENUE, SUITE 600
HOUSTON, TEXAS 77042-4136
(713) 435-6100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF PRINCIPAL
EXECUTIVE OFFICES)
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1996 EMPLOYEE STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
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DAVID W. WEHLMANN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
10370 RICHMOND AVENUE, SUITE 600
HOUSTON, TEXAS 77042-4136
(713) 435-6100
FAX: (713) 435-6171
(NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------------------
COPY TO:
NICK D. NICHOLAS
PORTER & HEDGES, L.L.P.
700 LOUISIANA, 35TH FLOOR
HOUSTON, TEXAS 77002
(713) 226-0600
FAX: (713) 226-0237
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
AMOUNT TO OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) PRICE FEE (3)
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<S> <C> <C> <C> <C>
Common Stock, par value $0.10 per share(4)....... 3,000,000 $4.59 $13,781,250 $3,638.25
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(1) Pursuant to Rule 416(a), also registered hereunder is an indeterminate
number of shares which may be offered and issued to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
(2) Estimated pursuant to Rule 457(c) under the Securities Act of 1933, as
amended (the "Securities Act"), solely for the purpose of computing the
registration fee, based upon the average high and low price of the
Common Stock as reported on the American Stock Exchange on July 10,
2000.
(3) Does not include 3,045,300 shares covered by a previous registration
statement included in the prospectus filed herewith pursuant to Rule
429. A registration fee of $2,364.72 was previously paid regarding
these shares.
(4) Includes one preferred share purchase right (the "Rights") for each
share of Common Stock. Pursuant to Rule 457(g) of the Securities Act no
separate fee is required for the Rights.
PURSUANT TO THE PROVISIONS OF RULE 429 OF THE SECURITIES ACT OF 1933,
AS AMENDED, THE PROSPECTUS CONTAINED IN THIS REGISTRATION STATEMENT ALSO RELATES
TO 3,045,300 SHARES OF COMMON STOCK COVERED BY THE REGISTRANT'S REGISTRATION
STATEMENT ON FORM S-8 (REG. NO. 333-19027). THE PREVIOUSLY FILED FORM S-8
REGISTERED 7,000,000 SHARES OF COMMON STOCK, OF WHICH 3,045,300 ARE CONTROL
SECURITIES THAT HAVE BEEN OR WILL BE ACQUIRED BY SELLING SHAREHOLDERS UNDER THE
1996 EMPLOYEE STOCK BENEFIT PLAN. THE REGISTRATION FEES WITH RESPECT THERETO
WERE PREVIOUSLY PAID.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The following documents listed under this Part I and the documents
incorporated by reference under Item 3 of Part II to this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act of 1933, and are incorporated herein by reference.
ITEM 1. PLAN INFORMATION
The information required to be provided to participants pursuant to
this Item is set forth in the Information Memorandum for the 1996 Employee Stock
Option Plan, as amended.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The written statement required to be provided to participants pursuant
to this Item is set forth in the Information Memorandum referenced in Item 1
above.
I-2
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6,045,300 SHARES
GREY WOLF, INC.
COMMON STOCK
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We have prepared this prospectus for use by selling shareholders listed
on page 12 of this prospectus to allow them to sell their shares without
restriction. The selling shareholders may make sales by the methods described in
the section entitled "Plan of Distribution" in this prospectus. We will file a
supplemental prospectus if required to do so by applicable securities laws to
describe specific sales of shares or to identify any selling shareholders not
listed in this prospectus.
Our common stock trades on the American Stock Exchange under the symbol
"GW."
We will not receive any portion of the proceeds resulting from the sale
of the shares offered by the selling shareholders under this prospectus. In
addition, we will pay for certain of the expenses relating to the registration
of the shares.
Our principal executive offices are located at 10370 Richmond Avenue,
Suite 600, Houston, Texas 77042, and our telephone number is (713) 435-6100.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 5 IN THIS PROSPECTUS.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus is dated July 13, 2000.
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TABLE OF CONTENTS
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PAGE
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Where You Can Find More Information................................................ 3
Grey Wolf, Inc..................................................................... 4
Forward-looking Statements......................................................... 4
Risk Factors....................................................................... 5
Selling Shareholders............................................................... 12
Plan of Distribution............................................................... 13
Legal Matters...................................................................... 14
Experts............................................................................ 14
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You should rely on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
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WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a registration statement on Form
S-8 that we filed with the SEC under the Securities Act of 1933. This prospectus
does not contain all the information set forth in the registration statement.
You should refer to the registration statement and its related exhibits and
schedules for further information with respect to Grey Wolf, Inc. and the shares
offered in this prospectus. Statements contained in this prospectus concerning
the provisions of any document are not necessarily complete and, in each
instance, reference is made to the copy of that document filed as an exhibit to
the registration statement or otherwise filed with the SEC and each such
statement is qualified by this reference. The registration statement and its
exhibits and schedules are 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. You may read and copy any document we file,
including the registration statement, at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
l-800-SEC-0330 for further information on the operation of the Public Reference
Room. Our public filings are also available from commercial document retrieval
services and at the Internet World Wide Web site maintained by the SEC at
"http://www.sec.gov."
SEC rules allow us to include some of the information required to be in
the registration statement by incorporating that information by reference to
other documents we file with them. 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. This prospectus incorporates the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 until all of the securities
covered by this prospectus are sold:
o our Annual Report on Form 10-K for the year ended December 31,
1999;
o our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
o our Current Report on Form 8-K filed on March 31, 2000;
o our Definitive Proxy Statement on Schedule 14A dated April 4,
2000;
o the description of our common stock contained in our Current
Report on Form 8-K dated October 6, 1997; and
o the description of our preferred stock purchase rights contained
in our registration statement on Form 8-A/A filed with the SEC on
October 9, 1998.
You may request a copy of these filings, which we will provide to you
at no cost, by telephoning or writing us at the following address:
Grey Wolf, Inc.
10370 Richmond Avenue, Suite 600
Houston, Texas 77042-4136
(713) 435-6100
3
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GREY WOLF, INC.
We are a leading provider of contract land drilling services in the
United States with a domestic fleet of 120 rigs, of which 108 are marketable. Of
the 108 marketable rigs, 77 rigs are marketed while 31 are cold-stacked. We also
have an inventory of 12 non-marketed rigs located in the United States which are
held for refurbishment as demand for drilling services warrants. In addition to
our domestic operations, we maintain a fleet of five non- marketed rigs in
Venezuela, giving us a total of 125 rigs. Our core markets are in Ark-La-Tex,
the Gulf Coast, Mississippi/Alabama and South Texas markets. Our customers are
independent oil and gas producers and major oil companies. We conduct our
operations through our subsidiaries.
Our principal office is located at 10370 Richmond Avenue, Suite 600,
Houston, Texas 77042-4136, and our telephone number is (713) 435-6100.
FORWARD-LOOKING STATEMENTS
The statements in this prospectus and the documents incorporated by
reference that relate to matters that are not historical facts 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 are subject to risks, uncertainties and assumptions,
including those discussed elsewhere in this prospectus. When used in this
prospectus and the documents incorporated by reference, words such as
"anticipate," "believe," "expect," "plan," "intend," "estimate," "project,"
"will," "could," "may," "predict," and similar expressions are intended to
identify forward- looking statements. Future events and actual results may
differ materially from the results expressed in or implied by the
forward-looking statements. Factors that might cause such a difference include:
o fluctuations in prices and demand for oil and gas;
o fluctuations in levels of oil and gas exploration and development
activities;
o fluctuations in the demand for contract land drilling services;
o the existence and competitive responses of our competitors;
o technological changes and developments in the industry;
o the existence of operating risks inherent in the contract land
drilling industry; and
o U.S. and global economic conditions.
The information contained in this prospectus under the heading "Risk
Factors," identifies additional factors that could affect our operating results
and performance. We urge you to carefully consider those factors.
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RISK FACTORS
An investment in our common stock is very risky. You should carefully
consider the following risk factors and all of the other information set forth
or incorporated by reference in this prospectus before you purchase our common
stock.
OUR BUSINESS CAN BE ADVERSELY AFFECTED BY LOW OIL AND GAS PRICES AND
EXPECTATIONS OF LOW PRICES.
As a supplier of land drilling services, our business depends on the
level of drilling activity by oil and gas exploration and production companies
operating in the geographic markets where we operate. The number of wells they
choose to drill is strongly influenced by past trends in oil and gas prices,
current prices, and their outlook for future oil and gas prices within those
geographic markets. Low oil and gas prices, or the perception among oil and gas
companies that future prices are likely to decline, can materially and adversely
affect us in many ways, including:
o our revenues, cash flows and earnings;
o the fair market value of our rig fleet;
o our ability to maintain or increase our borrowing capacity;
o our ability to obtain additional capital to finance our business
and make acquisitions, and the cost of that capital; and
o our ability to retain skilled rig personnel who we would need in
the event of a upturn in the demand for our services.
Oil and gas prices have been volatile historically and, we believe,
will continue to be so in the future. Many factors beyond our control affect oil
and gas prices, including:
o weather conditions in the United States and elsewhere;
o economic conditions in the United States and elsewhere;
o actions by OPEC, the Organization of Petroleum Exporting
Countries;
o political stability in the Middle East and other major producing
regions;
o governmental regulations, both domestic and foreign;
o the pace adopted by foreign governments for exploration of their
national reserves;
o the price of foreign imports of oil and gas; and
o the overall supply and demand for oil and gas.
WE OPERATE IN A HIGHLY COMPETITIVE, FRAGMENTED INDUSTRY IN WHICH PRICE
COMPETITION IS INTENSE.
The drilling contracts we compete for are usually awarded on the basis
of competitive bids. Pricing and rig availability are the primary factors
considered by our potential customers in determining which drilling contractor
to select. We believe other factors are also important. Among those factors are:
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o the type and condition of drilling rigs;
o the quality of service and experience of rig crews;
o the safety record of the rig;
o the offering of ancillary services; and
o the ability to provide drilling equipment adaptable to, and
personnel familiar with, new technologies and drilling
techniques.
While we must generally be competitive in our pricing, our competitive strategy
generally emphasizes the quality of our equipment, the safety record of our rigs
and the experience of our rig crews to differentiate us from our competitors.
This strategy is less effective as lower demand for drilling services
intensifies price competition and makes it more difficult for us to compete on
the basis of factors other than price. In all of the markets in which we
compete, an over supply of rigs can cause greater price competition.
Contract drilling companies compete primarily on a regional basis, and
the intensity of competition may vary significantly from region to region at any
particular time. If demand for drilling services improves in a region where we
operate, our competitors might respond by moving in suitable rigs from other
regions. An influx of rigs from other regions could rapidly intensify
competition and make any improvement in demand for drilling rigs short- lived.
WE FACE COMPETITION FROM MANY COMPETITORS WITH GREATER RESOURCES.
Certain of our competitors have greater financial and human resources
than we do. Their greater capabilities in these areas may enable them to:
o better withstand periods of low rig utilization;
o compete more effectively on the basis of price and technology;
o retain skilled rig personnel; and
o build new rigs or acquire and refurbish existing rigs so as to be
able to place rigs into service more quickly than us in periods of
high drilling demand.
OUR DRILLING OPERATIONS INVOLVE INHERENT RISKS OF LOSS WHICH IF NOT INSURED OR
INDEMNIFIED AGAINST COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Our business is subject to the many hazards inherent in the land
drilling business including the risks of:
o blowouts;
o fires and explosions;
o collapse of the borehole;
o lost or stuck drill strings; and
o damage or loss from natural disasters.
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We attempt to obtain indemnification from our customers by contract for certain
of these risks under daywork contracts but are not always able to do so. We also
seek to protect ourselves from some but not all operating hazards through
insurance coverage.
If these hazards occur they can produce substantial liabilities to us
from, among other things:
o suspension of drilling operations;
o damage to the environment;
o damage to, or destruction of our property and equipment and that
of others;
o personal injury and loss of life; and
o damage to producing or potentially productive oil and gas
formations through which we drill.
The indemnification we receive from our customers and our own insurance
coverage may not, however, be sufficient to protect us against liability for all
consequences of disasters, personal injury and property damage. Additionally,
our insurance coverage generally provides that we bear a portion of the claim
through substantial insurance coverage deductibles. The premiums we pay for
insurance policies are also subject to substantial increase based upon our
claims history, which may increase our operating costs. We can offer you no
assurance that our insurance or indemnification arrangements will adequately
protect us against liability from all of the hazards of our business. We are
also subject to the risk that we may be unable to obtain or renew insurance
coverage of the type and amount we desire at reasonable rates. If we were to
incur a significant liability for which we were not fully insured or indemnified
it could have a material adverse effect on our financial position and results of
operations.
OUR OPERATIONS ARE SUBJECT TO DOMESTIC AND FOREIGN ENVIRONMENTAL LAWS THAT MAY
EXPOSE US TO LIABILITIES FOR NONCOMPLIANCE WHICH COULD ADVERSELY AFFECT US.
Many aspects of our operations are subject to domestic and foreign laws
and regulations. For example, our drilling operations are typically subject to
extensive and evolving laws and regulations governing:
o environmental quality;
o pollution control; and
o remediation of environmental contamination.
Our operations are often conducted in or near ecologically sensitive
areas, such as wetlands which are subject to special protective measures and
which may expose us to additional operating costs and liabilities for
noncompliance with applicable laws. The handling of waste materials, some of
which are classified as hazardous substances, is a necessary part of our
operations. Consequently, our operations are subject to stringent regulations
relating to protection of the environment and waste handling which may impose
liability on us for our own noncompliance and, in addition, that of other
parties without regard to whether we were negligent or otherwise at fault. We
may also be exposed to environmental or other liabilities originating from
businesses and assets which we purchased from others. Compliance with applicable
laws and regulations may require us to incur significant expenses and capital
expenditures which could have a material and adverse affect on our operations by
increasing our expenses and limiting our future contract drilling opportunities.
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DESPITE RECENT IMPROVEMENTS, WE ARE STILL EXPERIENCING RELATIVELY WEAK DEMAND
FOR OUR SERVICES DUE, WE BELIEVE, TO UNCERTAINTY ABOUT OIL AND GAS PRICES.
Volatility in oil and gas prices can produce wide swings in the levels
of overall drilling activity in the markets we serve and affect the demand for
our drilling services and the dayrates we can charge for our rigs. Pronounced
downturns in oil and gas prices , or expectations of downturns, can adversely
affect our business.
We believe our operating and financial performance illustrates this
risk. Oil and gas prices generally dropped beginning in late 1997, with
generally lower commodity prices extending well into 1999. Beginning in the
first quarter of 1998, drilling activity in the markets we serve also dropped
significantly, and we experienced significant declines both in the utilization
rates for our rigs and in the dayrates we could charge for them. Our rig
utilization in our core domestic markets was 81% during the first quarter of
1998, declined to an average of 41% for the year 1999, and was 56% for the first
quarter 2000. Our average revenue per rig day worked was $9,407 in the first
quarter of 1998, $8,956 for the year 1999, and $10,616 for the first quarter
2000.
Future demand for our rigs may decline and we can offer you no
assurance otherwise. If drilling activity does increase in the areas where we
operate, we cannot assure you that demand for our rigs will also increase.
IN ADDITION TO TRADE LIABILITIES, WE HAVE $250.0 MILLION IN PRINCIPAL AMOUNT OF
INDEBTEDNESS UNDER OUR SENIOR NOTES AND OUR RECENT OPERATIONS HAVE NOT GENERATED
SUFFICIENT CASH FLOW TO COVER OUR SEMI-ANNUAL INTEREST PAYMENTS OF APPROXIMATELY
$11.1 MILLION.
We are indebted for a total of $250.0 million in principal amount under
our 8 7/8% Senior Notes due 2007. Semi-annual interest payments on the senior
notes of approximately $11.1 million are due on January 1 and July 1 of each
year. For the year ended December 31, 1999, and for the quarter ended March 31,
2000, our activities consumed net cash rather than provided additional cash. To
meet our debt service obligations under the senior notes and provide necessary
cash, we were required to use our cash on hand.
Our ability in the future to meet our debt service obligations and
reduce our total indebtedness will depend on a number of factors including:
o oil and gas prices;
o demand for our drilling services;
o whether our business strategy is successful;
o levels of interest rates; and
o other financial and business factors that affect us.
Many of these factors are beyond our control.
If we do not generate sufficient cash flow to pay debt service and
repay principal in the future, we will likely be required to use one or more of
the following measures:
o further diminish our cash balances;
o use our existing credit facility;
o obtain additional external financing;
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o refinance our indebtedness; and
o sell our assets.
We can give no assurance that any such sources of funds will be
adequate to meet our needs or be available on terms acceptable to us.
WE HAVE HAD ONLY ONE PROFITABLE YEAR SINCE 1991.
We have a history of losses with our only profitable year since 1991
being 1997 in which we had net income of $10.2 million. Whether we are able to
become profitable in the future will depend on many factors, but primarily on
whether we are able to obtain higher utilization rates for our rigs and the
rates we charge for them. Whether we can achieve those goals will largely depend
on oil and gas prices which are beyond our control.
UNEXPECTED COST OVERRUNS ON OUR TURNKEY AND FOOTAGE DRILLING JOBS COULD
ADVERSELY AFFECT US.
We have historically derived a significant portion of our revenues from
turnkey and footage drilling contracts and we expect that they will continue to
represent a significant component of our revenues. The occurrence of uninsured
or under-insured losses or operating cost overruns on our turnkey and footage
jobs could have a material adverse effect on our financial position and results
of operations. Under a typical turnkey or footage drilling contract, we agree to
drill a well for our customer to a specified depth and under specified
conditions for a fixed price. We typically provide technical expertise and
engineering service, as well as most of the equipment required for the drilling
of turnkey and footage wells. We often subcontract for related services. Under
typical turnkey drilling arrangements, we do not receive progress payments and
are entitled to be paid by our customer only after we have performed the terms
of the drilling contract in full. For these reasons, the risk to us under
turnkey and footage drilling contracts is substantially greater than for wells
drilled on a daywork basis because we must assume most of the risks associated
with drilling operations that are generally assumed by our customer under a
daywork contract. Although we attempt to obtain insurance coverage to reduce
certain of the risks inherent in our turnkey and footage drilling operations, we
can offer no assurance that adequate coverage will be obtained or will be
available in the future.
WE COULD BE ADVERSELY AFFECTED IF WE LOST THE SERVICES OF CERTAIN OF OUR SENIOR
MANAGERS.
Our business is dependent to a significant extent on a small group of
our executive management personnel. The loss of any one of these individuals
could have a material adverse effect on our financial condition and results of
operations.
OUR INDENTURES AND CREDIT AGREEMENTS MAY PROHIBIT US FROM PARTICIPATION IN
CERTAIN TRANSACTIONS THAT WE MAY CONSIDER ADVANTAGEOUS.
The indentures under which we issued our senior notes contain
restrictions on our ability and the ability of certain of our subsidiaries to
engage in certain types of transactions. These restrictive covenants may
adversely affect our ability to pursue business acquisitions and rig
refurbishments. These include covenants prohibiting or limiting our ability to:
o incur additional indebtedness;
o pay dividends or make other restricted payments;
o sell material assets;
o grant or permit liens to exist on our assets;
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o enter into sale and lease-back transactions;
o enter into certain mergers, acquisitions and consolidations;
o make certain investments;
o enter into transactions with related persons; and
o engage in lines of business unrelated to our core land drilling
business.
Our senior secured credit facility also contains covenants restricting
our ability and our subsidiaries' ability to undertake many of the same types of
transactions, and contains financial ratio covenants. They may also limit our
ability to respond to changes in market conditions. Our ability to meet the
financial ratio covenants of our credit agreement can be affected by events and
conditions beyond our control and we may be unable to meet those tests.
Our senior secured credit facility contains default terms that
effectively cross default with the indentures covering our senior notes. If we
breach the covenants in the indentures it could cause our default on our senior
notes, and also under our senior secured credit agreement, and possibly under
other then outstanding debt obligations owed by us or our subsidiaries. If the
indebtedness under our senior secured credit agreement or other indebtedness
owed by us or our subsidiaries is more than $10.0 million and is not paid when
due, or is accelerated by the holders of the debt, then an event of default
under the indenture covering our senior notes would occur. If circumstances
arise in which we are in default under our various credit agreements, our cash
and other assets may be insufficient to repay our indebtedness and that of our
subsidiaries.
WE COULD BE ADVERSELY AFFECTED IF SHORTAGES OF EQUIPMENT, SUPPLIES OR PERSONNEL
OCCUR.
While we are not currently experiencing any shortages, from time to
time there have been shortages of drilling equipment and supplies which we
believe could reoccur. During periods of shortages, the cost and delivery times
of equipment and supplies are substantially greater. In the past, in response to
such shortages, we have formed alliances with various suppliers and
manufacturers that enabled us to reduce our exposure to price increases and
supply shortages. Although we have formed many informal supply alliances with
equipment manufacturers and suppliers, and are attempting to establish
arrangements to assure adequate availability of certain necessary equipment and
supplies on satisfactory terms, there can be no assurance that we will be able
to do so or to maintain existing alliances. Shortages of drilling equipment or
supplies could delay and adversely affect our ability to return to service our
cold-stacked or inventory rigs and obtain contracts for our marketable rigs,
which could have a material adverse effect on our financial condition and
results of operations.
Although we have not encountered material difficulty in hiring and
retaining qualified rig crews, such shortages are occurring in the industry. We
may experience shortages of qualified personnel to operate our rigs, which could
have a material adverse effect on our financial condition and results of
operations.
OUR EXISTING DIVIDEND POLICY AND CONTRACTUAL RESTRICTIONS LIMIT OUR ABILITY TO
PAY DIVIDENDS.
We have never declared a cash dividend on our common stock and do not
expect to pay cash dividends on our common stock for the foreseeable future. We
expect that all cash flow generated from our operations in the foreseeable
future will be retained and used to develop or expand our business, pay debt
service and reduce outstanding indebtedness. Furthermore, the terms of our
senior secured credit facility prohibit the payment of dividends without the
prior written consent of the lenders and the terms of the indentures under which
our senior notes are issued also restrict our ability to pay dividends under
certain conditions.
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CERTAIN PROVISIONS OF OUR ORGANIZATIONAL DOCUMENTS, SECURITIES AND CREDIT
AGREEMENTS HAVE ANTI-TAKEOVER EFFECTS WHICH MAY PREVENT OUR SHAREHOLDERS FROM
RECEIVING THE MAXIMUM VALUE FOR THEIR SHARES.
Our articles of incorporation, bylaws and securities and credit
agreements contain certain provisions intended to delay or prevent entirely a
change of control transaction not supported by our board of directors, or which
may have that general effect. These measures include:
o classification of our board of directors into three classes, with
each class serving a staggered three year term;
o giving our board of directors the exclusive authority to adopt,
amend or repeal our bylaws and thus prohibiting shareholders from
doing so;
o requiring our shareholders to give advance notice of their intent
to submit a proposal at the annual meeting; and
o limiting the ability of our shareholders to call a special meeting
and act by written consent.
Additionally, the indentures under which our senior notes are issued,
require us to offer to repurchase all senior notes then outstanding at a
purchase price equal to 101% of the principal amount of the senior notes plus
accrued and unpaid interest to the date of purchase in the event that the we
become subject to a change of control, as defined in the indentures. This
feature of the indentures could also have the effect of discouraging potentially
attractive change of control offers.
In addition, we have adopted a shareholder rights plan which may have
the effect of impeding a hostile attempt to acquire control of us.
LARGE AMOUNTS OF OUR COMMON STOCK MAY BE RESOLD INTO THE MARKET IN THE FUTURE
WHICH COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DROP SIGNIFICANTLY,
EVEN IF OUR BUSINESS IS DOING WELL.
If we issue a significant amount of common stock, convertible preferred
stock or warrants, the market price of our common stock may be adversely
affected.
As of June 15, 2000, 179.6 million shares of our common stock were
issued and outstanding. 126.0 million of these shares, or 70.2% are freely
tradeable. The remaining 53.6 million shares, or 29.8% of our issued and
outstanding common stock are restricted shares, but are available for resale in
the public market under our currently effective registration statements or
exemptions from the registration requirements of the Securities and Exchange
Commission. In addition, as of June 15, 2000, we had issued and outstanding
options to purchase 8.2 million shares of common stock and these options are
currently exerciseable for 3.1 million shares of common stock. The market price
of our common stock could drop significantly if future sales of substantial
amounts of our common stock occur, or if the perception exists that substantial
sales may occur.
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SELLING SHAREHOLDERS
The following table sets forth information concerning the selling
shareholders as of June 15, 2000. We are registering the shares so that the
selling shareholders may sell their shares from time to time without
restriction. See "Plan of Distribution."
<TABLE>
<CAPTION>
NUMBER OF
SHARES
OWNED NUMBER OF SHARES NUMBER PERCENTAGE
AND TO BE SUBJECT TO OPTIONS(3) NUMBER OF SHARES OF SHARES
OWNED -------------------------- OF SHARES OWNED OWNED
PRIOR TO CURRENTLY NOT BEING AFTER AFTER
OFFERING EXERCISABLE CURRENTLY OFFERED OFFERING OFFERING
SELLING SHAREHOLDER POSITION (1)(2) (2) EXERCISABLE (3) (2)(4) (2)
------------------- -------- ---------- ----------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas P. Richards Chief Executive 1,159,080(5) 159,080 888,620 1,047,700 1,000,000(5) *
Officer, President,
Chairman of the
Board, and
Director
Edward S. Jacob III Senior Vice 20,000 20,000 190,000 210,000 --- *
President-
Marketing
Gary D. Lee Senior Vice 27,373(6) 24,640 322,160 346,800 2,733(6) *
President-Houston
Resources
Ronnie E. McBride Senior Vice 299,999(7) 298,000 392,000 690,000 1,999(7) *
President-Domestic
Operations
David W. Wehlmann Senior Vice 125,520(8) 109,520 333,780 443,300 16,000(8) *
President,
Chief Financial
Officer and
Secretary
Merrie S. Costley Vice President 20,000 20,000 130,000 150,000 --- *
and Controller
Donald J. Guedry, Jr. Vice President 47,126(9) 45,000 112,500 157,500 2,126(9) *
and Treasurer
</TABLE>
-----------------------------
*Indicates less than one percent.
(1) The selling shareholder has sole voting and sole investment power with
respect to all shares owned, except as otherwise specified. Includes
shares underlying currently exercisable options under the 1996 Employee
Stock Option Plan as set forth in this table and under other of our
plans as specified in notes 5 and 8 below. (2) Determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934.
(3) Includes the shares subject to options under the 1996 Employee Stock
Option Plan that are currently exercisable and that are not currently
exercisable.
(4) Assumes the sale of all shares offered hereby to persons who are not
affiliates of the selling shareholder.
(5) Represents 450,000 shares of common stock underlying currently
exercisable options, 300,000 shares of common stock and 250,000 shares
of common stock underlying currently exercisable options owned by a
limited partnership controlled by Mr. Richards for the benefit of his
children. We have registered all of these shares for resale on other
registration statements filed with the SEC.
(6) Represents 1,000 shares of common stock owned by Mr. Lee and 1,733
shares of common stock held by Mr. Lee in our 401(k) Plan.
(7) Represents shares of common stock held by Mr. McBride in our 401(k)
Plan.
(8) Represents shares of common stock underlying currently exercisable
options.
(9) Represents 1,000 shares of common stock owned by Mr. Guedry and 1,126
shares of common stock held by Mr. Guedry in our 401(k) Plan.
12
<PAGE> 15
PLAN OF DISTRIBUTION
The selling shareholders may sell shares of our common stock in
transactions on exchanges or markets as our common stock may be then listed for
trading. Shares may be sold in privately-negotiated transactions, in
underwritten offerings, or by a combination of such methods of sale. Sales of
shares of common stock may be made at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. As used in this prospectus,
"selling shareholders" includes donees and transferees who are family members of
a selling shareholder and who have received the options or shares by gift or
domestic relations order from a selling shareholder after the date of this
prospectus. The selling shareholders may effect such transactions by selling the
shares of common stock to or through broker-dealers, and such broker- dealers
may receive compensation in the form of discounts, concessions or commissions
from the selling shareholders or the purchasers of the shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions).
Other methods by which selling shareholders may sell shares of our
common stock include, without limitation:
o "at the market" to or through market makers or into an existing
market for our common stock;
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
o through transactions in options or swaps or other derivatives,
whether exchange-listed or otherwise;
o transactions which include cross or block trades or any other
transaction permitted by the American Stock Exchange;
o through short sales; or
o any combination of any such methods of sale.
The selling shareholders may also enter into option or other
transactions with broker-dealers which require the delivery to those broker
dealers of the common stock offered by this prospectus, which common stock such
broker-dealers may resell under this prospectus. The selling shareholders may
also make sales under Rule 144 of the Securities Act of 1933 if an exemption
from registration is available.
The selling shareholders and any broker-dealers who act in connection
with the sale of shares of our common stock under this prospectus may be deemed
to be "underwriters" as that term is defined in the Securities Act of 1933 and
will be subject to prospectus delivery requirements. Any commissions received by
them and profit on any resale of the shares of our common stock as principal
might be deemed to be underwriting discounts and commissions under the
Securities Act of 1933.
After we are notified by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of common
stock 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 of 1933, disclosing:
o the name of each such selling shareholder and of the participating
broker-dealer(s);
o the type and number of securities involved;
o the price at which such securities were sold;
13
<PAGE> 16
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigations to
verify the information set out or incorporated by reference in
this prospectus; and
o other facts material to the transaction.
Each selling shareholder is responsible for paying the brokerage
commissions or other charges and expenses incurred on the resales of his or her
shares, except the expenses relating to the preparation of this prospectus
supplement and prospectus which we are paying.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed
upon for us by Porter & Hedges, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of Grey Wolf, Inc. as of December
31, 1999 and 1998, and for each of the years in the three-year period ended
December 31, 1999, have been incorporated by reference herein in reliance upon
the report of KPMG LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of such firm as experts in
accounting and auditing.
14
<PAGE> 17
================================================================================
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO
GIVE ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS.
YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT
OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE
INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE BELOW.
================================================================================
================================================================================
GREY WOLF, INC.
6,045,300 SHARES
OF
COMMON STOCK
------------------
PROSPECTUS
------------------
JULY 13, 2000
================================================================================
<PAGE> 18
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATED OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Grey Wolf, Inc., a Texas corporation
(the "Company" or "Registrant"), with the Securities and Exchange Commission
("Commission") are incorporated into this registration statement ("Registration
Statement") by reference:
o Annual Report on Form 10-K for the year ended December 31, 1999;
o Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
o Current Report on From 8-K filed with the Commission on March 31,
2000;
o Definitive Proxy Statement on Schedule 14A dated April 4, 2000;
o Description of our common stock contained in the Current Report
on Form 8-K dated October 6, 1997; and
o Description of our preferred stock purchase rights contained in
our registration statement on Form 8-A/A filed with the
Commission on October 9, 1998.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), subsequent to the filing date of this Registration
Statement and prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing such documents. The Company will provide without
charge to each participant in the 1996 Employee Stock Purchase Plan, as amended,
upon written or oral request of such person, a copy (without exhibits, unless
such exhibits are specifically incorporated by reference) of any or all of the
documents incorporated by reference pursuant to this Item 3.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. 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:
o a breach of the director's duty of loyalty to the corporation or
its shareholders,
o acts or omissions not in good faith that constitute 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,
o any transaction from which the director received an improper
benefit, or
II-1
<PAGE> 19
o an act or omission for which the liability of a director is
expressly provided by an applicable statute.
Article Ten of our Articles of Incorporation, as amended, states that a
director is not 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 (the
"TBCA") 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 TBCA provides that unless a court of competent jurisdiction
determines otherwise, indemnification is permitted only if it is determined that
the person:
o conducted himself in good faith;
o 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
o 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 of the TBCA against
o judgments,
o penalties (including excise and similar taxes),
o fines,
o settlements, and
o reasonable expenses actually incurred by the person (including
court costs and attorneys' fees).
However, 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 shall
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 of the TBCA 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 of the TBCA a corporation may:
o indemnify and advance expenses to an officer, employee, agent or
other persons 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
its directors,
o indemnify and advance expenses to directors and such other persons
set forth above 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.
II-2
<PAGE> 20
o purchase and maintain insurance or another arrangement on behalf
of directors and such other persons set forth above against any
liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a 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 of the TBCA
described above.
The company maintains directors' and officers' insurance. The company
has entered into agreements to indemnify certain of its executive officers
regarding liabilities that may result from such officer's service as an officer
or director of the company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ----------------------------------------------------------------------------------------------------
<S> <C>
4.1 1996 Employee Stock Option Plan (exhibit 4.1 to our registration statement no. 333-19027 on Form S-8
is incorporated herein by reference)
4.2 1996 Employee Stock Option Plan Amendment dated August 26, 1998 (exhibit 4.2 to the post-
effective amendment no. 1 to our registration statement no. 333-19027 on Form S-8 is incorporated
herein by reference)
*4.3 1996 Employee Stock Option Plan Amendment dated May 4, 1999
4.4 Revised Form of Non-Qualified Stock Option Agreement (exhibit 4.3 to the post-effective amendment
no. 1 to our registration statement no. 333-19027 on Form S-8 is incorporated herein by reference)
4.5 Form of Incentive Stock Option Agreement (exhibit 4.2 to our registration statement no. 333-19027
on Form S-8 is incorporated herein by reference)
*5.1 Opinion of Porter & Hedges, L.L.P.
*23.1 Consent of KPMG LLP
23.2 Consent of Porter & Hedges, L.L.P. (contained in their opinion field as exhibit 5.1)
24.1 Powers of Attorney (included on the signature page of this Registration Statement)
</TABLE>
------------
*Filed herewith.
ITEM 9. UNDERTAKINGS
(a) Undertaking to Update
The undersigned Registrant hereby undertakes:
II-3
<PAGE> 21
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement
to:
(i) include any prospectus required by section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities
Act");
(ii) 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 in the Registration Statement; and
(iii) 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 paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the Registrant pursuant to Section 13 or 15(d) of the Exchange Act that
are incorporated by reference in the Registration Statement.
(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.
(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) Undertaking With Respect to Documents Incorporated by
Reference
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act that is incorporated by reference in
this 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) Undertaking With Respect to Indemnification
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 Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a 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.
II-4
<PAGE> 22
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below, constitutes and appoints Thomas P. Richards, David W. Wehlmann
and Merrie S. Costley and each of them, our true and lawful attorneys- in-fact
and agents, with full power of substitution and resubstitution, to do any and
all acts and things and execute, in the name of the undersigned, any and all
instruments which said attorneys-in-fact and agents may deem necessary or
advisable in order to enable Grey Wolf, Inc. to comply with the Securities Act
of 1933, as amended (the "Securities Act") and any requirements of the
Commission in respect thereof, in connection with the filing with the Commission
of the Registration Statement on Form S-8 under the Securities Act, including
specifically but without limitation, power and authority to sign the name of the
undersigned to such Registration Statement, and any amendments to such
Registration Statement (including post-effective amendments), and to file the
same with all Exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, to sign any and all applications,
Registration Statements, notices or other documents necessary or advisable to
comply with applicable state securities laws, and to file the same, together
with other documents in connection therewith with the appropriate state
securities authorities, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and to perform each and every act
and thing requisite or necessary to be done in and about the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, and
any of them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
SIGNATURES
The Registrant
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 29th day of June,
2000.
GREY WOLF, INC.
By: /s/DAVID W. WEHLMANN
--------------------------
David W. Wehlmann,
Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ THOMAS P. RICHARDS Chairman of the Board, President June 29, 2000
------------------------------------------- and Chief Executive Officer
Thomas P. Richards
/s/ WILLIAM R. ZIEGLER Vice Chairman of the Board and July 6, 2000
------------------------------------------- Director
William R. Ziegler
</TABLE>
II-5
<PAGE> 23
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ FRANK M. BROWN Director July 5, 2000
-------------------------------------------
Frank M. Brown
/s/ WILLIAM T. DONOVAN Director June 29, 2000
-------------------------------------------
William T. Donovan
/s/ JAMES K. B. NELSON Director June 29, 2000
-------------------------------------------
James K. B. Nelson
/s/ ROY T. OLIVER, JR. Director June 29, 2000
-------------------------------------------
Roy T. Oliver, Jr.
/s/ STEVEN A. WEBSTER Director June 29, 2000
-------------------------------------------
Steven A. Webster
/s/ DAVID W. WEHLMANN Senior Vice President and July 6, 2000
------------------------------------------- Chief Financial Officer
David W. Wehlmann
/s/ MERRIE S. COSTLEY Vice President and Controller July 6, 2000
-------------------------------------------
Merrie S. Costley
</TABLE>
II-6
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
4.1 1996 Employee Stock Option Plan Amendment
4.2 1996 Employee Stock Option Plan (exhibit 4.1 to our registration statement no. 333-19027 on
Form S-8 is incorporated herein by reference)
4.3* 1996 Employee Stock Option Plan Amendment dated May 4, 1999
4.4 Revised Form of Non-Qualified Stock Option Agreement (exhibit 4.3 to the post-effective
amendment no. 1 to our registration statement no. 333-19027 on Form S-8 is incorporated herein
by reference)
4.5 Form of Incentive Stock Option Agreement (exhibit 4.2 to our registration statement no.
333-19027 on Form S-8 is incorporated herein by reference)
5.1* Opinion of Porter & Hedges, L.L.P.
23.1* Consent of KPMG LLP
23.2* Consent of Porter & Hedges, L.L.P. (contained in their opinion field as exhibit 5.1)
24.1 Powers of Attorney (included on the signature page of this Registration Statement)
</TABLE>
------------
*Filed herewith.
II-7
