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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 30, 1996
PATTERSON ENERGY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-22664 75-2504748
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(State of other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4510 Lamesa Highway, Snyder, Texas 79549
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: 915-573-1104
No Change
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
On April 30, 1996, Patterson Energy, Inc. (the "Company") executed
Endorsement No. 1 and Amendment No. 1 (collectively referred to as the
"Amendments") to the Promissory Note and related Loan Agreement, (collectively
referred to as the "Agreements") dated March 15, 1995 existing between and
among the Company and The CIT Group/Equipment Financing, Inc. The Amendments
effectively amended certain terms and covenants of the Agreements as follows:
o The Company's borrowing capacity was increased from Seven Million
Dollars ($7,000,000) to Ten Million Dollars ($10,000,000) provided
that 62% of the collateral value (as defined in the Agreements)
exceeds such amount;
o The required quarterly consolidated cash flow ratio was changed from
1.5:1.0 to 2.0:1:0;
o The required consolidated tangible net worth was changed from
Twelve Million Dollars ($12,000,000) to Thirteen Million Dollars
($13,000,000); and
o The ratio regarding total liabilities to tangible net worth is allowed
to be increased by increments of .10 over the actual ratio up to
2.0:1:0 should the Company acquire assets or stock with the proceeds
of indebtedness provided by means other than the proceeds of the
Agreements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) EXHIBITS.
99.1 Endorsement No.1 dated April 30, 1996 to the Promissory Note
dated March 14, 1995 among Patterson Energy, Inc. and The CIT
Group/Equipment Financing, Inc.
99.2 Amendment No.1 dated April 30, 1996 to the Loan Agreement
dated March 14, 1995 among Patterson Energy, Inc. and The CIT
Group/Equipment Financing, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PATTERSON ENERGY, INC.
Date: May 22, 1996 /s/ Cloyce A. Talbott
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Cloyce A. Talbott
Chairman of the Board and
Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description
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<S> <C>
99.1 Endorsement No. 1 dated April 30, 1996 to the Promissory
Note dated March 14, 1995 among Patterson Energy, Inc.
and The CIT Group/Equipment Financing, Inc.
99.2 Amendment No. 1 dated April 30, 1996 to the Loan Agreement
dated March 14, 1995 among Patterson Energy, Inc. and The
CIT Group/Equipment Financing, Inc.
</TABLE>
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EXHIBIT 99.1
ENDORSEMENT NO. 1
Endorsement No. 1 dated April 30, 1996 to the Promissory Note dated
March 14, 1995 (the "Note") in the principal amount of USD 7,000,000 from
PATTERSON ENERGY, INC. (the "Borrower") in favor of THE CIT GROUP/EQUIPMENT
FINANCING, INC. (the "Lender") under the Loan Agreement dated as of March 14,
1995, as amended by Amendment No. 1 dated as of April 30, 1996 (as so amended,
the "Loan Agreement").
The Note is hereby amended, effective the date hereof, as follows:
1. The principal amount of the Note is hereby changed to USD
10,000,000 wherever it appears.
2. Wherever and in each place the term "Loan Agreement" is used
in the Note, such term shall be read to mean the Loan Agreement as amended by
Amendment No. 1 to Loan Agreement dated as of April 30, 1996.
3. Wherever and in each place the term "Note" is used in the
Note, it shall be read to mean the Note as amended by this Endorsement No. 1.
IN WITNESS WHEREOF, the parties hereto have executed this Endorsement
No. 1 the day and year first above written.
PATTERSON ENERGY, INC.
By: /s/ Cloyce A. Talbott
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Chairman of the Board and
Chief Executive Officer
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By: /s/ Joseph M. Pitch
-----------------------------------
Vice President
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EXHIBIT 99.2
AMENDMENT NO. 1
TO
LOAN AGREEMENT
AMENDMENT NO. 1 dated as of April 30, 1996 ("Amendment No. 1") to the
Loan Agreement dated as of March 14, 1995 (the "Loan Agreement"), among
PATTERSON ENERGY, INC., a Delaware corporation (the "Borrower") and THE CIT
GROUP/EQUIPMENT FINANCING, INC., a New York corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement, the Lender made available to
the Borrower a loan of up to USD 7,000,000 (the "Loan"), as evidenced by the
secured promissory note of the Borrower dated March 14, 1995 (the "Note"); and
WHEREAS, the Lender has agreed to make an additional USD 3,000,000
available to the Borrower subject to such additional amount being governed by
the terms and conditions of the Loan Agreement and evidenced by the Note;
NOW THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree to amend the Loan Agreement as follows:
1. The Definitions of the Loan Agreement are hereby amended as
follows:
(a) The definition of "Loan Documents" is hereby amended
to read as follows:
"Loan Documents" means this Agreement, the Security Agreement, the
Note, and the Amendment Documents.
(b) The following new definitions are hereby added to the
Definitions of the Loan Agreement:
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"Amendment Date" means the date on which the conditions precedent
contained in Section 7 of Amendment No. 1 are fulfilled and the
modifications to the Loan Agreement contemplated by Amendment No. 1
become effective.
"Amendment Documents" means Amendment No. 1 and Endorsement No. 1.
"Endorsement No. 1" means the Endorsement No. 1 to the Note,
substantially in the form of Exhibit A attached hereto.
2. Amount. Section 1.01 of the Loan Agreement is hereby amended
to read as follows:
"Section 1.01 Amount. Subject to the terms and conditions of
Section 2.01 of this Agreement, the Lender agrees to make Advances to the
Borrower in an aggregate principal amount equal to the lesser of (1) 62% of the
Collateral Value determined in accordance with Section 1.06(a)(ii) and as
substantiated by the appraisal to be delivered to the Lender pursuant to
Section 2.01(n) hereof and (2) USD 10,000,000 (the "Loan").
3. Revolving Loan Availability Period. Section 1.02(a) of the
Loan Agreement is hereby amended to read as follows:
"(a) During the Revolving Loan Availability Period, the
Lender agrees to make Advances to the Borrower from time to time on
any Business Day in the aggregate not to exceed the amount of the Loan
available to the Borrower referred to in Section 1.01 hereof. All
Advances shall be used by the Borrower for (i) the purchase of
additional drilling rigs and equipment; (ii) improvements to the
existing drilling rigs of the Borrower; and (iii) working capital;
provided, however, that no Advance over and above USD 7,000,000 shall
be used for any purpose other than purchasing additional drilling rigs
and related drilling rig equipment. The first Advance hereunder may
not exceed Four Million Five Hundred Thousand United States Dollars
(USD 4,500,000). Each subsequent Advance shall be in an amount of at
least Five Hundred Thousand United States Dollars (USD 500,000) and no
more than one Advance shall be made by the Lender during any thirty
(30) calendar days. Within the limits referred to above, the Borrower
may borrow, prepay and reborrow under this Section 1.02(a). During
the Revolving Loan Availability Period, outstanding Advances shall on
an average daily basis, total in the aggregate, a minimum of USD
3,000,000."
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4. Revolving Loan Fee. Section 1.09 of the Loan Agreement is
hereby amended by deleting the figure USD 7,000,000 where it appears in such
section and replacing it with the figure USD 10,000,000.
5. Conditions to Subsequent Advances. Section 2.02 of the Loan
Agreement is hereby amended by adding the following new subsection to the end
of such section:
"(h) There shall not have occurred, in the sole judgment of the
Lender, a material adverse change in the business, financial condition
or operation of the Borrower."
6. Covenants of the Borrower. Section 3.02 of the Loan Agreement
is hereby amended as follows:
(a) Subsection (j) is hereby amended to read as follows:
"(j) not, without the prior written consent of the Lender,
(i) sell, transfer, lend, lease or otherwise dispose of the
Rigs, the whole or, in the opinion of the Lender, any
substantial part of its business, property or other assets,
whether by a single transaction or by a series of transactions
(related or not); (ii) materially change, or permit to change,
the management or ownership of the Borrower; (iii) commit any
Rig to a drilling contract for a period longer than twelve
(12) months (including any committed extensions or renewals)
with an entity not affiliated with the Borrower; or (iv)
transfer the management or operation of its property, assets
or business, or in the opinion of the Lender, any substantial
part of its property, assets or business to any other person,
firm or corporation."
(b) In Subsection (s), the required quarterly consolidated Cash
Flow Ratio is hereby changed from 1.5:1.0 to 2.0:1.0.
(c) In Subsection (t), the required consolidated Tangible Net
Worth is hereby changed from USD 12,000,000 to USD 13,000,000.
(d) Subsection (u) is hereby amended by adding the following
proviso at the end of such subsection:
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"; provided, however, that should the Borrower consummate an
acquisition of assets or stock with the proceeds of
indebtedness other than the Loan, and such indebtedness causes
the Borrower to not be in compliance with this Section 3.02(u),
the Lender will increase the allowed ratio of Total
Liabilities to Tangible Net Worth by .10 over the actual ratio
up to 2.0:1.0."
7. Conditions Precedent.
7.1 Documents Required as Conditions Precedent to Amendment No. 1.
The effectiveness of the modifications to the Loan Agreement contemplated by
this Amendment No. 1 are subject to the condition precedent that the Lender
shall have received at or prior to the Amendment Date all of the following,
each dated on or before the Amendment Date and each in form and substance
satisfactory to the Lender and its counsel:
(a) Each of the Amendment Documents shall have been duly
authorized and executed with original counterparts thereof delivered to the
Lender.
(b) The Borrower shall have delivered to the Lender evidence of
good standing, a certified copy of its Certificate of Incorporation, a
certificate of incumbency and duly certified resolutions of its Board of
Directors and all such other corporate documentation authorizing it to enter
into the transactions contemplated by this Amendment No. 1.
(c) The Lender shall have received an opinion of its special
counsel, Gardere Wynne Sewell & Riggs, L.L.P., in form and substance
satisfactory to the Lender.
(d) The representations and warranties contained in Section 8 of
this Amendment No. 1 shall be true on the Amendment Date with the same effect
as though such representations and warranties had been made on and as of such
date, and no Event of Default specified in Article IV of the Loan Agreement and
no event which, with the lapse of time or the giving of notice and the lapse of
time specified in Article IV of the Loan Agreement, would become such an Event
of Default, shall have occurred and be continuing.
(e) The Lender shall have received a certificate of the Borrower
signed by an officer in charge of environmental affairs and safety as to
compliance by the Borrower with all
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environmental, safety and public health laws and regulations applicable to the
Borrower, and,without limitation of the foregoing, all other laws and
regulations affecting or relating to the Rigs, the non- compliance with which
would have a material adverse effect on the business, properties or condition
(financial or otherwise) of the Borrower.
(f) The Lender shall have received, reviewed and accepted the
audited consolidated and consolidating financial statements of the Borrower
dated as of the period ending on December 31, 1995, prepared in accordance with
generally accepted United States accounting principles, certified by Coopers and
Lybrand or other auditors acceptable to the Lender.
(g) The Borrower shall have provided to the Lender evidence of the
insurance maintained on the Rigs as required by Article 5 of the Security
Agreement.
7.2 Waiver of Conditions Precedent. All of the conditions precedent
contained in this Section 7 are for the sole benefit of the Lender and the
Lender may waive any of them in its absolute discretion, and on such conditions
as it deems proper.
8. Representations of the Borrower. The Borrower represents and
warrants that:
(a) The Borrower is a corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware, and has the
requisite power and authority (i) to carry on its business as presently
conducted; (ii) to enter into and perform its obligations under the Amendment
Documents; and (iii) to borrower moneys.
(b) The execution, delivery and performance by the Borrower of the
Amendment Documents and any other instrument or agreement provided for by this
Amendment No. 1 to which the Borrower is a party, have been duly authorized by
all necessary corporate action, do not require stockholder approval other than
such as has been duly obtained or given, do not or will not contravene any of
the terms of its Articles of Incorporation or Bylaws, and will not violate any
provision of law or of any order of any court or governmental agency or
constitute (with or without notice or lapse of time or both) a default under, or
result (except as contemplated by this Amendment No. 1) in the creation of any
security interests, lien, charge or
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encumbrance upon any of its properties or assets pursuant to, any agreement,
indenture or other instrument to which it is a party or by which it may be
bound; the Amendment Documents have been duly executed and delivered by the
Borrower and constitute its legal, valid and binding agreements, enforceable in
accordance with the respective terms thereof. The enforceability of this
Amendment No. 1, however, is subject to all applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws affecting the rights or creditors and
to general equity principles.
(c) There are no suits or proceedings pending or to its knowledge
threatened against or affecting the Borrower which if adversely determined
would have a material adverse effect upon its business, financial condition or
operations.
(d) Other than such as have been obtained, no license, consent or
approval of any Governmental Agency or other regulatory authority is required
for the execution, delivery or performance of this Amendment No. 1 or any other
Amendment Document or any instrument contemplated herein or therein. The
Borrower is the holder of all certificates and authorizations of governmental
authorities required by law to enable it to engage in the business transacted
by it.
9. Expenses. The Borrower agrees to promptly, whether or not the
modifications to the Loan Agreement contemplated by this Amendment No. 1 become
effective, (x) reimburse the Lender for all fees and disbursements or external
counsel to the Lender and all reasonable out of pocket fees and disbursements
of the Lender incurred in connection with the preparation, execution and
delivery of this Amendment No. 1 and all other documents referred to herein,
and all amendments or waivers to or termination of this Amendment No. 1 or any
agreement referred to herein; and (y) reimburse the Lender for all fees and
disbursements of internal and external counsel to the Lender and all reasonable
out of pocket fees, disbursements and travel-related expenses of the Lender
incurred in connection with the protection of the rights of the Lender under
this Amendment No. 1 and all other documents referred to herein, whether by
judicial
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proceedings or otherwise. The obligations of the Borrower under this Section 10
shall survive payment of the Loan.
10. Wherever and in each such place the term "Loan Agreement" is
used throughout the Loan Agreement, such term shall be read to mean the Loan
Agreement as amended by this Amendment No. 1.
11. Except as specifically amended by this Amendment No. 1, all of
the terms and provisions of the Loan Agreement shall remain in full force and
effect.
12. All capitalized terms used herein but not defined herein shall
have the meanings given to them in the Loan Agreement.
13. THIS AMENDMENT NO. 1 TO LOAN AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. IN
WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 1 on
the date first written above. PATTERSON ENERGY, INC.
By: /s/ Cloyce A. Talbott
---------------------------------------
Chairman of the Board and
Chief Executive Officer
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By: /s/ Joseph M. Pitch
---------------------------------------
Vice President
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EXHIBIT A TO AMENDMENT NO. 1 TO
LOAN AGREEMENT
ENDORSEMENT NO. 1
Endorsement No. 1 dated April _____, 1996 to the Promissory Note dated
March 14, 1995 (the "Note") in the principal amount of USD 7,000,000 from
PATTERSON ENERGY, INC. (the "Borrower") in favor of THE CIT GROUP/EQUIPMENT
FINANCING, INC. (the "Lender") under the Loan Agreement dated as of March 14,
1995, as amended by Amendment No. 1 dated as of April ____, 1996 (as so
amended, the "Loan Agreement").
The Note is hereby amended, effective the date hereof, as follows:
1. The principal amount of the Note is hereby changed to USD
10,000,000 wherever it appears.
2. Wherever and in each place the term "Loan Agreement" is used
in the Note, such term shall be read to mean the Loan Agreement as amended by
Amendment No. 1 to Loan Agreement dated as of April ____, 1996.
3. Wherever and in each place the term "Note" is used in the
Note, it shall be read to mean the Note as amended by this Endorsement No. 1.
IN WITNESS WHEREOF, the parties hereto have executed this Endorsement
No. 1 the day and year first above written.
PATTERSON ENERGY, INC.
By:__________________________________
Name:___________________________
Title:__________________________
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By:___________________________________
Name:___________________________
Title:__________________________
