As filed with the Securities and Exchange Commission on
June 2, 1999. REGISTRATION NO. 333-_________ - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------April 3, 2017RegistrationNo. 333-216474
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORMS-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------KEY ENERGY SERVICES, INC.
(Exact(Exact name of registrant as specified in its charter)
MARYLAND 04-2648081 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) TWO TOWER CENTER, 20TH FLOOR EAST BRUNSWICK, NEW JERSEY 08816 (732) 247-4822 (Address,
Delaware 04-2648081 (State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
1301 McKinney Street, Suite 1800
Houston, Texas 77010
(713)651-4300
(Address, including zip code, and telephone number, including area code, of
registrant'sregistrant’s principal executive offices)FRANCIS D. JOHN TWO TOWER CENTER, 20TH FLOOR EAST BRUNSWICK, NEW JERSEY 08816 (732) 247-4822 (Name,Katherine I. Hargis
Vice President, Chief Legal Officer and Secretary
Key Energy Services, Inc.
1301 McKinney Street, Suite 1800
Houston, Texas 77010
(713)651-4300
(Name, address, including zip code, and telephone number, including area code, of agent for service)
----------------------------- WITH COPIES TO JACK D. LOFTIS, JR. SAMUEL N. ALLEN KEY ENERGY SERVICES, INC. PORTERCopy to:
Alison S. Ressler
Patrick S. Brown
Sullivan &
HEDGES, L.L.P. TWO TOWER CENTER, 20TH FLOOR 700 LOUISIANA, 35TH FLOOR EAST BRUNSWICK, NEW JERSEY 08816 HOUSTON, TEXAS 77002 (732) 247-4822 (713) 226-0600 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:Cromwell LLP1888 Century Park East, Suite 2100
Los Angeles, California 90067
(310)712-6600
Approximate date of commencement of proposed sale to the public: From time to time after
the Registration Statementthis registration statement becomes effective.If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.
/ /☐If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans,
pleasecheck the following box./X/☒If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
/ /☐If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
/ /☐If
delivery ofthis Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with theprospectus is expected to be madeCommission pursuant to Rule434, please462(e) under the Securities Act, check the following box./ / ----------------------------- CALCULATION OF REGISTRATION FEE☐If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act. (Check one):
- ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ PROPOSED MAXIMUM PROPOSED TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE - ------------------------------------------------------------------------------------------------------------------------------Warrants.................................... 150,000 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------ Common Stock, par value $.10 per share...... 2,173,433(1) 4.88125(2) $10,609,070 3,215(3) - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ (Do not check if a smaller reporting company) Smaller reporting company ☐ (1)The
numberregistrant 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 that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell, and it is not soliciting an offer to buy, these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED APRIL 3, 2017
PROSPECTUS
KEY ENERGY SERVICES, INC.
6,084,637 Shares
COMMON STOCK
This prospectus relates to the resale from time to time of up to 6,084,637 shares of common stock
indicated is based on an exercise rate(which we refer to as the “shares”) of14.4896 shares of common stock per warrant. Pursuant to Rule 416 underKey Energy Services, Inc. by theSecurities Act of 1933, there are also registered an indeterminate number of shares of common stock that may be issued upon exercise of the warrants because of the antidilution provisions of the warrants. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act based on the price at which the Warrants may be exercised. (3) Pursuant to Rule 457(g), no registration fee is required for the warrants since the shares of common stock underlying the warrants are being registered hereby. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------SUBJECT TO COMPLETION, DATED JUNE 2, 1999. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT OFFER THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. PROSPECTUS [LOGO] KEY ENERGY SERVICES, INC. 150,000 WARRANTS 2,173,433 OF COMMON STOCK This prospectus relates to: - The resale of 150,000 warrants that we previously issued; - The issuance of common stock upon exercise of the warrants; and - If required by applicable law, the resale of the common stock issued upon exercise of the warrants.selling stockholders identified in this prospectus. We will not receive anyof theproceeds from theresalesale of thewarrants or the resale of the common stock issuable upon exercise of the warrants. We will, however, receive proceeds from any exercise of the warrants. Each warrant, when exercised, will entitle the holder to receive 14.4896 shares of our common stock at an exercise price of $4.88125 per share. Therefore, if all of the warrants are exercised, we will issue an aggregate of 2,173,433 shares of common stock and we will receive aggregate proceeds of $10,609,070.shares. You should read this prospectuscarefullyand any applicable prospectus supplement before you invest.The selling stockholders identified in this prospectus will pay any underwriting discounts and commissions and transfer taxes incurred by them in disposing of the shares, as well as the fees and expenses of their counsel exceeding a predetermined dollar amount. We will pay all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus.
The selling stockholders identified in this prospectus, or their pledgees, donees, assignees, transferees or othersuccessors-in-interest, may offer the shares from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices.
Our common stock is
listed andtraded on the New York Stock Exchange, or NYSE, under the symbol"KEG." The warrants are not listed for trading on any exchange.“KEG.” OnJune 1, 1999,March 31, 2017, thelast reportedclosing sale price of our common stock on the NYSE was$3.00$23.22 per share.CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 IN THIS PROSPECTUS.You are urged to obtain current market quotations for our common stock.Investing in our common stock involves certain risks. See “Risk Factors” beginning on page 3 and any risk factors included in any accompanying prospectus supplement and in the documents incorporated by reference in this prospectus for a discussion of the factors you should carefully consider before deciding to purchase our common stock.
Neither the
SECSecurities and Exchange Commission nor any state securities commission has approved or disapproved of these securities ordetermined thatpassed upon the adequacy or accuracy of thisprospectus is accurate or complete.prospectus. Any representation to the contrary isillegal.a criminal offense.The date of this prospectus is , 2017.
Page 1 2 3 4 6 7 10 UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FORNON-U.S. HOLDERS OF SHARES
12 14 14 14 14 This prospectus is
dated June , 1999.TABLE OF CONTENTS
SECTION PAGE - ------- ----Where You Can Find More Information...........................................3 Key Energy Services, Inc......................................................4 The Offering..................................................................4 Forward-Looking Statements....................................................5 Risk Factors..................................................................5 Use of Proceeds...............................................................9 Selling Securityholders......................................................10 Plan of Distribution.........................................................11 Description of Capital Stock.................................................12 Description of Warrants......................................................13 Legal Matters................................................................15 Experts......................................................................152WHERE YOU CAN FIND MORE INFORMATION We havepart of a registration statement that we filed with theSECSecurities and Exchange Commission (the “SEC”) utilizing a “shelf” registration process. Under this shelf registration process, the selling stockholders may sell shares of our common stock. This prospectus provides you with a general description of the securities the selling stockholders may offer. Depending on the manner in which the selling stockholders sell securities under this shelf registration statement, we may provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading “Where You Can Find More Information” onForm S-3 (Reg. No. _________) with respect topage 14 of thisoffering. This prospectus, which is a part of the registration statement, does not contain allprospectus.You should rely only on the information contained in
the registration statement, including its exhibits and schedules. For further information about us, you should refer to the registration statement, including the exhibits and schedules. Statements we makeor incorporated by reference in this prospectus,about certain contractsany accompanying prospectus supplement orother documents are not necessarily complete. When we make such statements, we refer you to the copies of the contracts or documents that arein any related free writing prospectus filedas exhibits to the registration statement, because those statements are qualified in all respectsbyreference to those exhibits. The registration statement, including exhibits and schedules, is on file at the offices of the SEC and may be inspected without charge. We file annual, quarterly and special reports, proxy statements and other informationus with the SEC.Our SEC filings, includingWe have not authorized anyone to provide you with different information. This prospectus and any accompanying prospectus supplement do not constitute an offer to sell or theregistration statement, are availablesolicitation of an offer to buy any securities other than thepublic overcommon stock or an offer to sell or theInternet at the SEC's web site at http://www.sec.gov.solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Youalso may read and copy any document we file at the SEC's public reference rooms in Washington, D.C.; New York, New York; and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. SEC rules allow us to include some ofshould assume that the informationrequired to beappearing in this prospectus, any prospectus supplement, theregistration statement by incorporating that information by reference todocumentswe file with the SEC. That means we can disclose important information to you by referring you to those documents. The informationincorporated by reference and any related free writing prospectus isan important partaccurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed materially since those dates.Unless the context otherwise indicates, references in this prospectus to “Key,” the “Company,” “we,” “our” and
information that we file later with the SEC will automatically update“us” refer, collectively, to Key Energy Services, Inc., a Delaware corporation, andsupersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act: - Annual Report on Form 10-K for the year ended June 30, 1998, as amended on October 28, 1998 and as further amended on March 31, 1999; - Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, as amended on March 31, 1999; - Quarterly Report on Form 10-Q for the quarter ended December 31, 1998, as amended on March 31, 1999, and as further amended April 30, 1999; - Quarterly Report on Form 10-Q for the quarter ended March 31, 1999; - Current Reports on Form 8-K, filed on September 28, 1998, May 6, 1999, April 20, 1999, February 3, 1999, December 21, 1998 and Form 8-K/A filed on October 28, 1998 and March 31, 1999; -its consolidated subsidiaries.-1-
ABOUT KEY ENERGY SERVICES, INC.
Our
prospectus dated April 16, 1999, as filed with the SEC under Rule 424(b) on April 16, 1999, as supplemented by the prospectus supplement dated May 4, 1999, filed with the SEC pursuant to Rule 424(b) on May 4, 1999; - Proxy Statement on Schedule 14A, dated November 17, 1998; and - The description of the our common stock contained in Form 8-A dated March 27, 1998, including any amendments or reports that have been filed to update the description. You may request a copy of these filings, which we will provide to you at no cost, by writing or telephoning us at the following address:BusinessKey Energy Services, Inc.
Two Tower Center, 20th Floor East Brunswick, New Jersey 08816 (732) 247-4822 3KEY ENERGY SERVICES, INC. BUSINESS We areis theworld'slargest onshore,oil and gasrig-based wellservice and workover companyservicing contractor based on the number of rigs owned. We were organized in April 1977 in Maryland and commenced operations in July 1978 under the name National Environmental Group, Inc. In December 1992, weownbecame Key Energy Group, Inc. andavailable industry data.we changed our name to Key Energy Services, Inc. in December 1998. In connection with our reorganization described below, we reincorporated as a Delaware corporation on December 15, 2016.We provide a
completefull range ofrig-based well maintenance, workover, completion, recompletion, contract drilling and non-rig ancillarywell services to major oil companies, foreign national oil companies and independent oil and natural gas production companies.We believe that we have the most comprehensive array ofOur servicesof any participant in the marketincluderig-based andhave differentiated ourselves from our competitors by our position as a single-source provider of multiple well-head based services and products across multiple geographic regions. In addition tocoiled tubing-based well maintenance and workover services,we providewell completion and recompletion services,that include: - The completion of newly drilled wells - the recompletion of existing wells (including horizontal recompletions) - plugging and abandonment of wells at the end of their useful lives - oilfieldfluidand equipment transportation - oilfield fluid storage and disposalmanagement services,-fishing and rentaltools - wirelineservices- airand other ancillary oilfield services. Additionally, certain rigs are capable of specialty drilling- hot oiling - production testingapplications. We operate in most major oil and natural gas producing regions of the continental United States, and we have operations in Russia. In addition, we have a technology development and control systems business based in Canada. An important component of the Company’s growth strategy is to make acquisitions that will strengthen its core servicesAREAS OF OPERATION.or presence in selected markets, and the Company also makes strategic divestitures from time to time. To that end, during the fourth quarter of 2016, we sold operations in Mexico and we are currently attempting to sell our operations in Russia. The Company expects that the industry in which it operates will experience consolidation, and the Company expects to explore opportunities and engage in discussions regarding these opportunities, which could include mergers, consolidations or acquisitions or further dispositions or other transactions, although there can be no assurance that any such activities will be consummated.Our
principal operating regionsReorganizationOn October 24, 2016, Key and certain of our domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code in the United States
include West Texas,Bankruptcy Court for theGulf Coast, Oklahoma, Michigan,District of Delaware (the “Bankruptcy Court”) pursuant to a prepackaged plan of reorganization (the “Plan”). The Plan was confirmed by theAppalachian Basin,Bankruptcy Court on December 6, 2016, and theRocky Mountains,Company emerged from theArk La Tex region,bankruptcy proceedings on December 15, 2016 (the “Effective Date”).You can find more information about the
Four Corners areaPlan andCalifornia. We also operateour emergence from bankruptcy inArgentina and have limited operationsour Annual Report on Form10-K for the fiscal year ended December 31, 2016, which is incorporated by reference inOntario, Canada. OPERATING ASSETS. We estimate that our share of the domestic onshore well service rig fleet is approximately 37% based on the number of rigs we own and available industry data.this prospectus.Our
operating assets consist of approximately 1,420 well service and workover rigs, 75 drilling rigs and 1,130 oil field trucks. ACQUISITIONS. We have pursued an acquisition strategy designed to consolidate a highly fragmented industry that is primarily comprised of small, regional well service companies. Over the last three years, we have completed over 50 acquisitions, for an aggregate consideration of approximately $807 million. ____________________________Corporate InformationOur principal executive offices are located at
Two Tower Center, 20th Floor, East Brunswick, New Jersey 088161301 McKinney Street, Suite 1800, Houston, Texas 77010, and ourphonetelephone number is(732) 247-4822. THE OFFERING This prospectus relates to: - The resale of 150,000 warrants we previously issued(713)651-4300.-2-
Investing in
an offering of 150,000 units, consisting of $150,000,000 principal amount ofour14% Senior Subordinated Notes due 2009 and the warrants; - The issuance ofcommon stockupon exerciseinvolves a high degree of risk. You should carefully consider thewarrants;risks and- If required by applicable law, the resale of the common stock issued upon exercise of the warrants. USE OF PROCEEDS. If all of the warrants are exercised in full, we will receive aggregate proceeds of $10,609,070. These proceeds will be used for general corporate purposes or as otherwiseuncertainties describedherein. 4FORWARD-LOOKING STATEMENTS The statements madein this prospectus,or inany prospectus supplement and the documentswe haveincorporated by referencethatherein or therein, including the risks and uncertainties described in our Annual Report on Form10-K for the fiscal year ended December 31, 2016, which is incorporated by reference in this prospectus, and which may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future. The risks and uncertainties described in this prospectus and the documents incorporated by reference herein are notstatements of historical fact,the only risks we face. Additional risks and uncertainties that we do not presently know about or that we currently believe are"forward looking statements"not material may also adversely affect our business. For more information, please see “Where You Can Find More Information” below.-3-
This prospectus, and the information incorporated by reference in this prospectus, contains, or incorporates by reference, certain forward-looking statements within the meaning of
Section 27A ofthe Private Securities Litigation Reform Act of19331995. Statements that are not historical in nature or that relate to future events andSection 21Econditions are, or may be deemed to be, forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections and management’s beliefs and assumptions concerning future events and financial trends affecting our financial condition and results ofthe Securities Exchange Act of 1934. Forward-lookingoperations. In some cases, you can identify these statementsgenerally can be identifiedbythe use of forward-lookingterminology such as"may," "will," "expect," "intend," "estimate," "anticipate"“may,” “will,” “should,” “predicts,” “expects,” “believes,” “anticipates,” “projects,” “potential” or"believe,"“continue” orsimilarthe negative of such terms and other comparable terminology.The forward-looking statements include discussions about business strategy and expectations concerning market position, future operations, margins, profitability, liquidity and capital resources, and statements concerning the integration into our business of the operations we have acquired. Although we believe that the expectations in suchThese statements arereasonable,only predictions and are subject to substantial risks and uncertainties and are not guarantees of performance. Future actions, events and conditions and future results of operations may differ materially from those expressed in these statements. In evaluating those statements, you should carefully consider the information above as well as the risks outlined in “Item 1A. Risk Factors” in our Annual Report on Form10-K for the fiscal year ended December 31, 2016 and in the other reports wecan not givefile with the SEC.We undertake no obligation to update any
assurance that those expectations will be correct. We caution you notforward-looking statement toplace undue reliance on these forward-looking statements, which speak only as ofreflect events or circumstances after the date of thisprospectus. Our operationsreport except as required by law. All of our written and oral forward-looking statements aresubject to several uncertainties, risks and other influences, many of which are outside our controlexpressly qualified by these cautionary statements and anyof which could materially affect our results of operations and ultimately prove theother cautionary statementswe make to be inaccurate.that may accompany such forward-looking statements.Important factors that
could cause actual results to differ materially frommay affect our expectations, estimates or projections include, but arediscussed undernot limited to, theheading "Risk Factors" and elsewhere in this prospectus. RISK FACTORS YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS AND OTHER INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO BUY THE WARRANTS. RECENT OPERATING LOSSES We have experienced a significant decreasefollowing:conditions in the oil and natural gas industry, especially oil and natural gas prices and capital expenditures by oil and natural gas companies;volatility in oil and natural gas prices;our ability to implement price increases or maintain pricing on our core services;risks that we may not be able to reduce, and could even experience increases in, the costs of labor, fuel, equipment and supplies employed in our businesses;industry capacity;asset impairments or other charges;the periodic low demand for our servicesduring the last three quarters that has resulted inand resulting operatinglosses. The proceeds oflosses and negative cash flows;ourMay 1999 public offering permitted us to reduce indebtedness and has provided us with a cash reservehighly competitive industry as well as operating risks, whichtogether with cash from operations, should permit us to maintain operations for the balance of calendar 1999 and through 2000. However, there must be a significant improvement in the demand for our services for us to be able to generate cash from operations sufficient to service our indebtedness or to return to profitability. No assurance can be given when or if there will be any such improvement in demand for our services. RISKS ASSOCIATED WITH OIL AND GAS INDUSTRY -- OUR BUSINESS IS DEPENDENT ON CONDITIONS IN THE OIL AND GAS INDUSTRY, ESPECIALLY THE PRODUCTION EXPENDITURES OF OIL AND GAS COMPANIES. The demand for our services is directly influenced by current and anticipated oil and gas prices, oil and gas production costs, and government regulation and conditions in the worldwide oil and gas industry, and particularly on the level of development, exploration and production activity of, and corresponding spending by, oil and gas companies. Most of our operationsarein the United States where the demand for well servicing and related services currently is depressed in many markets because of weak oil prices, which recently were at a twelve-year low. Continued weakness in oil and gas prices may cause lower day rates and lower utilization of available well service equipment, which may influence the recoverability and carrying value of our long-term assets and related goodwill balances, pursuant to the provisions of SFAS 121 "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." In addition, when oil prices are weak, fewer wells are drilled, resulting in less drilling and less maintenance work for us. Periods of diminished or weakened demand may continue to occur. In light of these and other factors relating to the oil and gas industry, our historical operating results may not be indicative of future performance. In addition, reductions in oil prices can result in a reduction in the trading prices of our securities, even if the reduction in oil prices does not affect our business generally. 5SUBSTANTIAL LEVERAGE -- OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER OUR CURRENT INDEBTEDNESS. We have a significant amount of indebtedness. Our substantial indebtedness could: - increase our vulnerability to general adverse economic and industry conditions; - limit our ability to fund future working capital, capital expenditures and other general corporate requirements; - require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; - limit our flexibility in planning for, or reacting to, changes in our businessprimarily self-insured, and theindustry in which we operate; - place us at a competitive disadvantage compared to our competitors that have less debt; and - limit, along with the financial and other restrictive covenants in our credit facility, among other things, our ability to borrow additional funds. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on us. ADDITIONAL BORROWINGS AVAILABLE -- DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES STILL MAY BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD FURTHER INCREASE THE RISKS DESCRIBED ABOVE. We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Our credit facility currently permits additional borrowings of up to approximately $9.0 million. If new debt is added to our and our subsidiaries' current debt levels, the related risks that we and they now face could intensify. ABILITY TO SERVICE DEBT -- TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL. Our ability to make payments on and to refinance our indebtedness, and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure youpossibility that ourbusiness will generate sufficient cash flow form operations to service our outstanding debt, that currently anticipated cost savings and operating improvements will be realized or that future borrowings will be available to us under our credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our credit facility, on commercially reasonable terms or at all. RISKS ASSOCIATED WITH INTEGRATION OF ACQUISITIONS -- WE HAVE PURSUED, AND INTEND TO CONTINUE TO PURSUE, ACQUISITIONS. OUR BUSINESS MAY BE ADVERSELY AFFECTED IF WE CANNOT EFFECTIVELY INTEGRATE ACQUIRED OPERATIONS. One of our business strategies has been to acquire operations and assets that are complementary to our existing businesses. In the last 18 months, our acquisitions have doubled the number of well service rigs we own. Our revenues have grown from $44.7 million in fiscal 1995 to $645.6 million on a pro forma basis in fiscal 1998, largely as a result of acquisitions. Acquiring operations and assets involves financial, operational and legal risks. These risks include the difficulty of assimilating operations, systems and personnel of the acquired businesses and maintaining uniform standards, controls, procedures and policies. We currently do not have an active acquisition program, but we may make strategic acquisitions in the future under certain circumstances. Any future acquisitions would likely result in an increase in expenses. In addition, competition from other potential buyers could cause us to pay a higher price than we otherwise might have to pay and reduce our acquisition 6opportunities. Moreover, our past success in making acquisitions and in integrating acquired businesses does not necessarily mean we will be successful in making acquisitions and integrating businesses in the future. OPERATING RISKS; INSURANCE -- OUR BUSINESS COULD BE ADVERSELY AFFECTED BY CERTAIN OPERATING RISKS, AND OUR INSURANCE MAY NOT BE ADEQUATE TO COVER ALL LOSSES OR LIABILITIES WE MIGHT INCUR IN OUR OPERATIONS. Our operations are subject to many hazards. These hazards include explosions, blow-outs, reservoir damage, loss of well control, cratering, fires and damage to the environment. In addition, we are subject to seasonal risks caused by adverse weather conditions such as rain and flooding, high winds and severe winter storms. Operations in northern regions are subject to limitations on transporting equipment during the spring thaw. These hazards and risks could cause the suspension of operations, damage to or destruction of our equipment and the property of others and injury or death to field personnel. Like most companies in our industry, we have experienced some of these incidents in our operations. The frequency and severity of these incidents affect our operating costs and our relationships with customers, employees and regulators. Any significant increase in the frequency or severity of such incidents, or the general level of compensation awards, could affect our ability to obtain insurance and could have a material adverse effect on our business. We have insurance, customary in the industry, to protect against these liabilities. However, this insurance is capped at $50 million per incident and does not provide coverage for all liabilities. Ourinsurance may not be adequate to cover all of our losses or liabilities;significant costs and potential liabilitiesthat we might incur inresulting from compliance with applicable laws, including those resulting from environmental, health and safety laws and regulations, specifically those relating to hydraulic fracturing, as well as climate change legislation or initiatives;ouroperations. To the extent our liability for any particular loss or liability exceeds the $50 million cap, we would incur costs for the excess. Moreover, we may not be able to maintain insurance at adequate levels or at reasonable rates and particular types of coverage may not be available in the future. COMPETITION We experience intense competition in our markets. Certain of our competitors have greater financial and other resources than we do. POTENTIAL LABOR SHORTAGE -- WE HISTORICALLY HAVE EXPERIENCED A HIGH EMPLOYEE TURNOVER RATE. ANY DIFFICULTY WE EXPERIENCE REPLACING OR ADDING WORKERS COULD ADVERSELY AFFECT OUR BUSINESS. Wehistoricallyhave experienced an annualhigh employee turnover rateof over 50%. The high turnover rate is caused by the nature of the work, which is physically demandingandperformed outdoors. As a result, workers may choose to pursue employment in fields that offer a more desirable work environment at wage rates that are competitive with ours. Although we currently are downsizing our workforce, we cannot assure that at times of high demand we will be able to recruit and train workers. Potential inability or lack of desire by workers to commute to our facilities and job sites and competition for workers from other industries are factors that could affectour ability toattract workers. We believe that our wage rates are competitive with the wage rates of our competitors and other potential employers. A significant increase in the wages other employers pay could result in a reduction in our workforce, increases in our wage rates,replace orboth. Either of these events could diminish our profitability and growth potential. GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS -- WE MAY BECOME LIABLE FOR PENALTIES UNDER A VARIETY OF ENVIRONMENTAL LAWS AND GOVERNMENT REGULATIONS EVEN IF WE DO NOT CAUSE ANY ENVIRONMENTAL PROBLEMS. CERTAIN CHANGES IN ENVIRONMENTAL LAWS AND GOVERNMENT REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS. Our operations are subject to foreign, federal, state and local laws and regulations relating to protection of the environment, natural resources, health and safety, waste management and transportation of waste and other materialsadd workers, includinghydrocarbons and chemicals. Our fluid services include injection operations that pose certain risks of environmental liability. Although we monitor the injection process, the possibility exists of leakage to surface or subsurface soils or groundwater, which could result in cancellation of well operations, fines and penalties, expenditures for remediation, and liability for property damages and personal injuries. Sanctions for noncompliance with applicable environmental laws and regulations also may include administrative, civil and criminal penalties, revocation of permits and corrective action orders. In addition, our operations may be subject to potential liability for environmental clean up at currently or previously owned or operated properties or off-site locations where we sent, disposed of, or arranged for disposal of hazardous materials. A party can be liable for environmental 7damage without regard to its negligence or fault. Therefore, we could incur liability based on the conduct of others, or for acts that were lawful at the time we performed them. Environmental laws have become more stringent over the years. The modification or interpretation of existing laws or regulations, the adoption of new laws or regulations or the more vigorous enforcement of environmental laws or regulations could curtail exploratory or development drilling for oil and gas and could limit well servicing opportunities. FOREIGN INVESTMENTS -- OUR FOREIGN BUSINESS EXPOSES US TO RISKS RELATING TO INCREASED REGULATION AND POLITICAL OR ECONOMIC INSTABILITY WITHIN CERTAIN FOREIGN COUNTRIES. We have investments and may make additional investments in Argentina and Canada. We may make other investments outside the United States. Foreign investments are subject to risks relating to the political, social and economic structures of those countries. Risks may include fluctuations in currency valuation, expropriation, confiscatory taxation and nationalization, currency conversion restrictions, increased regulation and approval requirements and governmental policies limiting returns to foreign investors. In fiscal 1998, our foreign operations accounted for less than 10% of our revenues. DEPENDENCE ON KEY PERSONNEL -- OUR BUSINESS MAY BE ADVERSELY AFFECTED IF WE LOSE OUR EXECUTIVE OFFICERS. We depend upon the performance of our executive officers. We have entered into employment agreements with these executive officers that contain non-compete provisions. Notwithstanding these agreements, we may not be able to retain ourexecutive officers andmay not be ableskilled workers;our ability toenforce the non-compete provisions in the employment agreements. We maintain key person life insuranceincur debt or long-term lease obligations;our ability to implement technological developments and enhancements;severe weather impacts onthe lives of certainour business;our ability to successfully identify, make and integrate acquisitions and our ability to finance future growth of ouroffices, includingoperations or future acquisitions;-4-
ourchief executive officer. This insurance does not mean thatability to achieve thedeath or disabilitybenefits expected from disposition transactions;the loss of one or more ofthem would not adversely affectouroperations. YEAR 2000 ISSUE -- THE YEAR 2000 PROBLEM MAY ADVERSELY AFFECT OUR BUSINESS IF OUR SUPPLIERS AND CUSTOMERS DO NOT ADEQUATELY ADDRESS THEIR YEAR 2000 CONCERNS. We currently are implementing a new integrated management information system along with updated hardware that will replace mostlarger customers;our ability to generate sufficient cash flow to meet debt service obligations;the amount of ourcurrent systems.debt and the limitations imposed by the covenants in the agreements governing our debt, including our ability to comply with covenants under our debt agreements;an increase in our debt service obligations due to variable rate indebtedness;our inability to achieve our financial, capital expenditure and operational projections, including quarterly and annual projections of revenue and/or operating income and our inaccurate assessment of future activity levels, customer demand, and pricing stability which may not materialize (whether for Key as a whole or for geographic regions and/or business segments individually);risks affecting our international operations, including risks affecting our ability to execute our plans to withdraw from international markets outside North America;our ability to respond to changing or declining market conditions, including our ability to reduce the costs of labor, fuel, equipment and supplies employed and used in our businesses;our ability to maintain sufficient liquidity;adverse impact of litigation; andother factors affecting our business described in “Item 1A. Risk Factors” in our Annual Report on Form10-K for the fiscal year ended December 31, 2016 and in the other reports we file with the SEC.-5-
We are filing the registration statement of which this prospectus is a part to permit the stockholders named in the section entitled “Selling Stockholders” to resell shares of our common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. The
new management information systemselling stockholders willbe year 2000 compliant for our systemspay any underwriting discounts and commissions and transfer taxes incurred by the selling stockholders in disposing of the shares, as well asfor thosethe fees and expenses of their counsel exceeding a predetermined dollar amount. We will pay all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus, including, without limitation the SEC registration fee with respect to the shares covered by this prospectus, fees and expenses of ourpastcounsel andfuture acquisitions. Implementation began in July 1998accountants, as well as the fees andis scheduled to be substantially completed by June 1999. Our new management information systems do not cover our Argentine operations, but we have established a separate system, which is year 2000 compliant, that will be implemented in late 1999. We have not yet developed a plan to formally communicate with our significant suppliers and customers to determine if those parties have appropriate plans to remedy year 2000 issues when their systems interface with our systems or otherwise have an impact on our operations. We do not anticipate that this will have a material impact on our operations. However, there can be no assurance that the systemsexpenses ofother companies on which we rely will be timely converted, or that failure to successfully convert by another company, or conversion that is incompatible with our systems, would not have an impact on our operations. We currently do not have a contingency plan to cover any unforeseen problems encountered that relatecounsel to theyear 2000, but we intendselling stockholders up toproduce one beforesuch predetermined dollar amount.-6-
Pursuant to the
endPlan, on the Effective Date, the Company cancelled $675 million outstanding principal amount of its senior unsecured notes. In exchange for cancelling these notes, the Company issued shares of its common stock to the selling stockholders, and certain of thecurrent fiscal year. The cost of the new management information system is not anticipated to have a material impact on our business. Although we are not aware of any material operational issues or costs associated with preparing our internal systems for the year 2000, there can be no assurance that there will not be a delay in, or increased costs associated with, the implementation of the necessary systems and changes to address the year 2000 issues. If we are unable to adequately address the year 2000 issue in a timely manner, the worst case scenario would be that we could suffer significant computer downtime, and billings, payments and collections would revert to manual accounting records. In addition, the inability of our principal suppliers and major customers to be year 2000 compliant could result in delays in product deliveries from those suppliers and collection of accounts receivable. 8SHARES ELIGIBLE FOR FUTURE SALE -- THE MARKET PRICE OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED BY SALES OF SUBSTANTIAL AMOUNTS OF COMMON STOCK IN THE PUBLIC MARKET OR THE PERCEPTION THAT SUCH SALES COULD OCCUR. As of May 12, 1999, we had 77,302,401 shares of common stock outstanding. Approximately 16.2 millionselling stockholders purchased additional shares of common stockwere issuable uponin theexercise of outstanding options, warrants and convertible securities. All of these shares will be registeredrights offerings conducted under theSecurities Act or are subject to registration rights agreements.Plan. Themarket price of our common stock could be adversely affected by sales of substantial amountsshares of common stockinoffered hereby are being registered pursuant to a registration rights agreement, dated December 15, 2016 (the “Registration Rights Agreement”), between the Company and the selling stockholders to permit publicmarket orsales of such shares.The following table sets forth the
perception that such sales could occur. VOLATILITY -- THE TRADING PRICE OF OUR SECURITIES COULD BE SUBJECT TO SIGNIFICANT FLUCTUATIONS. The trading price of our common stock has been volatile. Factors such as announcements of fluctuations in our or our competitors' operating results and market conditions for oil and gas related stocks in general could have a significant impact on the future trading prices of our securities. In particular, the trading pricenames of thecommon stock of many oil and gas companies has experienced extreme price and volume fluctuations, which have at times been unrelated to the operating performance of such companies whose stocks were affected. The trading prices of our securities could be subject to significant fluctuations in response to variations in our prospects and operating results, which may in turn be affected by weakness in oil prices, changes in interest rates and other factors. In addition, our May 1999 public offering of 58,508,772 shares of our common stock resulted in an approximate 317% increase inselling stockholders, the number of shares ofourcommon stockissued and outstanding. The historical volumebeneficially owned by each oftrading and historical trading pricethem as of March 3, 2017, the percentage of our total outstanding common stockhas been based on a substantially lowerbeneficially owned by each of them as of March 3, 2017, the number ofoutstandingshares ofourcommon stockthan were outstanding afterbeing offered by each of them, theoffering. Therefore, our prior trading volume and prior market price may not be indicativenumber ofour future trading volume and market price. There can be no assurance that these factorsshares of common stock each selling stockholder willnot have an adverse effect onbeneficially own if thetrading prices of our securities. USE OF PROCEEDS We will not receive any of the proceeds from the resale of the warrants or the resalestockholder sells all of the common stockissued upon exercisebeing registered and each selling stockholder’s percentage beneficial ownership ofthe warrants. We will, however, receive the proceeds from the exercise of the warrants. Ifour total outstanding common stock if all of thewarrantscommon stock in the offering is sold. As used in this prospectus, “selling stockholders” includes thesuccessors-in-interest, donees, transferees or others who may later hold the selling stockholders’ shares. The selling stockholders may offer the common stock for resale from time to time pursuant to this prospectus. However, the selling stockholders areexercised, we would receive aggregate proceedsunder no obligation to sell any ofapproximately $10.61 million. The proceeds fromtheexercisecommon stock offered pursuant to this prospectus. Note that Soter Capital, LLC, a party to the Registration Rights Agreement and the Company’s largest stockholder, will not register its shares ofwarrants will be usedcommon stock forgeneral corporate purposes, which may include refinancings of indebtedness, working capital, capital expenditures, acquisitions and repurchases and redemptions of securities. 9SELLING SECURITYHOLDERS The following table sets forth certainresale at this time.All information with respect to
each selling securityholder for whom we are registering warrants andcommon stockissuable upon exercise of the warrants for resale. Beneficialownershipof the warrants by the selling securityholders after this offering will depend on the number of warrants sold by each selling securityholder; however, the table assumes that all warrants owned by a beneficial owner are offered and resold pursuant to this prospectus. This prospectus also covers the resale of common stock issued upon the exercise of the warrants. However, since the distribution of common stock upon exercise of the warrants also is covered by this prospectus, we do not anticipate that this prospectus will be required for resales of the common stock. Therefore, the table set forth below does not include information concerning potential resales of the common stock issuable upon exercise of the warrants. Other than the selling securityholders' ownership of our securities, no material relationship exists between any of the selling securityholders and us, nor have any such relationships existed within the past three years.
BENEFICIAL OWNERSHIP OF WARRANTS BEFORE OFFERING -------------------------- NUMBER OF WARRANTS % OF NAME OWNED CLASS - --------- ---------- -----------The Bank of New York............................................. 35,000 23.33% Bear, Stearns Securities Corp.................................... 6,000 4.00% Brown Brothers Harriman & Co..................................... 2,750 1.83% Chase Manhattan Bank............................................. 7,000 4.67% Firstar Trust Company............................................ 4,000 2.67% Investors Bank & Trust/M.F. Custody.............................. 30,250 20.17% The Northern Trust Company....................................... 1,600 1.07% State Street Bank and Trust Company.............................. 33,025 22.02% UMB Bank, National Association................................... 6,500 4.33% Bankers Trust Company............................................ 3,175 2.12% Boston Safe Deposit and Trust Company............................ 3,900 2.60% Bankers Trust Company/First Union Safekeeping.................... 5,000 3.33% Citibank, N.A.................................................... 3,900 2.60% FUNB-Philadelphia Main........................................... 1,150 * Lehman Brothers, Inc............................................. 4,500 3.00% FNC Bank, National Association................................... 2,000 1.33% Swiss American Securities Inc.................................... 250 * ---------- ----------- Total..................................................... 150,000 100% ---------- ----------- ---------- ------------ --------------------- The information in the table with respect to selling securityholders who are holders of warrantshas beenprepared based upon informationfurnishedto the companyby or on behalf of the sellingsecurityholders. 10PLAN OF DISTRIBUTION Thisstockholders. We believe, based on information supplied by the selling stockholders and subject to community property laws where applicable, that, except as may otherwise be indicated in the footnotes to the table below, each selling stockholder has sole voting and dispositive power with respect to the common stock reported as beneficially owned by it. Because the selling stockholders may sell all, part or none of the common stock held by them, no assurance can be given as to the number of shares of common stock that a selling stockholder will hold upon termination of any offering made hereby. In addition, the selling stockholders may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, the common stock held by them in transactions exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), after the date on which it provided the information set forth on the table below. For purposes of the table below, however, we have assumed that after termination of this offering, none of the shares of common stock offered by this prospectusrelates to: - The resale of 150,000 warrantswill be held by the sellingsecurityholders; - Our issuancestockholders.Beneficial ownership for the purposes of this table is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Common stock subject to options that are currently exercisable or exercisable within 60 days is deemed to be outstanding and beneficially owned by the person holding the options. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.
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Name of Selling Shares Beneficially Owned
Prior to the Offering(1)Shares Beneficially Owned
After the Offering(2)Stockholder
Number Percentage Shares Offered Number Percentage Contrarian Capital Fund I, L.P.(3)
1,135,907 5.65 % 1,135,907 0 * Contrarian Opportunity Fund, L.P.(3)
558,138 2.78 % 558,138 0 * Contrarian Dome Du Gouter Master Fund, LP(3)
229,938 1.14 % 229,938 0 * Contrarian Centre Street Partnership, L.P.(3)
223,941 1.11 % 223,941 0 * Contrarian Capital Trade Claims, L.P.(3)
87,537 * 87,537 0 * CCMPension-A, L.L.C.(3)
64,073 * 64,073 0 * Contrarian Capital Senior Secured, L.P.(3)
35,338 * 35,338 0 * ContrarianAdvantage-B, L.P.(3)
29,777 * 29,777 0 * CCMPension-B, L.L.C.(3)
12,281 * 12,281 0 * Quantum Partners LP(4)
1,250,728 6.22 % 1,218,749 31,979 * Silver Point Capital Offshore Master Fund, L.P.(5)
981,861 4.89 % 981,861 0 * Silver Point Capital Fund, L.P. (5)
157,380 * 157,380 0 * Goldman, Sachs & Co.(6)
925,447 4.61 % 588,973 336,474 1.67 % Whitebox Multi-Strategy Partners, LP(7)
228,251 1.14 % 226,162 2,089 * Whitebox Asymmetric Partners, LP(7)
90,105 * 89,279 826 * Whitebox Credit Partners, LP(7)
90,068 * 89,243 825 * Whitebox Relative Value Partners, LP(7)
81,507 * 80,761 746 * Pandora Select Partners, LP(7)
34,457 * 34,141 316 * Whitebox GT Fund, LP(7)
16,310 * 16,160 150 * Scoggin Capital Management II LLC(8)
91,278 * 91,278 0 * Scoggin International Fund Ltd.(8)
78,975 * 78,975 0 * Scoggin Worldwide Fund, Ltd.(9)
54,745 * 54,745 0 *
* Less than 1%.
(1) Shares shown in the table above include shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account.
(2) Represents the amount of common stock that will be held by the selling stockholders after completion of all offerings pursuant to this prospectus based on the assumptions that (a) all shares registered for sale by the registration statement of which this prospectus forms a part will be sold and (b) that no other shares of common stock are acquired or sold by the selling stockholders prior to completion of such offerings. However, the selling stockholders may sell all, some or none of the shares offered pursuant to this prospectus and may sell some or all of their shares pursuant to an exemption from the registration provisions of the Securities Act. Percentages based on number of shares of common stock outstanding as of March 3, 2017.
(3) Jon Bauer is the managing member of Contrarian Capital Management, L.L.C., which is the investment manager of each of Contrarian Capital Fund I, L.P., Contrarian Opportunity Fund, L.P., Contrarian Dome Du Gouter Master Fund, LP, Contrarian Centre Street Partnership, L.P., Contrarian Capital Trade Claims, L.P., CCMPension-A, L.L.C., Contrarian Capital Senior Secured, L.P., ContrarianAdvantage-B, L.P., and CCMPension-B, L.L.C. (collectively, the “Contrarian Funds”), and as such, may be deemed to have sole voting and dispositive power over the shares held by the Contrarian Funds and/or investment control over the Contrarian Funds. The mailing address for each of the Contrarian Funds is 411 West Putnam Avenue, Suite 425, Greenwich, CT 06830.
(4) Includes 5,752 shares underlying warrants to purchase shares of our common stock. Soros Fund Management LLC (“SFM”) serves as principal investment manager to Quantum Partners LP (“Quantum Partners”). As such, SFM has been granted investment discretion over portfolio investments, including the shares of common stock held for the account of Quantum Partners. George Soros serves as Chairman of SFM and Robert Soros serves as President and Deputy Chairman of SFM. SFM is also the holder of record of 26,227 shares of common stock, which shares are not being offered pursuant to this prospectus. The mailing address for Quantum Partners is 250 West 55th Street, New York, NY 10019.
(5) Silver Point Capital, L.P. (“Silver Point”) is the investment manager of each of Silver Point Capital Offshore Master Fund, L.P. and Silver Point Capital Fund, L.P. (collectively, the “Silver Point Funds”) and, by reason of such status, may be deemed to be the beneficial owner of all of the common stock held by the Silver Point Funds. Silver Point Capital Management, LLC (“Silver Point Management”) is the general partner of Silver Point and as a result may be deemed to be the beneficial owner of all common stock held by the Silver Point Funds. Edward A. Mulé and Robert J. O’Shea are each members of Silver Point Management and as a result may be deemed to be the beneficial owner of all of the common stock held by the Silver Point Funds. The mailing address for the Silver Point Funds is 2 Greenwich Plaza, 1st Floor, Greenwich, CT 06830.
(6) Goldman, Sachs & Co. (“Goldman Sachs”), a New York limited partnership, is a member of the New York Stock Exchange and other national exchanges. Goldman Sachs is a direct and indirect wholly-owned subsidiary of The Goldman Sachs Group, Inc. (“GS Group”). GS Group is a public entity and its common stock is publicly traded on the NYSE. The shares of common stock held by Goldman Sachs were acquired in the ordinary course of its investment business and not for the purpose of resale or distribution. Goldman Sachs has not participated in the distribution of the shares on behalf of the issuer. GS Group may be deemed to beneficially own the securities held by Goldman Sachs. GS Group disclaims beneficial ownership of such securities except to the extent of its pecuniary interest therein. The mailing address for Goldman Sachs is 200 West Street, 26th Floor, New York, NY 10282. -8-
(7) Whitebox General Partner LLC (“Whitebox”) is the general partner of Whitebox Multi-Strategy Partners, LP, Whitebox Asymmetric Partners, LP, Whitebox Credit Partners, LP, Whitebox Relative Value Partners, LP, Pandora Select Partners, LP and Whitebox GT Fund, LP (collectively, the “Whitebox Funds”), which have direct beneficial ownership of shares of the common stock. Whitebox is owned by Andrew Redleaf, Robert Vogel, Mark Strefling, Paul Twitchell, Richard Vigilante and Dyal Capital Partners II (B) LP. Messrs. Redleaf, Vogel, Strefling, Twitchell and Vigilante share voting and dispositive power over all of the shares of Whitebox. Whitebox Advisors LLC (“Whitebox Advisors”) is the investment manager of each of the Whitebox Funds and holds voting and disposable power over the shares of common stock held by each of the Whitebox Funds. Whitebox Advisors is owned by Messrs. Redleaf, Vogel, Strefling, Twitchell and Vigilante and by Dyal Capital Partners II (A) LP. The mailing address for the Whitebox Funds is 3033 Excelsior Boulevard, Suite 300, Minneapolis, MN 55416.
(8) Scoggin Management LP is the investment manager of Scoggin Capital Management II LLC (“Scoggin Capital”) and Scoggin International Fund, Ltd. (“Scoggin International”). A. Dev Chodry is the Chief Investment Officer for Distressed Credit Strategies for Scoggin Management LP. Craig Effron and Curtis Schenker areCo-Chief Investment Officers for Event Driven Strategies for Scoggin Management LP. Scoggin GP LLC is the general partner of Scoggin Management LP. Craig Effron and Curtis Schenker are the managing members of Scoggin GP LLC. Each of the foregoing may be deemed to have sole power to direct the voting and disposition over the shares held by Scoggin Capital and Scoggin International. The mailing address for Scoggin Capital and Scoggin International is 660 Madison Avenue, 20th Floor, New York, NY 10065.
(9) The investment manager of Scoggin Worldwide Fund, Ltd.(“Scoggin Worldwide,” and together with Scoggin Capital and Scoggin International, the “Scoggin Funds”) is Old Bellows Partners LP. Craig Effron and Curtis Schenker areCo-Chief Investment Officers for Event Driven Strategies for Old Bellows Partners LP. Old Bell Associates LLC is the general partner of Old Bellows Partners LP. A. Dev Chodry is the managing member of Old Bell Associates LLC. Each of the foregoing may be deemed to have sole power to direct the voting and disposition over the shares held by Scoggin Worldwide. The mailing address for Scoggin Worldwide is 660 Madison Avenue, 20th Floor, New York, NY 10065. None of the selling stockholders has held any position or office or had any other material relationship with us or any of our predecessors or affiliates within the past three years other than as a result of the ownership of our securities, except in connection with (1) the Registration Rights Agreement; (2) the Plan; (3) the plan support agreement, dated August 24, 2016, by and among the Debtors and certain of their lenders and noteholders, pursuant to which the Company filed its petition for bankruptcy; and (4) the term loan and security agreement, dated as of December 15, 2016, by and among the Company, as borrower, Cortland Products Corp., as agent, and lenders including certain of the selling stockholders or their respective affiliates. You can find more information about these documents in our Annual Report on Form10-K for the fiscal year ended December 31, 2016, which is incorporated by reference in this prospectus.
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The shares covered by this prospectus may be offered and sold from time to time by the selling stockholders. The term “selling stockholders” includes pledgees, donees, assignees, transferees or othersuccessors-in-interest and any other person named as a selling stockholder in any applicable prospectus supplement. The selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. Such sales may be made on one or more exchanges or in theover-the-counter market or otherwise, at prices and under terms then prevailing or at prices related to the then-current market price or in negotiated transactions. The selling stockholders may sell their shares by one or more of, or a combination of, the following methods:
an underwritten offering;purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant to this prospectus;ordinary brokerage transactions and transactions in which the broker solicits purchasers;block trades in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;anover-the-counter distribution in accordance with applicable law;in privately negotiated transactions;in options transactions; andany other method permitted by applicable law.In addition, any shares that qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus. If the selling stockholders use one or more underwriters in the sale, such underwriter(s) will acquire the shares of our common stock
upon exercisecovered by this prospectus for their own account. The underwriter(s) may resell the shares of our common stock in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale.To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution, including the names of any underwriters, the purchase price and the proceeds the selling stockholders will receive from the sale, any underwriting discounts and other items constituting underwriters’ compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers, and any other information we believe to be material.
In connection with distributions of the
warrants; and - If required by applicable law,shares or otherwise, theresaleselling stockholders may enter into hedging transactions with broker-dealers or other financial institutions. In connection with such transactions, broker-dealers or other financial institutions may engage in short sales of the common stockissuedin the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also sell the common stock short and redeliver the shares to close out such short positions. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The selling stockholders may also pledge shares to a broker-dealer or other financial institution, and, uponexercisea default, such broker-dealer or other financial institution may effect sales of thewarrants. Althoughpledged shares pursuant to this prospectusrelates(as supplemented or amended toresales of common stock issued upon exercise of warrants, we do not anticipate that a prospectus will be required to be delivered with respect to thosereflect such transaction).In effecting sales,
because the distribution of our common stock upon the exercise of the warrants also is covered by this prospectus. We will bear all costs, expenses and fees in connection with registration of the securities covered by this prospectus. Brokerage commissions and similar selling expenses, if any, attributable to the resale of warrantsbroker-dealers orcommon stock issued upon the exercise of warrants will be borneagents engaged by the sellingsecurityholders. Sales of warrantsstockholders may arrange for other broker-dealers to participate. Broker-dealers orcommon stock issued upon exercise of the warrants may be effected by selling securityholders from time to time in one or more types of transactions (which may include block transactions) in the over-the-counter market, in negotiated transactions, through put or call options transactions relating to the securityholders, or a combination of such methods of sale, at market prices prevailing at the time of sale, or at negotiated prices. Such transactions may or may not involve brokers or dealers. The selling securityholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their warrants or common stock issued upon exercise of the warrants, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of warrants or common stock issued upon exercise of the warrants by the selling securityholders. The selling securityholders may effect such transactions by selling warrants or common stock issued upon exercise of the warrants directly to purchasers or to or through broker-dealers, which may act asagentsor principals. Such broker-dealersmay receivecompensation in the form ofcommissions, discountsconcessions,orcommissionsconcessions from the sellingsecurityholders and/stockholders in amounts to be negotiated immediately prior to the sale.Any underwriters, broker-dealers or
the purchasers of warrants for whom such broker-dealers may act asagentsor to whom they sell as principal, or both which compensation as to a particular broker-dealer might bewho participate inexcess of customary commissions. The selling securityholders and any broker-dealers that act in connection withthe sale or distribution ofwarrants mightthe common stock may be deemed to be"underwriters"“underwriters” within the meaning of Section 2(11) of the SecuritiesAct,Act. In addition, any selling stockholder or affiliate of a selling stockholder that is a registered broker-dealer will be deemed to be an underwriter, unless such selling-10-
stockholder purchased in the ordinary course of business, and at the time of its purchase of the shares to be resold, did not have any agreements or understandings, directly or indirectly, with any person to distribute the shares. As a result, any profits on the sale of the common stock by such selling stockholders and any discounts, commissions or concessions received by
such broker-dealers and any profit on the resale of the warrants or common stock issued upon exercise of the warrants sold by them while acting as principals mightit may be deemed to be underwriting discountsorand commissions under the Securities Act. Affiliates of selling stockholders who are deemed to be “underwriters” within the meaning of the Securities Act will be subject to prospectus delivery requirements of the Securities Act. Underwriters are subject to certain statutory liabilities, including, but not limited to, Sections 11, 12 and 17 of the Securities Act.The specific terms of thelock-up provisions, if any, in respect of any given offering will be described in the applicable prospectus supplement.
In order to comply with the securities laws of certain states, if applicable, the shares must be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
In addition, we will make copies of this prospectus available to the selling stockholders upon reasonable request. The selling
securityholdersstockholders mayagree toindemnify anyagent dealer orbroker-dealer that participates in transactions involvingsalesthe sale of thewarrants or common stock issued upon exercise of the warrantsshares against certain liabilities, including liabilities arising under the Securities Act.BecauseWe have agreed to indemnify the selling
securityholdersstockholders against certain liabilities, including certain liabilities under the Securities Act.-11-
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FORNON-U.S. HOLDERS OF SHARES
This section summarizes certain United States federal income and estate tax consequences of the ownership and disposition of shares by anon-U.S. holder. You are anon-U.S. holder if you are, for United States federal income tax purposes:
a nonresident alien individual,a foreign corporation, oran estate or trust that in either case is not subject to United States federal income tax on a net income basis on income or gain from shares.This section does not consider the specific facts and circumstances that may be
deemedrelevant to a particularnon-U.S. holder and does not address the treatment of anon-U.S. holder under the laws of any state, local or foreign taxing jurisdiction. This section is based on the tax laws of the United States, including the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed regulations, and administrative and judicial interpretations, all as currently in effect. These laws are subject to change, possibly on a retroactive basis.If a partnership holds the shares, the United States federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the shares should consult its tax advisor with regard to the United States federal income tax treatment of an investment in the shares.
You should consult a tax advisor regarding the United States federal tax consequences of acquiring, holding and disposing of common stock in your particular circumstances, as well as any tax consequences that may arise under the laws of any state, local or foreign taxing jurisdiction.
Dividends
Except as described below, if you are anon-U.S. holder of shares, dividends paid to you are subject to withholding of United States federal income tax at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate. Even if you are eligible for a lower treaty rate, we and other payors will generally be
"underwriters"required to withhold at a 30% rate (rather than the lower treaty rate) on dividend payments to you, unless you have furnished to us or another payor:a valid Internal Revenue Service (“IRS”) FormW-8 or an acceptable substitute form upon which you certify, under penalties of perjury, your status as anon-U.S. person and your entitlement to the lower treaty rate with respect to such payments, orin the case of payments made outside the United States to an offshore account (generally, an account maintained by you at an office or branch of a bank or other financial institution at any location outside the United States), other documentary evidence establishing your entitlement to the lower treaty rate in accordance with U.S. Treasury regulations.If you are eligible for a reduced rate of United States withholding tax under a tax treaty, you may obtain a refund of any amounts withheld in excess of that rate by filing a refund claim with the IRS.
If dividends paid to you are “effectively connected” with your conduct of a trade or business within the
meaningUnited States, and, if required by a tax treaty, the dividends are attributable to a permanent establishment that you maintain in the United States, we and other payors generally are not required to withhold tax from the dividends, provided that you have furnished to us or another payor a valid IRS FormW-8ECI or an acceptable substitute form upon which you represent, under penalties ofSection 2(11)perjury, that:you are anon-U.S. person, andthe dividends are effectively connected with your conduct of a trade or business within the United States and are includible in your gross income.-12-
“Effectively connected” dividends are taxed at rates applicable to United States citizens, resident aliens and domestic United States corporations.
If you are a corporatenon-U.S. holder, “effectively connected” dividends that you receive may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.
Gain on Disposition of Shares
If you are anon-U.S. holder, you generally will not be subject to United States federal income tax on gain that you recognize on a disposition of shares unless:
the gain is “effectively connected” with your conduct of a trade or business in the United States, and the gain is attributable to a permanent establishment that you maintain in the United States, if that is required by an applicable income tax treaty as a condition for subjecting you to United States taxation on a net income basis,you are an individual, you hold the shares as a capital asset, you are present in the United States for 183 or more days in the taxable year of theSecuritiessale and certain other conditions exist, orwe are or have been a United States real property holding corporation for federal income tax purposes and you held, directly or indirectly, at any time during the five-year period ending on the date of disposition, more than 5% of the shares and you are not eligible for any treaty exemption.If you are a corporatenon-U.S. holder, “effectively connected” gains that you recognize may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.
We have not been, are not and do not anticipate becoming a United States real property holding corporation for United States federal income tax purposes.
FATCA Withholding
Pursuant to sections 1471 through 1474 of the Code, commonly known as the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax (“FATCA withholding”) may be imposed on certain payments to you or to certain foreign financial institutions, investment funds and othernon-U.S. persons receiving payments on your behalf if you or such persons fail to comply with certain information reporting requirements. Such payments will include U.S.-source dividends and the
selling securityholdersgross proceeds from the sale or other disposition of stock that can produce U.S.-source dividends. Payments of dividends that you receive in respect of shares could be affected by this withholding if you are subject to the FATCA information reporting requirements and fail to comply with them or if you hold shares through anon-U.S. person (e.g., a foreign bank or broker) that fails to comply with these requirements (even if payments to you would not otherwise have been subject to FATCA withholding). Payments of gross proceeds from a sale or other disposition of shares could also be subject to FATCA withholding unless such disposition occurs before January 1, 2019. You should consult your own tax advisors regarding the relevant U.S. law and other official guidance on FATCA withholding.Federal Estate Taxes
Shares held by anon-U.S. holder at the time of death will be included in the holder’s gross estate for United States federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.
Backup Withholding and Information Reporting
If you are anon-U.S. holder, we and other payors are required to report payments of dividends on IRS Form1042-S even if the payments are exempt from withholding. You are otherwise generally exempt from backup withholding and information reporting requirements with respect to dividend payments and the payment of the proceeds from the sale of shares effected at a United States office of a broker provided that either (i) the payor or broker does not have actual knowledge or reason to know that you are a United States person and you have furnished a valid IRS FormW-8 or other documentation upon which the payor or broker may rely to treat the payments as made to anon-U.S. person or (ii) you otherwise establish an exemption.
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Payment of the proceeds from the sale of shares effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, a sale effected at a foreign office of a broker could be subject to information reporting in the same manner as a sale within the United States (and in certain cases may be subject to backup withholding as well) if (i) the broker has certain connections to the United States, (ii) the proceeds or confirmation are sent to the United States or (iii) the sale has certain other specified connections with the United States. In addition, certain foreign brokers may be required to report the amount of gross proceeds from the sale or other disposition of shares under FATCA if you are presumed to be a United States person.
Unless the applicable prospectus
delivery requirementssupplement indicates otherwise, the validity of theSecurities Act. Selling securityholders also may resell all or a portionsecurities in respect of which this prospectus is being delivered will be passed upon for Key by Sullivan & Cromwell LLP.The financial statements and management’s assessment of the
warrants or common stock issued upon exerciseeffectiveness ofthe warrants in open market transactions in reliance upon Rule 144 under the Securities Act, provided they meet the criteria and conform to the requirements of such rule. After we are notified by a selling securityholder that any material arrangement has been entered into with a broker-dealer for the sale of warrants or common stock issued upon the exercise of warrants through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling securityholder and of the participating broker-dealer(s), (ii) the type and number of securities involved, (iii) the price at which such securities were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker- 11dealer(s) did not conduct any investigations to verify the information set out orinternal control over financial reporting incorporated by reference in this prospectus and(vi) other facts material to the transaction. DESCRIPTION OF CAPITAL STOCK As of May 12, 1999, our authorized capital stock was 100,000,000 shares, which may be issued as either shares of preferred stock or common stock. As of that date, we had 77,302,401 shares of common stock outstanding and no shares of preferred stock outstanding. COMMON STOCK LISTING. Our common stock is listed on the New York Stock Exchange under the symbol "KEG." Any additional common stock we issue will also be listed on the NYSE. DIVIDENDS. Common stockholders may receive dividends when declared by the board of directors. Dividends may be paid in cash, stock or another form. However, certain of our existing debt agreements contain covenants that currently restrict us from paying dividends. Additionally, in certain cases, common stockholders may not receive dividends until we have satisfied our obligations to any preferred stockholders. FULLY PAID. All outstanding shares of common stock are fully paid and non-assessable. Any additional common stock we issue will also be fully paid and non-assessable. VOTING RIGHTS. Each share of common stock is entitled to one voteelsewhere in theelection of directors and other matters. Common stockholders are not entitled to preemptive or cumulative voting rights. OTHER RIGHTS. We will notify common stockholders of any stockholders' meetings according to applicable law. If we liquidate, dissolve or wind-up our business, either voluntarily or not, common stockholders will share equally in the assets remaining after we pay our creditors and preferred stockholders. TRANSFER AGENT AND REGISTRAR. Our transfer agent and registrar is American Stock Transfer & Trust Company, New York, New York. PREFERRED STOCK Our board of directors can, without approval of our stockholders, issue one or more series of preferred stock. The board can also determine the number of shares of each series and the rights, preferences and limitations of each series including the dividend rights, voting rights, conversion rights, redemption rights and any liquidation preferences of any series of preferred stock, the number of shares constituting each series and the terms and conditions of issue. In some cases, the issuance of preferred stock could delay a change in control of the Company and make it harder to remove present management. Under certain circumstances, preferred stock could also restrict dividend payments to holders of our common stock. The registrar for shares of preferred stock will send notices to stockholders of any meetings at which holders of the preferred stock have the right to elect directors or to vote on any other matter. 12DESCRIPTION OF WARRANTS The warrants were issued pursuant to a warrant agreement with The Bank of New York, as Warrant Agent. The following summary of certain provisions of the warrant agreement is not complete and is qualified in its entirety by reference to the warrant agreement. A copy of the warrant agreement may be obtained by contacting Key Energy Services, Inc. at Two Tower Center, 20th Floor, East Brunswick, New Jersey 08816, Attention: General Counsel. GENERAL SHARES ISSUABLE UPON EXERCISE. Each warrant, when exercised, entitles a holder to receive 14.4896 fully paid and non-assessable shares of our common stock. The exercise price is $4.88125 per share of common stock. The exercise price and the number of shares of common stock issuable upon exercise of a warrant are both subject to adjustment in certain circumstances described below. The warrants currently trade as a unit with our 14% senior subordinated notes due 2009, and will continue to trade as a unit until the earlier of: - The commencement of an exchange offer or the effectiveness of a shelf-registrationregistration statementwith respect to the registration of the 14% notes under the Securities Act; - July 15, 1999; - Or such date as the underwriter for the unit offering may determine. EXERCISE PERIOD. Warrants are exercisable at any time on or after January 25, 2000. Unless earlier exercised, the warrants will expire on January 15, 2009. We will give notice of expiration not less than 90 nor more than 120 days before the expiration date to the registered holders of the then outstanding warrants. If we fail to give the notice when required, the warrants will not expire until 90 days after notice is given. The warrants are not listed for trading on any stock exchange, but the common stock issuable upon exercise of the warrants has been listed on the New York Stock Exchange. EXERCISE PROCEDURES. In order to exercise all or any of the warrants, holders are required, in the case of a warrant in certificated form, to surrender to the warrant agent the certificate representing the warrants to be exercised, and in the case of a warrant held in book-entry form, to comply with the applicable procedures set forth in the warrant agreement, in each case with the accompanying form of election to purchase properly completed and executed, and to pay in full the exercise price for each share of common stock or other securities issuable upon exercise of the warrants. The exercise price may be paid: (i) in cash or by certified or official bank check or by wire transfer to an account that we have designated for that purpose; or (ii) without the payment of cash, by reducing the number of shares of common stock that would be obtainable upon the exercise of a warrant and payment of the exercise price in cash so as to yield a number of shares of common stock upon the exercise of the warrant equal to the product of (a) the number of shares of common stock for which the warrant is exercisable as of the date of exercise (if the exercise price were being paid in cash) and (b) the "cashless exercise ratio," as defined in the warrant agreement. VOTING RIGHTS; DIVIDENDS. If warrants are not exercised, warrant holders will not be entitled to receive dividends, to vote, to consent, to exercise any preemptive rights or to receive notice as a stockholder in respect of any stockholders meeting for the election of our directors or any other purpose, or to exercise any other rights whatsoever as a stockholder. 13ADJUSTMENTS. The number of shares of common stock issuable upon the exercise of the warrants and the exercise price will be subject to adjustment in certain circumstances, including: (i) payment of dividends and other distributions on our common stock payable in our common stock or our other equity interests; (ii) subdivisions, combinations and certain reclassifications of our common stock; (iii) the issuance to all holders of common stock of rights, options or warrants entitling them to subscribe for additional shares of common stock, or of securities convertible into or exercisable or exchangeable for additional shares of common stock at an offering price (or with an initial conversion, exercise or exchange price plus such offering price) that is less than the then current market value per share of common stock; (iv) the distribution to all holders of common stock of any of our assets (including cash), our debt securities or any rights or warrants to purchase any securities (excluding those rights, options and warrants referred to in clause (iii) above and cash dividends and other cash distributions from current or retained earnings); (v) the issuance of shares of common stock for a consideration per share that is less than the then current market value per share of common stock; and (vi) the issuance of securities convertible into or exercisable or exchangeable for common stock for a conversion, exercise or exchange price per share that is less, than the then current market value per share of common stock. The events described in clauses (v) and (vi) above are subject to certain exceptions described in the warrant agreement, including, without limitation, certain BONA FIDE public offerings and private placements, issuances of common stock under any option, warrant, right or convertible security exercisable upon issuance of the warrants and certain issuances of common stock pursuant to employee stock incentive plans. No adjustment in the exercise price will be required unless the adjustment would result in an increase or decrease of at least 1% in the exercise price; PROVIDED, HOWEVER, that any adjustment that is not made as a result of this paragraph will be carried forward and taken into account in any subsequent adjustment. In addition, we may at any time reduce the exercise price (but not to an amount that is less than the par value of the common stock) for any period of time (but not less than 20 business days) as deemed appropriate by our board of directors. If we consolidate or merge, or sell all or substantially all of our assets to another person, each warrant will thereafter be exercisable for the right to receive the kind and amount of shares of stock or other securities or property to which you wouldhave beenentitled as a result of such consolidation, merger or sale had the warrants been exercised immediately prior thereto. However, if (i) we consolidate, merge or sell all or substantially all of our assets to another person and, in connection therewith, the consideration payable to the holders of common stock in exchange for their shares is payable solely in cash or (ii) we dissolve, liquidate or wind-up, then warrant holders will be entitled to receive distributions on an equal basis with the holders of common stock or other securities issuable upon exercise of the warrants, as if the warrants had been exercised immediately before such event, less the exercise price. AMENDMENT. Any amendment or supplement to the warrant agreement that has an adverse effect on the interests of warrant holders will require the written consent of the holders of a majority of the then outstanding warrants (excluding any warrants held by us or any of our affiliates). Notwithstanding the foregoing, from time to time, we and the warrant agent, without the consent of warrant holders, may amend or supplement the warrant agreement for certain purposes, including to cure any ambiguities, defects or inconsistencies or to make any change that does not adversely affect your rights. 14LEGAL MATTERS Certain legal matters relating to the validity of the common stock and the debt securities will be passed upon by Porter & Hedges, L.L.P., Houston, Texas. EXPERTS The consolidated financial statements of the Company and subsidiaries as of June 30, 1998 and 1997, and for each of the years in the three-year period ended June 30, 1998, have beenso incorporated by reference inthis prospectus inthe reliance upon thereportreports ofKPMGGrant Thornton LLP, independentcertifiedregistered public accountants, upon the authority of said firm as experts in accounting and auditing.The consolidated financialWHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov. Copies of
Dawson Production Services, Inc.certain information filed by us with the SEC are also available on our website at www.keyenergy.com. Our website is not a part of this prospectus andsubsidiaries as of March 31, 1998 and 1997, and for each of the years in the three-year period ended March 31, 1998, have beenis not incorporated by reference in this prospectus. You may also read and copy any document we file at the SEC’s Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at1-800-SEC-0330 for further information on the operation of the Public Reference Room.This prospectus is part of a registration statement we filed with the SEC. This prospectus omits some information contained in
reliance uponthereportregistration statement in accordance with SEC rules and regulations. You should review the information and exhibits in the registration statement for further information about us and our consolidated subsidiaries and the securities we are offering. Statements in this prospectus concerning any document we filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified by reference to these filings. You should review the complete document to evaluate these statements.The SEC allows us to incorporate by reference much of
KPMG LLP, independent certified public accountants,the information we file with the SEC, which means that we can disclose important information to you by referring you to those publicly available documents. The information that we incorporate by reference in this prospectus is considered to be part of this prospectus. Because we are incorporating by reference future filings with the SEC, this prospectus is continually updated and those future filings may modify or supersede some of the information included or incorporated in this prospectus. This means that you must look at all of the SEC filings that we incorporate by reference to determine if any of the statements in this prospectus or in any document previously incorporated by referenceherein, uponhave been modified or superseded. This prospectus incorporates by reference theauthoritydocuments listed below (File No. 001-08038), and any documents we may file pursuant to Sections 13(a), 13(c), 14 or 15(d) ofsaid firmthe Securities Exchange Act of 1934, asexpertsamended, (i) after the date of the initial registration statement and prior to effectiveness of the registration statement and (ii) after the effectiveness of the registration statement until the offering of the securities under the registration statement is terminated or completed, inaccountingeach case, other than those documents or the portions of those documents not deemed to be filed:Annual Report on Form10-K for the fiscal year ended December 31, 2016 (as filed with the SEC on March 2, 2017);Current Reports on Form8-K filed with the SEC on January 30, 2017, February 2, 2017, February 6, 2017 andauditing.March 24, 2017;The description of our common stock contained in our Registration Statement on Form8-A filed with the SEC on December 15,2016, including any amendments or reports filed for the purpose of updating such description. -14-
You may request a copy of these filings, at no cost, by writing or telephoning us at the following address or telephone number:
Key Energy Services, Inc.
1301 McKinney Street, Suite 1800
Houston, Texas 77010
Attn: Investor Relations
(713)651-4300
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KEY ENERGY SERVICES, INC.
6,084,637 SHARES
COMMON STOCK
PROSPECTUS
, 2017
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Set
Item 14. Other Expenses of Issuance and Distribution. The following table sets forth
below is an estimate oftheamount of fees andvarious expenses to be incurred in connection with theissuancesale and distribution of the securities being registered herebyother than(except any underwriting discounts andcommissions.commissions that may be incurred).
SEC registration fee
$ 19,442.62 Legal fees and expenses
Accounting fees and expenses
Miscellaneous expenses
Total expenses
$ — (1)
Registration Fee Under Securities Act................. $ 3,215 Legal Fees............................................ 12,500 Accounting Fees....................................... 5,000 Printing(1) Other than the SEC registration fee, these fees and Engraving................................ 5,000 Miscellaneous Fees.................................... 4,285 ------- Total.......................................... $30,000 ------- -------expenses will be calculated based on the number and manner of offerings and accordingly are not estimated at this time.ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Item 15. Indemnification of Directors and Officers. Reference is made to Section
2-418145 (“Section 145”) of theMarylandGeneral Corporation Law(the "MGCL") provides that a corporation may indemnify any director made a party to any proceeding against judgments, penalties, fines, settlements and reasonable expenses, unless it is established that - the act or omissionof thedirector was material to the matter giving rise to the proceeding and was committed in bad faith or was a resultState ofdeliberate dishonesty; - the director actually received an improper personal benefit; or - in a criminal proceeding, the director had reasonable cause to believe the act or omission was unlawful. A director may not be indemnified in any proceeding charging improper personal benefit if the director was adjudged to be liable on the basis that personal benefit was improperly received and, in a derivative action, there shall not beDelaware (the “DGCL”) which provides for indemnificationif a director has been adjudged liable to the corporation. A director or officerofa corporation who has been successful in the defense of any proceeding shall be indemnified against reasonable costs incurred in such defense. Indemnification may not be made unless authorized for a specific proceeding after determination by the board of directors, special legal counsel or the stockholders that indemnification is permissible because the director has met the requisite standard of conduct. Article Seventh of the Company's Amended and Restated Articles of Incorporation, as amended (the "Charter"), provides that the Company shall indemnify: - itsdirectors and officerswhether servingin certain circumstances.The Company’s certificate of incorporation (the “Certificate of Incorporation”) contains a provision that is designed to limit the
Company or at its request any other entity,directors’ liability to thefull extent required or permitted by Maryland law, including the advance of expenses under the procedures and to the fullextent permitted bylaw;the DGCL and- other employees and agents to such extent as shallany amendments thereto. Specifically, directors will not beauthorized by the Board of Directors or the Company's Bylaws and be permitted by law. The foregoing rights of indemnification are exclusive of any other rights to which those seeking indemnification may be entitled. The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is II-1expressly empowered to adopt, approve and amend from time to time such Bylaws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by Maryland law. Furthermore, no director or officer of the Company shall beheld personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director,or an officer,except for liability: (i) for a breach of the duty of loyalty to theextent that exculpation from liability isCompany or its stockholders, (ii) for acts or omissions notpermitted under Marylandin good faith or which involve intentional misconduct or a knowing violation of law,as in effect when such breach occurred. No amendment(iii) payment of an improper dividend or improper repurchase of theCharterCompany’s stock under Section 174 of the DGCL, orrepeal(iv) for any transaction from which the director derived an improper personal benefit. The principal effect ofanythe limitation ofits provisions shallliability provision is that a stockholder is unable to prosecute an action for monetary damages against a director of the Company unless the stockholder can demonstrate one of the specified bases for liability. This provision, however, does not eliminate or limitordirector liability arising in connection with causes of action brought under the federal securities laws. While the Certificate of Incorporation limits the personal liability of directors, it does not eliminate thelimitations ondirectors’ duty of care. The inclusion of the limitation of liabilityprovided toprovision in the Certificate of Incorporation may, however, discourage or deter stockholders or management from bringing a lawsuit against directors for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited the Company and its stockholders. This provision should not affect the availability of equitable remedies such as injunction or rescission based upon a director’s breach of the duty of care.The Certificate of Incorporation and the bylaws of the Company also provide that the Company will indemnify its directors and officers to the fullest extent permitted by Delaware law. The Company is generally required to indemnify its directors and officers for all judgments, fines, settlements, legal fees and other expenses incurred in connection with
respectpending or threatened legal proceedings because of the director’s or officer’s position with the Company or another entity for which the director or officer serves at the Company’s request, subject toactscertain conditions, and to advance funds to its directors and officers to enable them to defend against such proceedings. To receive indemnification, the director oromissions occurring priorofficer must have acted in good faith and in what was reasonably believed tosuch amendment or repeal. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits EXHIBIT NO. DESCRIPTION ----------- ----------- 4.1 -- Warrant Agreement, dated as January 22, 1999 betweenbe a lawful manner in theRegistrantCompany’s best interest. Pursuant to Section 145, the Company maintains directors’ and officers’ liability insurance coverage which insures the Company, its subsidiaries and theBankelected officers and directors ofNew York, a New York banking corporationthe Company and its subsidiaries, against damages, judgments, settlements and costs incurred by reason of certain acts committed by such persons in their capacities asWarrant Agent (incorporated by reference to Exhibit 99(c) to the Registrant's Current Report on Form 8-K, dated February 3, 1999. 4.2 -- Form of Warrant (attached as Exhibit A to the Warrant Agreement filed as Exhibit 4.1 to this R e gistration Statement,officers andincorporated by reference to Exhibit 99(c) to the Registrant's Current Report on Form 8-K, dated February 3, 1999). *5.1 -- Opinion of Porter & Hedges, L.L.P. *23.1 -- Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1) *23.2 -- Consent of KPMG LLP *23.3 -- Consent of KPMG LLP *24.1 -- Power of Attorney (included on signature page) - ----------------- * Filed herewith (b) Financial Statement Schedules Schedules are omitted since the information required to be submitted has been included in the Consolidated Financial Statements of Key Energy Services, Inc., or the notes thereto, or the required information is not applicable. ITEM 17. UNDERTAKINGS.directors.
Item 16. Exhibits. The
undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendmentexhibits to this RegistrationStatement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; II-2(ii) To reflectStatement are listed in theprospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof)exhibit index, which appears elsewhere herein and is incorporated herein by reference.II-1
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;
(ii) to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; provided,however, that paragraphs (a)(1)(i), (ii) and (iii)
To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; provided, however, that subparagraphs (i) and (ii)do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained inthe periodicreports filed with or furnished to the SEC bythe Registranta registrant pursuant to Section 13 or Section 15(d) of the SecuritiesandExchange Act of 1934, as amended (the “Exchange Act”), that are incorporated by reference in this registrationstatement. (2) That for the purposestatement, or is contained in a form ofdetermining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemedprospectus filed pursuant tobe a new registration statement relating to the securities offered herein, and the offering of such securities atRule 424(b) thattime shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) The undersigned Registrant hereby undertakes as follows: that prior to any public offering of the securities registered hereunder through use of a prospectus whichisapart of this registrationstatement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (5) The registrant undertakes that every prospectus: (I) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned Registrant hereby further undertakes that, for the purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.statement.
(2) That, for the purposes 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 the time shall be deemed to be the initialbona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser:
(i) each prospectus filed by a registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof;provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(b) 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 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to 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 initialbona fide offering thereof. II-2
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of any registrant pursuant to the indemnification provisions described herein, or otherwise, each registrant has been advised that in the opinion of the SEC 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 a registrant of expenses incurred or paid by a director, officer or controlling person of such 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, such 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-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, Key Energy Services, Inc.the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on FormS-3 and has duly caused thisRegistration StatementAmendment No. 2 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City ofEast Brunswick,Houston, State ofNew JerseyTexas, onJune 2, 1999. KEY ENERGY SERVICES, INC. By: /s/ FRANCIS D. JOHN ------------------------------------ FRANCIS D. JOHN, PRESIDENT AND CHIEF EXECUTIVE OFFICERthis 3rd day of April, 2017.
KEY ENERGY SERVICES, INC. By: /s/ J. Marshall Dodson
Name: J. Marshall Dodson Title: Senior Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933,
as amended,thisRegistration Statement on Form S-3Amendment No. 2 to the registration statement has been signedbelowby the following persons in the capacities and on the datesindicated;indicated.
Signature
Title
Date
*
Chairman April 3, 2017 Philip Norment *
Director April 3, 2017 Robert Drummond President and
each of the undersigned officers and directors of Key Energy Services, Inc. hereby severally constitutes and appoints Francis D. John and Jack D. Loftis, Jr., and each of them, to sign for him, and in his name in the capacity indicated below, such Registration Statement on Form S-3 and for the purpose of registering such securities under the Securities Act of 1933, as amended, and any and all amendments thereto, including without limitation any registration statements or post-effective amendment thereof filed under and meeting the requirements of Rule 462(b) under the Securities Act, hereby ratifying and confirming our signatures as they may be signed by our attorneys to such Registration Statement and any and all amendments thereto.
Signatures Title Date ---------- ----- ----/s/ FRANCIS D. JOHN President,Chief Executive OfficerJune 2, 1999 - ------------------------------ and Director (Principal(Principal Executive Officer)
Francis D. John /s/ WILLIAM S. MANLY Director June 2, 1999 - ------------------------------ William S. Manly /s/ MORTON WOLKOWITZ Director June 2, 1999 - ------------------------------ Morton Wolkowitz /s/ DAVID/s/ J.
BREAZZANO Director June 2, 1999 - ------------------------------ David J. Breazzano /s/ KEVIN P. COLLINS Director June 2, 1999 - ------------------------------ Kevin P. Collins/s/ PHILLIP W. MARCUM Director June 2, 1999 - ------------------------------ Phillip W. Marcum ExecutiveMarshall DodsonSenior Vice President /s/ STEPHEN E. MCGREGORand ChiefApril 3, 2017 J. Marshall Dodson Financial Officer and - ------------------------------ Treasurer(Principal Financial Officer)June 2, 1999 Stephen E. McGregor /s/ DANNY R. EVATT*
Vice President of Financial June 2, 1999 - ------------------------------ Operations (Principaland ControllerApril 3, 2017 Eddie Picard (Principal Accounting Officer) Danny R. Evatt*
Director April 3, 2017 Sherman K. Edmiston III *
Director April 3, 2017 C. Christopher Gaut *
Director April 3, 2017 Bryan Kelln *
Director April 3, 2017 Jacob Kotzubei EXHIBITSII-4
*
Director April 3, 2017 Steven H. Pruett *
Director April 3, 2017 Mary Ann Sigler *
Director April 3, 2017 Scott D. Vogel *
Director April 3, 2017 H.H. Tripp Wommack, III
*By: /s/ J. Marshall Dodson J. Marshall Dodson Attorney-in-Fact II-5
EXHIBIT
NO. DESCRIPTION ----------- ----------- 4.1 -- Warrant Agreement dated as January 22, 1999 between the Registrant and the Bank of New York, a New York banking corporation as Warrant Agent (incorporated by reference to Exhibit 99(c) to the Registrant's Current Report on Form 8-K, dated February 3, 1999. 4.2 -- Form of Warrant (attached as Exhibit A to the Warrant Agreement filed as Exhibit 4.1 to this Registration Statement, and incorporated by reference to Exhibit 99(c) to the Registrant's Current Report on Form 8-K, dated February 3, 1999). *5.1 -- Opinion of Porter & Hedges, L.L.P. *23.1 -- Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1) *23.2 -- Consent of KPMG LLP *23.3 -- Consent of KPMG LLP *24.1 -- Power of Attorney (included on signature page) - ----------------- * Filed herewith.INDEX
Exhibit
No.Description
3.1 Certificate of Incorporation of Key Energy Services, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company’s Form8-A filed with the SEC on December 15, 2016, FileNo. 001-08038) 3.2 Amended and RestatedBy-laws of Key Energy Services, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 2, 2017, FileNo. 001-08038) 4.1 Registration Rights Agreement, dated December 15, 2016, by and between Key Energy Services, Inc. and each investor party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form8-A filed with the SEC on December 15, 2016, FileNo. 001-08038) 5* Opinion of Sullivan & Cromwell LLP 23.1** Consent of Grant Thornton, independent registered public accounting firm for the registrant 23.2* Consent of Sullivan & Cromwell LLP (included in Exhibit 5) 24* Power of Attorney
* Previously filed
** Filed herewith II-6