Credit Facility Amendments
In light of strong market conditions and the recent completion of the restatement process, the Company requested and received more favorable terms under the Facility. Specifically, the Facility was amended to:
1) Give the Company until July 31, 2007 to file its 2006 Annual Report on Form 10-K and waive any defaults due to failure to file compliant SEC reports for prior periods;
2) Reduce the Eurodollar interest rate spread from 3.75% to 2.50% and commitment fees from 0.50% to 0.375% under the Senior Credit Facility;
3) Increase the limitation on capital expenditures through 2009 to $225 million;
4) Increase the stock repurchase basket from $50 million to $250 million and permit repurchases before the Company has made all required SEC filings (the Company will still be subject to securities laws limitations on its ability to repurchase stock before it has released current financial information);
5) Increase the permitted acquisitions basket from $50 million to $100 million; and
6) Eliminate the provision requiring the Company to prepay the term loan with excess cash flow.
In addition, the lenders under the Facility agreed to waive the requirement that the Company issue select financial data monthly. The Company will, however, continue to release its monthly rig and trucking hours as well as provide select quarterly financial data and host quarterly investor conference calls.
Bill Austin, the Company's Chief Financial Officer, stated, "We are pleased that our requested amendments to the Senior Credit Facility have been approved. We appreciate the continued support of our lenders. The amendments will result in a reduction in the annual interest expense on our Senior Credit Facility of nearly $6 million annually and will provide the Company with increased flexibility to grow."
Key Energy Services, Inc. is the world's largest rig-based well service company. The Company provides oilfield services including well servicing, contract drilling, pressure pumping, fishing and rental tools and other oilfield services. The Company has operations in all major onshore oil and gas producing regions of the continental United States and internationally in Argentina.
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