Business Context and Reporting Period
Company: RPC, Inc. (NYSE: RES)
Filing Type: Form 8-K (Current Report)
Date of Report: April 1, 2025
Event: Completion of the acquisition of 100% of the membership interests of Pintail Alternative Energy, L.L.C. ("Pintail"), a leading provider of wireline services for pump-down perforation operations in the Permian Basin. The transaction was executed through RPC's wholly owned subsidiary, Thru Tubing Solutions, Inc.
Key Financial Metrics and Transaction Structure
Total Purchase Price: $245 million for 100% equity interest in Pintail.
- Cash Consideration: Approximately $170 million (subject to working capital, cash, and debt adjustments). Paid from RPC's cash on hand.
- Stock Consideration: $25 million, paid via issuance of 4,545,454 shares of restricted RPC common stock to Matthew Houston.
- Seller Note: $50 million secured note payable to Houston Companies, L.P.
Working Capital Adjustment: Target Net Working Capital (NWC) is $26 million with a $250,000 collar. Final cash consideration is adjusted based on actual cash, debt (approx. $4.5 million), and unpaid transaction expenses.
Escrow: Approximately $2 million of the cash consideration is held in escrow to secure obligations regarding final adjustments.
Material Changes and Payment Terms
Stock Vesting and Restrictions:
- 33.33% of the stock consideration vests annually over three years.
- Shares are subject to a lock-up until vested.
- Forfeiture applies if the recipient is terminated for cause or resigns without "good reason."
Seller Note Repayment Schedule:
- Year 1: $20 million principal payment.
- Year 2: $10 million principal payment.
- Year 3: Remaining outstanding principal balance.
- Interest Rate: Variable (SOFR + 2.0% per annum).
Default Provisions: The Seller Note includes standard default triggers (e.g., missed payments, bankruptcy, admission of inability to pay debts), resulting in immediate acceleration of the full principal and accrued interest.
Outlook, Risks, and Contingencies
Financial Statements: Pintail's audited financial statements and pro forma financial information for RPC will be filed within 71 calendar days of this report.
Indemnification: Sellers (Houston and Kenworthy) have agreed to indemnify RPC for breaches of representations, warranties, covenants, and specific liabilities (taxes, legal proceedings, unpaid debt). RPC has agreed to indemnify Sellers for breaches of its own representations and covenants.
Restrictive Covenants: Sellers are subject to 5-year non-compete, non-solicitation, and non-disclosure agreements.
Risk Factors: The transaction relies on the accuracy of Pintail's financial representations. Disputes regarding the final working capital calculation may impact the final cash consideration and escrow release.
Investor Verification Checklist
- Verify the final adjusted purchase price once the working capital and debt adjustments are finalized (expected within 150 days).
- Review the upcoming pro forma financial information to assess the impact of the $50 million Seller Note and interest expense on RPC's leverage and liquidity.
- Monitor the vesting schedule of the 4.5 million shares issued to ensure compliance with the lock-up and forfeiture provisions.
- Confirm the integration progress of Pintail's wireline services into RPC's existing operations in the Permian Basin.
- Check for any subsequent filings regarding the $2 million escrow release or potential claims against the Sellers.