Business Context and Reporting Period
This Form 8-K Current Report was filed by Oil States International, Inc. on January 24, 2018. The filing discloses material events regarding the Company's capital structure and strategic growth initiatives, specifically a planned private offering of convertible senior notes and a potential acquisition.
Key Financial Metrics and Capital Structure
The filing does not provide historical revenue, profit, cash flow, or margin data. Instead, it outlines proposed financing terms:
- Convertible Senior Notes: The Company intends to offer convertible senior notes due 2023 in a private offering, subject to market conditions.
- Revolving Credit Facility: The Company has received lender commitments for an amended facility with up to $350 million in borrowing capacity, maturing in January 2022.
- Covenants: The amended facility includes a minimum interest coverage ratio, a maximum net total leverage ratio, and a maximum senior secured leverage ratio, tested quarterly.
Material Changes and Strategic Initiatives
The primary material change is the initiation of a capital raise and a potential acquisition:
- Acquisition: The Company is in active negotiations to acquire a business complimentary to its existing lines. A letter of intent has been signed, but definitive terms are not yet agreed upon.
- Acquisition Funding: The expected purchase price is approximately $85 million, to be funded via borrowings under the Amended Revolving Credit Facility.
- Contingency: There is no assurance that the Offering, the amended credit facility, or the acquisition will be completed on expected terms or at all.
- Failure to consummate the convertible notes offering on acceptable terms.
- Failure to execute the Amended Revolving Credit Facility.
- Failure to finalize the acquisition agreement or complete the transaction.
- General market conditions and factors detailed in the Company's Form 10-K and 10-Q filings.
- Verify the final terms and pricing of the convertible senior notes due 2023 once the offering is completed.
- Confirm the execution of the definitive agreement for the Amended Revolving Credit Facility and the $350 million capacity.
- Monitor the status of the $85 million acquisition, including the signing of a definitive purchase agreement and closing date.
- Review the Company's compliance with the new leverage and interest coverage covenants in the amended credit facility.
Guidance, Risks, and Management Commentary
Management has issued a cautionary note regarding forward-looking statements. Key risks include: