HOUSTON, Dec. 09, 2019 (GLOBE NEWSWIRE) — Key Energy Services, Inc. (“Key” or the “Company”) (OTC: KEGX) announced today that it has entered into an extension of its forbearance agreements with its Term Loan and ABL Lenders until the earlier of January 10, 2020 or the occurrence of certain specified early termination events.
As previously announced, on October 29, 2019, Key entered into (i) a forbearance agreement (the “Term Loan Forbearance Agreement”) with Cortland Products Corp., as agent (in such capacity, the “Agent”), and the lenders party thereto (the “Term Loan Lenders”), collectively holding over 99.5% of the principal amount of the outstanding term loans, regarding a default under the Term Loan and Security Agreement, dated as of December 15, 2016, by and among Key, the Agent and the Term Loan Lenders and (ii) a forbearance agreement (the “ABL Forbearance Agreement” and, collectively, the “Forbearance Agreements”) with Bank of America, N.A., as administrative agent (the “Administrative Agent”), and all of the lenders party thereto (the “ABL Lenders” and, collectively with the Term Loan Lenders, the “Lenders”) regarding a cross-default under the Loan and Security Agreement, dated as of April 5, 2019, by and among Key, the Administrative Agent and the ABL Lenders (such defaults, the “Specified Defaults”).
On December 6, 2019, the Company and the Lenders party thereto amended the Forbearance Agreements (the “Forbearance Agreement Amendments”) to extend the forbearance period. Pursuant to the Forbearance Agreement Amendments, the Lenders party thereto have agreed that, until the earlier of January 10, 2020 or the occurrence of certain specified early termination events, such Lenders will forbear from exercising any default-related rights and remedies with respect to the Specified Defaults.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature or that relate to future events and conditions are, or may be deemed to be, forward-looking statements. These forward-looking statements are based on Key’s current expectations, estimates and projections and its management’s beliefs and assumptions concerning future events and financial trends affecting its financial condition and results of operations. In some cases, you can identify these statements by terminology such as “may,” “will,” “should,” “predicts,” “expects,” “believes,” “anticipates,” “projects,” “potential” or “continue” or the negative of such terms and other comparable terminology. These statements are 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 Key’s Annual Report on Form 10-K for the year ended December 31, 2018 and in other reports Key files with the Securities and Exchange Commission.
Key undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release except as required by law. All of Key’s written and oral forward-looking statements are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements.
Important factors that may affect Key’s expectations, estimates or projections include, but are not limited to, the following: the structure and timing of any financial, transactional, or other strategic alternative and whether any such financial, transactional, or other strategic alternative will be completed; Key’s ability to reduce its debt levels or to come to an agreement with its lenders on acceptable terms, if at all; Key’s ability to achieve the benefits of its plan to optimize its geographic footprint, including exiting certain locations and reducing its regional and corporate overhead costs; 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; Key’s ability to implement price increases or maintain pricing on its core services; risks that Key may not be able to reduce, and could even experience increases in, the costs of labor, fuel, equipment and supplies employed in its businesses; industry capacity; asset impairments or other charges; the periodic low demand for Key’s services and resulting operating losses and negative cash flows; Key’s highly competitive industry as well as operating risks, which are primarily self-insured, and the possibility that its insurance may not be adequate to cover all of its losses or liabilities; significant costs and potential liabilities resulting 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; Key’s historically high employee turnover rate and its ability to replace or add workers, including executive officers and skilled workers; Key’s ability to incur debt or long-term lease obligations; Key’s ability to implement technological developments and enhancements; severe weather impacts on Key’s business, including hurricane activity; Key’s ability to successfully identify, make and integrate acquisitions and its ability to finance future growth of its operations or future acquisitions; Key’s ability to achieve the benefits expected from disposition transactions; the loss of one or more of Key’s larger customers; Key’s ability to generate sufficient cash flow to meet debt service obligations; the amount of Key’s debt and the limitations imposed by the covenants in the agreements governing its debt, including its ability to comply with covenants under its current debt agreements; an increase in Key’s debt service obligations due to variable rate indebtedness; Key’s inability to achieve its financial, capital expenditure and operational projections, including quarterly and annual projections of revenue and/or operating income and its 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); Key’s ability to respond to changing or declining market conditions, including Key’s ability to reduce the costs of labor, fuel, equipment and supplies employed and used in its businesses; Key’s ability to maintain sufficient liquidity; the adverse impact of litigation; and other factors affecting Key’s business described in “Item 1A. Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2018, and other reports Key files with the Securities and Exchange Commission.
About Key Energy Services
Key Energy Services is the largest onshore, rig-based well servicing contractor based on the number of rigs owned. Key provides a complete range of well intervention services and has operations in all major onshore oil and gas producing regions of the continental United States.