Key Energy Group Secures $700 Million in Funding for Acquisition of Dawson Production Services

Key Energy Group, Inc., a holding company with diversified energy operations, has received commitments for $700 million in funding to support its acquisition of Dawson Production Services, Inc. The company announced that it has entered into commitment letters with Lehman Commercial Paper, Inc. and Lehman Brothers, Inc. for $150 million in interim loans, and PNC Bank, N.A. for $550 million in senior secured credit facilities. The financing will be used to fully fund the tender offer for all outstanding shares of Dawson common stock, refinance certain existing indebtedness of Key, and pay related fees and expenses.

The tender offer, which commenced on August 17, 1998, is currently scheduled to expire on Monday, September 14, 1998, unless extended. The offer is conditioned upon several factors, including the execution and delivery of definitive documentation, the valid tender and non-withdrawal of a majority of shares, and the receipt of funds from an existing financing commitment. Key Energy Group's diversified energy operations, including well servicing, oilfield services, contract drilling, and oil and natural gas production, have operations in major domestic onshore producing regions and in Argentina.

Key Takeaways:

• Key Energy Group, Inc. has received commitments for $700 million in funding to support its acquisition of Dawson Production Services, Inc.
• The company has entered into commitment letters with Lehman Commercial Paper, Inc. and Lehman Brothers, Inc. for $150 million in interim loans, and PNC Bank, N.A. for $550 million in senior secured credit facilities.
• The financing will be used to fully fund the tender offer for all outstanding shares of Dawson common stock, refinance certain existing indebtedness of Key, and pay related fees and expenses.
• The tender offer commenced on August 17, 1998, and is currently scheduled to expire on Monday, September 14, 1998, unless extended.
• The offer is conditioned upon several factors, including the execution and delivery of definitive documentation, the valid tender and non-withdrawal of a majority of shares, and the receipt of funds from an existing financing commitment.
• Key Energy Group has diversified energy operations, including well servicing, oilfield services, contract drilling, and oil and natural gas production, with operations in major domestic onshore producing regions and in Argentina.

Statistics:

• $700 million: total funding commitments
• $150 million: interim loans from Lehman Commercial Paper, Inc. and Lehman Brothers, Inc.
• $550 million: senior secured credit facilities from PNC Bank, N.A.
• 17.50 per share: purchase price of Dawson common stock
• August 17, 1998: commencement date of tender offer
• September 14, 1998: scheduled expiration date of tender offer

Sources:

• Business Wire, August 26, 1998
• Key Energy Group, Inc. press release, August 26, 1998
• Securities and Exchange Commission filings, August 17, 1998, and August 26, 1998