Boots and Coots S-3 03-20-2006
As
filed with the Securities and Exchange Commission on March 20,
2006
Registration No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
BOOTS
& COOTS INTERNATIONAL WELL CONTROL, INC.
(Name
of
Registrant as specified in its charter)
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Delaware
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11-2908692
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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11615
N. Houston Rosslyn
Houston,
Texas 77086
(281) 931-8884
(Address,
including zip code, and telephone number, including
area
code, of Registrant's principal executive offices)
Brian
Keith
Corporate
Secretary and General Counsel
11615
N. Houston Rosslyn
Houston,
Texas 77086
(281) 931-8884
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies
to:
William
T. Heller IV
Thompson &
Knight LLP
333
Clay Street, Suite 3300
Houston,
Texas 77002
(713) 654-8111
(713) 654-1871
(Fax)
Approximate
date of commencement of proposed sale to the public:
From
time to time after this Registration Statement becomes effective.
If
the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
o
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. x
If
this
Form is filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. o
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. o
CALCULATION
OF REGISTRATION FEE
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Title
of each class securities
to be registered
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Amount
to be
registered
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Proposed
maximum offering
price per
share(1)
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Proposed
maximum aggregate
offering
price(1)
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Amount
of registration
fee
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Common
Stock, $0.00001
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26,462,137
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$1.69
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$44,721,012
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$4,785.15
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______________
(1) Estimated
solely for purposes of calculating the registration fee, based on the average
of
the high and low prices for our common stock as quoted on the American Stock
Exchange on March 15, 2006, in accordance with Rule 457(c) under the
Securities Act of 1933.
The
Registrant hereby amends this Registration Statement on such date or dates
as
may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. The selling
stockholder named herein may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting
an
offer to buy these securities in any jurisdiction where the offer or sale is
not
permitted.
SUBJECT
TO COMPLETION, DATED MARCH 20, 2006
PROSPECTUS
[Boots
& Coots logo]
26,462,137
Shares
Common
Stock
This
prospectus relates to the offer and sale from time to time of up to an aggregate
of 26,462,137
shares
of our common stock for the account of the stockholder named in this prospectus.
The selling stockholder may sell none, some or all of the shares offered by
this
prospectus. We cannot predict when or in what amounts the selling stockholder
may sell any of the shares offered by this prospectus. We will not receive
any
proceeds from sales by the selling stockholder.
On
March
3, 2006, we acquired the hydraulic workover business of Oil States
International, Inc., a Delaware corporation, from its wholly owned subsidiary,
Oil States Energy Services, Inc. (formerly known as HWC Energy Services, Inc.).
In connection with the acquisition, we issued 26,462,137 shares of our common
stock, par value $0.00001 per share, to Oil States Energy Services, Inc. We
also
entered into a registration rights agreement with Oil States Energy Services
pursuant to which we agreed to file with the U.S. Securities and Exchange
Commission on or before March 31, 2006 a registration statement covering resales
of the 26,462,137 shares of common stock issued to Oil States Energy Services.
This prospectus forms a part of the registration statement filed by us as
required by the registration rights agreement.
Our
common stock is quoted on the American Stock Exchange under the symbol “WEL.” On
March 15, 2006, the last reported sales price for our common stock was $1.67
per
share.
Investing
in our common stock involves risks. Please read carefully the information under
the headings “Risk Factors” beginning on page 3 and “Forward-Looking Statements”
on page 18 of this prospectus before you invest in our common
stock.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
March
, 2006
You
should rely only on the information contained or incorporated by reference
in
this prospectus. We have not authorized anyone to provide you with different
information. You should not assume that the information contained in this
prospectus is accurate as of any date other than the date on the front of this
prospectus.
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This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission utilizing a “shelf” registration process or continuous
offering process. Under this shelf registration process, the selling stockholder
may, from time to time, sell the securities described in this prospectus in
one
or more offerings. This prospectus provides you with a general description
of
the securities which may be offered by the selling stockholder. Each time the
selling stockholder sells shares of our common stock pursuant to the
registration statement of which this prospectus is a part, the selling
stockholder is required to provide you with this prospectus and, in certain
cases, a prospectus supplement containing specific information about the terms
of the offering. That prospectus supplement may include additional risk factors
or other special considerations applicable to the offering and may also add,
update, or change information in this prospectus. If there is any inconsistency
between the information in this prospectus and any prospectus supplement, you
should rely on the information in that prospectus supplement. You should read
both this prospectus and any prospectus supplement together with additional
information described under “Where You Can Find More Information.”
The
following summary should be read together with the information contained in
other parts of this prospectus and the documents we incorporate by reference.
It
likely does not contain all of the information that is important to you or
that
you should consider when making an investment decision. In this prospectus,
we
refer to Boots & Coots International Well Control, Inc., and its
subsidiaries as “we,” “us,” “our” or “Boots & Coots,” unless we specifically
indicate otherwise or the context clearly indicates otherwise.
THE
COMPANY
We
provide a suite of integrated oilfield services centered on the prevention,
emergency response and restoration of blowouts and well fires around the world.
Our proprietary risk management program, WELLSURE®,
combines traditional well control insurance with post-event response as well
as
preventative services, giving oil and gas operators and insurance underwriters
a
medium for effective management of well control insurance policies. Our
SafeGuard program, developed for international producers and operators sponsored
by Boots & Coots, provides dedicated emergency response and risk management
services including risk assessment, prevention, loss mitigation, contingency
planning and continuous training and education in all aspects of critical well
management. We also provide the same services on a discrete basis to our
customers world-wide.
We
were
incorporated in Delaware in April 1988.
Our
principal offices are located at 11615 N. Houston-Rosslyn, Houston, Texas,
77086, and our telephone number is (281) 931-8884.
Recent
Developments
We
have
recently completed several transactions:
Acquisition
of Hydraulic Workover Business. On
March
3, 2006, we acquired the hydraulic workover business of Oil States
International, Inc. (the “Acquisition”). The hydraulic workover business, based
in Houma, Louisiana, includes a fleet of 27 owned and operated hydraulic
workover units and provides live and dead well workover services throughout
the
world. The acquired workover operations are currently performed in the U.S.,
Venezuela, Algeria, West Africa and the Middle East. In connection with the
Acquisition, we acquired all of the issued and outstanding capital stock of
HWCES International, a Cayman Islands corporation, and HWC Limited, a Louisiana
corporation, and all of the issued and outstanding membership interests in
Hydraulic Well Control, LLC, a Delaware limited liability company. We paid
total
consideration consisting of 26,462,137 shares of our common stock, par value
$0.00001 per share, and subordinated promissory notes in the aggregate principal
amount of $15,000,000, subject to adjustment, based upon the closing date
working capital of the acquired companies. The notes are due and payable in
full
on September 2, 2010 and bear interest at 10% per annum.
Senior
Credit Facility. On
March
3, 2006, we and our wholly owned subsidiary, IWC Services, LLC, a Texas limited
liability company, entered into a credit agreement with Wells Fargo Bank,
National Association, acting through its Wells Fargo Business Credit operating
division, which established a revolving credit facility of $10,300,000, subject
to a borrowing base of $5,993,189, and a term credit facility of $9,700,000.
The
term credit facility is due and payable in full on March 3, 2010, subject to
extension to March 3, 2011. The revolving credit facility is due and payable
in
full on March 3, 2010, subject to year-to-year renewals thereafter. The
credit agreement is secured by all of our assets and all of the assets of IWC
Services, including equity interests in our subsidiaries. Unused commitment
fees are due monthly on the revolving credit facility and range from 0.25%
to
0.50% per annum, based on the ratio of the outstanding principal amount under
the credit agreement to our consolidated EBITDA. At our option, borrowings
under
the credit agreement bear interest at either Wells Fargo’s prime commercial
lending rate, or the Inter-Bank Market Offered Rate plus a margin ranging,
as to
the revolving credit facility, from 0.50% to 1.50% per annum, and, as to the
term credit facility, from 3.00% to 3.50%, which margin increases or decreases
based on the ratio of the outstanding principal amount under the credit
agreement to our consolidated EBITDA. The interest rate at March 3, 2006 was
7.5%, and we had $9.7 million outstanding under the term credit facility and
$2.2 million outstanding under the revolving credit facility.
THE
OFFERING
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Securities
offered
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Up
to 26,462,137 shares of our common stock.
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Use
of proceeds
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We
will not receive any proceeds from the sale by the selling stockholder
of
its shares of our common stock.
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Listing
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Our
common stock is listed on the American Stock Exchange under the symbol
“WEL.”
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You
should carefully consider all of the information set forth or incorporated
by
reference in this prospectus and, in particular, the specific factors in the
section of this prospectus entitled “Risk Factors.”
In
addition to the other information set forth elsewhere or incorporated by
reference in this prospectus, the following factors relating to us and our
common stock should be considered carefully before making an investment
decision. See
“Where You Can Find More Information” for a description of the information we
have included or incorporated by reference in this prospectus. This prospectus
and the documents we incorporate by reference also contain forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including the risks faced by us described in the
documents we incorporate by reference. See “Forward-Looking Statements” for a
discussion of forward-looking statements included or incorporated by reference
in this prospectus.
Risks
Relating to Our Business
Decreased
oil and gas industry expenditure levels will adversely affect our results of
operations.
Our
business depends upon the oil and gas industry and its ability and willingness
to make expenditures to explore for, develop and produce oil and gas. If these
expenditures decline, our business will suffer. The industry’s willingness to
explore, develop and produce depends largely upon the availability of attractive
drilling and workover prospects and the prevailing view of future product
prices. Many factors affect the supply and demand for oil and gas and therefore
influence product prices, including:
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the
level of production;
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the
levels of oil and gas inventories;
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the
expected cost of developing new
reserves;
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the
actual cost of finding and producing oil and
gas;
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the
availability of attractive oil and gas field prospects which may
be
affected by governmental actions or environmental activists which
may
restrict drilling;
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the
availability of transportation infrastructure and refining
capacity;
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the
level of drilling activity;
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worldwide
economic activity including growth in underdeveloped
countries;
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national
government political requirements, including the ability of the
Organization of Petroleum Exporting Companies (OPEC) to set and maintain
production levels and prices for
oil;
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the
impact of armed hostilities involving one or more oil producing
nations;
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the
cost of developing alternate energy
sources;
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environmental
regulation; and
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If
demand
for drilling services, cash flows of drilling contractors or drilling rig
utilization rates decrease significantly then demand for our services will
decrease, which will adversely affect our results of operations.
We
may not successfully integrate the businesses we acquire or achieve the benefits
we are seeking from acquisitions.
On
March
3, 2006, we completed the acquisition of the hydraulic workover business of
Oil
States International, Inc., or HWC. Our success will partially depend upon
the
integration of the operations of this business and any other businesses we
may
acquire and our ability to retain and timely employ personnel necessary to
augment our staff in a competitive environment. Our management team does not
have experience with the combined activities of us and HWC. We may not be able
to integrate these operations without loss of revenues, increases in operating
or other costs, or other difficulties. In addition, we may not be able to
realize the operating efficiencies and other benefits sought from the
acquisition or from other acquisitions we may pursue in the future.
Disruptions
in the political and economic conditions of the foreign countries in which
we
operate expose us to risks that may have a material adverse effect on our
business.
A
significant portion of our revenue is derived from our operations outside of
the
United States, which exposes us to risks inherent in doing business in each
of
the countries in which we transact business. Our operations in countries other
than the United States accounted for approximately 55% of our consolidated
revenues for 2005. Further, we anticipate that our revenues from foreign
operations will increase significantly during 2006 as a consequence of our
recently completed acquisition of HWC. Operations in countries other than the
United States are subject to various risks peculiar to each country. With
respect to any particular country, these risks may include:
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expropriation
and nationalization of our assets in that
country;
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political
and economic instability;
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civil
unrest, acts of terrorism, force majeure, war, or other armed
conflict;
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natural
disasters, including those related to earthquakes and
flooding;
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currency
fluctuations, devaluations, and conversion
restrictions;
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confiscatory
taxation or other adverse tax
policies;
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governmental
activities that limit or disrupt markets, restrict payments, or limit
the
movement of funds;
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governmental
activities that may result in the deprivation of contract rights;
and
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trade
restrictions and economic embargoes imposed by the United States
and other
countries.
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Due
to
the unsettled political conditions in many oil-producing countries, our revenue
and profits are subject to the adverse consequences of war, the effects of
terrorism, civil unrest, strikes, currency controls, and governmental actions.
International areas where we operate that have significant amounts of political
risk include parts of Africa, South America and the Middle East. Operations
in
these areas increase our exposure to the foregoing risks, the occurrence of
any
of which may:
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disrupt
our operations;
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restrict
the movement of funds or limit repatriation of
profits;
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lead
to U.S. government or international sanctions;
and
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limit
access to markets for periods of
time.
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In
addition, military action or continued unrest in the Middle East could impact
the supply and pricing for oil and gas, disrupt our operations in the region
and
elsewhere, and increase our costs for security worldwide.
We
are subject to foreign exchange and currency risks, particularly with respect
to
Venezuela.
A
significant portion of our consolidated revenue and consolidated operating
expenses are in foreign currencies, primarily Venezuelan Bolivars.
As a
result, we are subject to significant risks, including:
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·
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foreign
exchange risks resulting from changes in foreign exchange rates and
our
exchange controls; and
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limitations
on our ability to reinvest earnings from operations in one country
to fund
the capital needs of our operations in other
countries.
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On
September 30, 2005, we had $951,000 cash and $1,847,000 accounts receivable
attributable to our Venezuelan SafeGuard operations, and HWC had $3,320,000
cash
and $3,971,000 accounts receivable attributable to its Venezuelan operations.
Of
HWC’s cash attributable to its Venezuelan operations, $1,962,000 was denominated
in U.S. dollars. Effective February 5, 2004, the exchange rate changed from
1,600 to 1,920 Bolivars to the U.S. dollar, and effective March 1, 2005, the
exchange rate changed again from 1,920 to 2,150 Bolivars to the U.S. dollar.
As
a consequence, we and HWC were required to take a charge to equity for foreign
currency translation losses of approximately $361,000 and $15,000,
respectively, during the nine months ended September 30, 2005, to reflect
the devaluation of the Bolivar. Venezuela is also on the U.S. government’s
“watch list” for highly inflationary economies and the Venezuelan government has
made it very difficult for U.S. dollars to be repatriated.
Demand
for our services and products depends on oil and natural gas industry activity
and expenditure levels that are directly affected by trends in oil and natural
gas prices.
Demand
for our products and services is particularly sensitive to the level of
exploration, development, and production activity of, and the corresponding
capital spending by, oil and natural gas companies, including national oil
companies. Prices for oil and natural gas are subject to large fluctuations
in
response to relatively minor changes in the supply of and demand for oil and
natural gas, market uncertainty, and a variety of other factors that are beyond
our control. Any prolonged reduction in oil and natural gas prices will depress
the immediate levels of exploration, development, and production activity,
often
reflected as changes in rig counts. Perceptions of longer-term lower oil and
natural gas prices by oil and gas companies can similarly reduce or defer major
expenditures given the long-term nature of many large-scale development
projects. Lower levels of activity result in a corresponding decline in the
demand for our services that could have a material adverse effect on our revenue
and profitability. Factors affecting the prices of oil and natural gas
include:
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governmental
regulations, including the policies of governments regarding the
exploration for and production and development of their oil and natural
gas reserves;
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global
weather conditions and natural
disasters;
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worldwide
political, military, and economic
conditions;
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the
level of oil production by non-OPEC countries and the available excess
production capacity within OPEC;
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economic
growth in China and India;
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oil
refining capacity and shifts in end-customer preferences toward fuel
efficiency and the use of natural
gas;
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the
cost of producing and delivering oil and
gas;
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potential
acceleration of development of alternative fuels;
and
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the
level of demand for oil and natural gas, especially demand for natural
gas
in the United States.
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Historically,
the markets for oil and gas have been volatile and are likely to continue to
be
volatile in the future. This volatility causes oil and gas companies and
drilling contractors to change their strategies and expenditure levels. We
have
experienced in the past, and may experience in the future, significant
fluctuations in operating results based on these changes.
We
must successfully compete for the services of highly trained technical
personnel.
Many
of
the services that we provide are complex and highly engineered and often must
perform or be performed in harsh conditions. We believe that our success depends
upon our ability to employ and retain technical personnel with the ability
to
provide and enhance these services. In addition, our ability to expand our
operations depends in part on our ability to increase our skilled labor force.
The demand for skilled workers is high and the supply is limited. A significant
increase in the wages paid by competing employers could result in a reduction
of
our skilled labor force, increases in the wage rates that we must pay, or both.
If either of these events were to occur, our cost structure could increase,
our
margins could decrease, and our growth potential could be impaired.
Our
hydraulic workover business is susceptible to seasonal earnings volatility
and
may be adversely affected by severe weather.
Our
hydraulic well control operations are directly affected by seasonal differences
in weather in the areas in which the business operates, most notably in the
Gulf
of Mexico and the Gulf Coast region. Weather conditions in the Gulf of Mexico
and the Gulf Coast region generally result in higher activity in the spring,
summer and fall months, with the lowest activity in the winter months. In
addition, summer and fall drilling activity and, therefore, the demand for
our
hydraulic well control services can be restricted due to hurricanes and other
storms prevalent in the Gulf of Mexico and along the Gulf Coast. Repercussions
of severe weather conditions may include:
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evacuation
of personnel and curtailment of
services;
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weather-related
damage to offshore equipment resulting in suspension of
operations;
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weather-related
damage to our facilities;
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inability
to deliver men or materials to jobsites;
and
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During
2005, HWC suffered the loss of one workover unit as a consequence of severe
weather in the Gulf of Mexico. As a result, full year results are not likely
to
be a direct multiple of any particular quarter or combination of
quarters.
Our
bank lenders can limit our borrowing capabilities, which may materially impact
our operations.
As
of
March 3, 2006, our bank debt was $11.9 million, and we had approximately
$6.0 million of cash and additional available borrowing capacity under our
bank revolving credit facility. The borrowing base limitation under our
revolving credit facility may be subject to redetermination periodically at
the
discretion of the lender. Upon a redetermination, we could be required to repay
a portion of our bank debt. We may not have sufficient funds to make such
repayments, which could result in a default under the terms of the loan
agreement and an acceleration of the loan. We intend to finance our development,
acquisition and exploration activities with cash flow from operations, bank
borrowings and other financing activities. In addition, we may significantly
alter our capitalization in order to make future acquisitions. These changes
in
capitalization may significantly increase our level of debt. If we incur
additional debt for these or other purposes, the related risks that we now
face
could intensify. A higher level of debt also increases the risk that we may
default on our debt obligations. Our ability to meet our debt obligations and
to
reduce our level of debt depends on our future performance which is affected
by
general economic conditions and financial, business and other factors. Many
of
these factors are beyond our control. Our level of debt affects our operations
in several important ways, including the following:
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a
significant portion of our cash flow from operations must be used
to pay
interest on borrowings and is therefore not available to re-invest
in our
business;
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the
covenants contained in the agreements governing our debt limit our
ability
to borrow additional funds, pay dividends, dispose of assets or issue
shares of preferred stock and otherwise may affect our flexibility
in
planning for, and reacting to, changes in business
conditions;
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our
high level of debt may impair our ability to obtain additional financing
in the future for working capital, capital expenditures, acquisitions,
or
general corporate or other
purposes;
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our
highly leveraged financial position makes us more vulnerable to economic
downturns and could limit our ability to withstand competitive pressures;
and
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any
debt that we incur under our revolving credit facility will be at
variable
rates which makes us vulnerable to increases in interest
rates.
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Our
ability to finance our business activities will require us to generate
substantial cash flow.
Our
business activities require substantial capital. We have budgeted total capital
expenditures for 2006 of approximately $3.0 million. We intend to finance
our capital expenditures in the future through cash flows from operations,
the
incurrence of additional indebtedness and/or the issuance of additional equity
securities. We cannot be sure that our business will continue to generate cash
flow at or above current levels.
If
we are
unable to generate sufficient cash flow from operations to service our debt,
we
may have to obtain additional financing through the issuance of debt and/or
equity. We cannot be sure that any additional financing will be available to
us
on acceptable terms. Issuing equity securities to satisfy our financing
requirements could cause substantial dilution to our existing stockholders.
If
our
revenues were to decrease due to lower oil and natural gas prices, or other
reasons, and if we could not obtain capital through our revolving credit
facility or otherwise, our ability to operate and grow our business could be
materially adversely affected.
Risks
Relating to Our Relationship with Oil States Energy
Services
Oil
States Energy Services owns a significant percentage of common stock in our
company, which could limit your ability to influence the outcome of stockholder
votes.
Oil
States International, Inc., through its wholly owned subsidiary, Oil States
Energy Services, owns approximately 46% of our common stock outstanding as
of
the date hereof. In addition, Douglas E. Swanson and Cindy B. Taylor, two
current members of our board of directors are directors of Oil States Energy
Services and executive officers of Oil States International, Inc. As a result,
Oil Sates Energy Services will be able to exercise significant influence over
the outcome of matters requiring a stockholder vote, including the election
of
directors, the adoption or amendment of provisions in our charter and bylaws,
the approval of mergers and other significant corporate transactions, including
transactions involving a change of control. The interests of Oil States Energy
Services may differ from yours, and Oil States Energy Services may vote its
common stock in a manner that may adversely affect you.
We
have renounced any interest in specified business opportunities, and Oil States
International and its director nominees on our board of directors generally
have
no obligation to offer us those opportunities.
Pursuant
to our certificate of incorporation, we have renounced any interest or
expectancy in specified business opportunities in which Oil States
International, any of its affiliates or any of their respective officers,
directors, employees or other agents serving as a member of our board of
directors (collectively, the “Oil States Group”) participates or desires or
seeks to participate and that involves any aspect of the energy equipment or
services business or industry. Our certificate of incorporation also provides
that if any such business opportunity is presented to a person who is a member
of the Oil States Group, including any of those individuals who also serves
as a
member of our board of directors:
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·
|
no
member of the Oil States Group or any of those individuals has any
obligation to communicate or offer the opportunity to us;
and
|
| |
·
|
such
entity or individual may pursue the opportunity as that entity or
individual sees fit,
|
unless:
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·
|
it
was presented to a member of the Oil States Group who also serves
as a
member of our board of directors solely in that person’s capacity as a
director of our company and no other member of the Oil States Group
independently received notice of or otherwise identified such opportunity;
or
|
| |
·
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the
opportunity was identified solely through the disclosure of information
by
or on behalf of our company.
|
These
provisions of our certificate of incorporation may be amended only by an
affirmative vote of holders of at least 80% of our outstanding common stock.
As
a result of these charter provisions, our future competitive position and growth
potential could be adversely affected.
Risks
Relating to Ownership of Our Common Stock
Future
sales of our common stock by our existing stockholders may depress our stock
price.
As
of the
date of this prospectus, there are approximately 58.3 million shares of our
common stock are outstanding and approximately 8.6 million shares of our common
stock that are issuable upon the exercise or conversion of outstanding options
and warrants. The registration statement of which this prospectus is a part
relates to 26,462,137
shares
of
our common stock, which constitute approximately 46% of our issued and
outstanding common stock as of the date hereof. In addition, we have filed
registration statements with the Securities and Exchange Commission with respect
to the offer and sale of approximately 4.3 million shares of common stock
underlying certain warrant agreements, employee stock option plans and director
stock option plans, and we may register additional shares underlying these
or
other plans in the future. All of the common stock covered by these registration
statements may be sold by the selling security holders in market transactions
from time to time. Sales of a substantial number of shares of our common stock
in the public market, or the perception that these sales may occur, could cause
the market price of our common stock to decline.
We
have not paid, and do not anticipate paying, any dividends on our common stock
in the foreseeable future.
We
have
never paid any cash dividends on our common stock. We do not expect to declare
or pay any cash or other dividends in the foreseeable future on our common
stock. Our existing revolving credit facility restricts our ability to pay
cash
dividends on our preferred stock and common stock, and we may also enter into
credit agreements or other borrowing arrangements in the future that further
restrict our ability to declare cash dividends on our preferred stock and common
stock.
You
may experience dilution of your ownership interests due to the future issuance
of additional shares of our common stock.
We
may in
the future issue our previously authorized and unissued securities, resulting
in
the dilution of the ownership interests of our present stockholders. We are
currently authorized to issue 125 million shares of common stock and five
million shares of preferred stock with such designations, preferences and rights
as determined by our board of directors. As of the date of this prospectus,
approximately 58.3 million shares of common stock are outstanding, and
approximately 8.6 million shares of common stock are issuable upon the
exercise of outstanding options and warrants. The potential issuance of such
additional shares of common stock may create downward pressure on the trading
price of our common stock. We may also issue additional shares of our common
stock or other securities that are convertible into or exercisable for common
stock in connection with the hiring of personnel, future acquisitions, future
private placements of our securities for capital raising purposes, or for other
business purposes. The number of shares that can be issued under our employee
plans is approximately 4.2 million shares. Any such issuance would further
dilute the interests of our existing stockholders.
We
may issue preferred stock, the terms of which could adversely affect the voting
power or value of our common stock.
Our
certificate of incorporation authorizes us to issue, without the approval of
our
stockholders, one or more classes or series of preferred stock having such
preferences, powers and relative, participating, optional and other rights,
including preferences over our common stock respecting dividends and
distributions, as our board of directors may determine. The terms of one or
more
classes or series of preferred stock could adversely impact the voting power
or
value of our common stock. For example, we might afford holders of preferred
stock the right to elect some number of our directors in all events or on the
happening of specified events or the right to veto specified transactions.
Similarly, the repurchase or redemption rights or liquidation preferences we
might assign to holders of preferred stock could affect the residual value
of
our common stock.
The
ownership interest of Oil States Energy Services, our Rights Agreement,
provisions contained in our certificate of incorporation and bylaws and
provisions of Delaware law could discourage a takeover attempt, which may reduce
or eliminate the likelihood of a change of control transaction and, therefore,
your ability to sell your shares for a premium.
The
significant ownership position of Oil States Energy Services, our Rights
Agreement, provisions contained in our certificate of incorporation and bylaws
and provisions of Delaware law could make it more difficult for a third party
to
acquire control of our company. We
have
entered into a Rights Agreement that would cause extreme dilution to any person
or group (other than Oil States Energy Services, its affiliates and certain
of
its direct transferees) who attempts to acquire a significant interest in us
without advance approval of our board of directors. Our certificate of
incorporation and bylaws include provisions for a
classified board, limitations on the removal of directors and on stockholder
proposals at meetings of stockholders and the inability of stockholders to
call
special meetings. Our certificate of incorporation also authorizes our board
of
directors to issue preferred stock without stockholder approval. In
addition, Section 203 of the Delaware General Corporation Law imposes
restrictions on mergers and other business combinations between us and any
holder of 15% or more of our outstanding common stock. Each of these factors
could increase
the difficulty for a third party to acquire us and therefore delay
or
prevent a change of control transaction, even if that change would be beneficial
to our stockholders, which could affect the value of our common stock
and
reduce or eliminate your ability to sell your shares of common stock at a
premium. See “Description of Capital Stock.”
This
prospectus relates to the offer and sale from time to time of up to an aggregate
of 26,462,137
of
common
stock for the account of the selling stockholder referred to in this prospectus.
We will not receive any of the proceeds from the sale of any shares of common
stock by the selling stockholder. Please read “Selling Stockholder” for a list
of the persons receiving proceeds from the sale of the common stock covered
by
this prospectus.
DESCRIPTION
OF OUR CAPITAL STOCK
The
following description of our common stock, preferred stock, certificate of
incorporation, by-laws and rights agreement is a summary only and is subject
to
the complete text of our certificate of incorporation and by-laws and the rights
agreement we have entered into with American Stock Transfer & Trust Company,
as Rights Agent, which we have previously filed with the SEC. You should read
our certificate of incorporation, by-laws and rights agreement as currently
in
effect for more details regarding the provisions we describe below and for
other
provisions that may be important to you. You may request copies of these
documents by writing or telephoning us at our address and telephone number
shown
under the caption "Where You Can Find More Information." This section also
summarizes relevant provisions of the Delaware General Corporation Law. The
terms of the Delaware General Corporation Law are more detailed than the general
information provided below. Therefore, you should carefully consider the actual
provisions of these laws.
Our
authorized capital stock currently consists of 125,000,000 shares of common
stock, par value $0.00001 per share, and 5,000,000 shares of preferred stock,
par value $0.00001 per share. As of March 15, 2006, there were approximately
58.3 million shares of common stock issued and outstanding and
approximately 127 stockholders of record of our common stock. No shares of
preferred stock are currently outstanding.
Common
Stock
The
holders of our common stock are entitled to one vote per share on all matters
to
be voted on by stockholders generally, including the election of directors.
There are no cumulative voting rights, meaning that the holders of a majority
of
the shares voting for the election of directors can elect all of the candidates
standing for election.
Our
common stock carries no preemptive or other subscription rights to purchase
shares of our stock and is not convertible, redeemable or assessable or entitled
to the benefits of any sinking fund. Holders of our common stock will be
entitled to receive such dividends as may from time to time be declared by
our
board of directors out of funds legally available for the payment of dividends.
If we issue preferred stock in the future, payment of dividends to holders
of
our common stock may be subject to the rights of holders of our preferred stock
with respect to payment of preferential dividends, if any.
If
we are
liquidated, dissolved or wound up, the holders of our common stock will share
pro rata in our assets after satisfaction of all of our liabilities and the
prior rights of any outstanding class of our preferred stock.
Our
common stock is listed on the American Stock Exchange under the symbol
“WEL.”
Preferred
Stock
Our
board
of directors has the authority, without stockholder approval, to issue up to
five million shares of preferred stock in one or more series and to fix the
rights, preferences, privileges and restrictions thereof, including dividend
rights, dividend rates, conversion rates, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series or the designation of that series, which may be superior to those
of
the common stock, without further vote or action by the stockholders. One of
the
effects of undesignated preferred stock may be to enable our board of directors
to render more difficult or to discourage an attempt to obtain control of us
by
means of a tender offer, proxy contest, merger or otherwise, and as a result
to
protect the continuity of our management. The issuance of shares of the
preferred stock by the board of directors as described above may adversely
affect the rights of the holders of common stock. For example, preferred stock
issued by us may rank superior to the common stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and
may
be convertible into shares of common stock. Accordingly, the issuance of shares
of preferred stock may discourage bids for our common stock or may otherwise
adversely affect the market price of our common stock.
For
purposes of the rights plan described below, our board of directors has
designated 1,000,000 shares of preferred stock to constitute the Series I Junior
Participating Preferred Stock. For a description of the rights plan, please
read
“—Stockholder Rights Plan.”
Authorized
but Unissued Stock
We
have
125,000,000 authorized shares of common stock and 5,000,000 authorized shares
of
preferred stock of which approximately 58.3 million shares of common stock
and
no shares of preferred stock were outstanding as of March 15, 2006. One of
the
consequences of our authorized but unissued common stock and preferred stock
may
be to enable our board of directors to make more difficult or to discourage
an
attempt to obtain control of us. If, in the exercise of its fiduciary
obligations, our board of directors determined that a takeover proposal was
not
in our best interest, the board could authorize the issuance of those shares
without stockholder approval. The shares could be issued in one or more
transactions that might prevent or make the completion of the change of control
transaction more difficult or costly by:
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·
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diluting
the voting or other rights of the proposed acquiror or insurgent
stockholder group;
|
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·
|
creating
a substantial voting block in institutional or other hands that might
undertake to support the position of the incumbent board;
or
|
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·
|
effecting
an acquisition that might complicate or preclude the
takeover.
|
Stockholder
Action by Written Consent; Special Meetings of
Stockholders
Our
certificate of incorporation does not prohibit action by written consent of
stockholders in lieu of a meeting. Special meetings of stockholders may be
called only by the board of directors, the chairman of the board, or the
president.
Amendment
of the By-laws
Under
Delaware law, the power to adopt, amend or repeal by-laws is conferred upon
the
stockholders entitled to vote. A corporation may, however, in its certificate
of
incorporation also confer upon the board of directors the power to adopt, amend
or repeal its by-laws. Our certificate of incorporation and by-laws grant our
board of directors the power to alter and repeal our by-laws at any regular
or
special meeting of the board on the affirmative vote of a majority of the
directors then in office. Our stockholders may also alter or repeal our by-laws
by the affirmative vote of not less than 66% of the stockholders entitled to
vote.
Removal
of Directors
Directors
may be removed with cause by a vote of at least 66% of the voting power of
our
outstanding voting stock. A vacancy on our board of directors may be filled
by a
vote of a majority of the directors in office even if less than a quorum. A
director elected to fill a vacancy not resulting from an increase in the number
of directors serves for the remaining term of his predecessor or his earlier
death, resignation or removal.
Advance
Notice Procedure for Director Nominations and Stockholder
Proposals
Our
certificate of incorporation and by-laws provide the manner in which
stockholders may give notice of business to be brought before an annual meeting.
In order for an item to be properly brought before the meeting by a stockholder,
the stockholder must be a holder of record at the time of the giving of notice
and must be entitled to vote at the annual meeting. The item to be brought
before the meeting must be a proper subject for stockholder
action, and the stockholder must have given timely advance written notice of
the
item. For notice to be timely, it must be delivered to, or mailed and received
at, our principal executive office not less than 60 days nor more than 90 days
prior to the date of the meeting; provided, however, that in the event that
less
than 70 days’ notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely must
be
received not later than the close of business on the 10th
day
following the day on which such notice of the meeting was mailed or public
disclosure was made.
The
notice must set forth, as to each item to be brought before the annual meeting,
a description of the proposal and the reasons for conducting such business
at
the annual meeting, the name and address, as they appear on our books, of the
stockholder proposing the item, the number of shares of each class or series
of
capital stock beneficially owned by the stockholder, and any material interest
of the stockholder in the proposal. A notice with regards to stockholder
nominations for the election of directors must contain the name, age, business
address and residence of the director nominee, the principal occupation or
employment of the director nominee, the number of shares of each class or series
of capital stock beneficially owned by the director nominee, and any other
information relating to the director nominee that is required to be disclosed
in
solicitations of proxies for the election of directors or is otherwise required
by Regulation 14A of the Securities Exchange Act of 1934, as
amended.
These
procedures may limit the ability of stockholders to bring business before a
stockholders meeting, including the nomination of directors and the
consideration of any transaction that could result in a change in control and
that may result in a premium to our stockholders.
Stockholder
Rights Plan
General
On
November 27, 2001, our board of directors issued a dividend of one preferred
share purchase right (a "Right") for each outstanding share of our common stock
held of record on that date and approved the further issuance of Rights with
respect to all shares of our common stock that are subsequently issued. The
Rights were issued subject to a Rights Agreement dated as of November 17, 2001
between us and American Stock Transfer & Trust Company, as Rights Agent.
Each Right now entitles the registered holder to purchase from us one
one-hundredth of a share of Series I Junior Participating Preferred Stock,
par
value $0.00001 (“Preferred Stock”), at a price of $5.00 in cash, subject to
adjustment. Until the occurrence of certain events described below, the Rights
are not exercisable, will be evidenced by the certificates for our common stock
and will not be transferable apart from our common stock. On November 21, 2005,
we amended the Rights Agreement to exempt the acquisition by Oil States Energy
Services of the shares of our common stock to which this prospectus relates
from
the operation of the Rights Agreement as described below. The acquisition of
25%
or less of our outstanding common stock at the time of such acquisition by
certain direct transferees of Oil States Energy Services is also exempted from
the operation of the Rights Agreement pursuant to such amendment.
Detachment
of Rights; Exercise
The
Rights are currently attached to all certificates representing outstanding
shares of our common stock and no separate Right certificates have been
distributed. The Rights will separate from our common stock and a distribution
date ("Distribution Date") will occur upon the earlier of (1) 10 business days
following the public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership
of
15% or more of our outstanding common stock or (2) 10 business days following
the commencement or announcement of an intention to commence a tender offer
or
exchange offer, the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of our outstanding common
stock.
The
Rights are not exercisable until the Distribution Date. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
will be mailed to holders of record of our common stock as of the close of
business on the Distribution Date and such separate certificates alone will
thereafter evidence the Rights.
If
a
person or group were to acquire 15% or more of our common stock, each Right
then
outstanding (other than Rights beneficially owned by the Acquiring Person which
would become null and void) would become a right to buy that number of shares
of
our common stock (or, under certain circumstances, the equivalent number of
one
one-hundredth of a share of Preferred Stock) that at the time of such
acquisition would have a market value of two times the Purchase Price of the
Right.
If
we
were acquired in a merger or other business combination transaction or more
than
50% of our consolidated assets or earning power were sold, proper provision
would be made so that each holder of a Right would thereafter have the right
to
receive, upon the exercise thereof at the then current Purchase Price
of
the Right, that number of shares of common stock of the acquiring company which
at the time of such transaction would have a market value of two times the
Purchase Price of the Right.
Antidilution
and Other Adjustments
The
number of shares (or fractions thereof) of Preferred Stock or other securities
or property issuable upon exercise of the Rights, and the Purchase Price
payable, are subject to customary adjustments from time to time to prevent
dilution. The number of outstanding Rights and the number of shares (or
fractions thereof) of Preferred Stock issuable upon exercise of each Right
are
also subject to adjustment in the event of a stock dividend on our common stock
payable in our common stock or any subdivision or combination of our common
stock occurring, in any such case, prior to the Distribution
Date.
Exchange
Option
At
any
time after the acquisition by a person or group of affiliated or associated
persons of beneficial ownership of 15% or more of our outstanding common stock
and before the acquisition by a person or group of 50% or more of our
outstanding common stock, our board of directors may, at its option, issue
our
common stock in mandatory redemption of, and in exchange for, all or part of
the
then outstanding and exercisable Rights (other than Rights owned by such person
or group which would become null and void) at an exchange ratio of one share
of
our common stock (or one one-hundredth of a share of Preferred Stock) for each
share of our common stock for which each Right is then exercisable, subject
to
appropriate adjustment.
Redemption
of Rights
At
any
time prior to the first public announcement that a person or group has become
the beneficial owner of 15% or more of our outstanding common stock, our board
of directors may redeem all but not less than all the then outstanding rights
at
a price of $0.001 per Right (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as our board of directors in its sole discretion may establish.
Immediately upon the action of the board of directors ordering redemption of
the
Rights, the right to exercise the Rights will terminate and the only right
of
the holders of Rights will be to receive the Redemption Price.
Expiration;
Amendment of Rights
The
Rights will expire on December 31, 2011, unless earlier extended, redeemed
or
exchanged. The terms of the Rights may be amended by our board of directors
without the consent of the holders of the Rights, including an amendment to
extend the expiration date of the Rights, and, provided a Distribution Date
has
not occurred, to extend the period during which the Rights may be redeemed,
except that after the first public announcement that a person or group has
become or intends to become the beneficial owner of 15% or more of our
outstanding common stock, no such amendment may materially and adversely affect
the interests of holders of the Rights.
The
Rights have certain anti-takeover effects. The Rights will cause substantial
dilution to a person or group that attempts to acquire us without the approval
of our board of directors. The Rights should not, however, interfere with any
merger or other business combination that is approved by our board of
directors.
Limitation
of Liability of Officers and Directors
Our
directors will not be personally liable to us or our stockholders for monetary
damages for breach of fiduciary duty as a director, except, if required by
Delaware law, for liability:
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·
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for
any breach of the duty of loyalty to us or our
stockholders;
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·
|
for
an act or omission not in good faith that constitutes a breach of
duty of
the director to us or involving intentional misconduct or a knowing
violation of law;
|
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·
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for
any transaction from which the director derived an improper personal
benefit;
|
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·
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under
Section 174 of the DGCL relating to unlawful stock repurchases
or
dividends; and
|
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·
|
an
act or omission for which the liability of a director is expressly
provided for by an applicable
statute.
|
As
a
result, neither we nor our stockholders, through stockholders' derivative suits
on our behalf, have the right to recover monetary damages against a director
for
breach of fiduciary duty as a director, including breaches resulting from
grossly negligent behavior, except in the situations described
above.
Delaware
Anti-Takeover Law and Certain Charter and Bylaw Provisions
Our
certificate of incorporation, bylaws and the DGCL contain certain provisions
that could discourage potential takeover attempts and make it more difficult
for
stockholders to change management or receive a premium for their
shares.
Delaware
law.
We are
subject to Section 203 of the DGCL, an anti-takeover law. In general, the
statute prohibits a publicly-held Delaware corporation from engaging in a
business combination with an “interested stockholder” for a period of three
years after the date of the transaction in which the person became an interested
stockholder. A “business combination” includes a merger, sale of 10% or more of
our assets and certain other transactions resulting in a financial benefit
to
the stockholder. For purposes of Section 203, an “interested stockholder”
is defined to include any person that is:
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·
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the
owner of 15% or more of the outstanding voting stock of the
corporation;
|
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·
|
an
affiliate or associate of the corporation and was the owner of 15%
or more
of the voting stock outstanding of the corporation, at any time within
three years immediately prior to the relevant date;
and
|
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·
|
an
affiliate or associate of the persons described in the foregoing
bullet
points.
|
However,
the above provisions of Section 203 do not apply if:
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·
|
the
board of directors approves the transaction that made the stockholder
an
interested stockholder prior to the date of that
transaction;
|
|
·
|
after
completion of the transaction that resulted in the stockholder becoming
an
interested stockholder, that stockholder owned at least 85% of our
voting
stock outstanding at the time the transaction commenced, excluding
shares
owned by our officers and directors;
or
|
|
·
|
on
or subsequent to the date of the transaction, the business combination
is
approved by our board of directors and authorized at a meeting of
our
stockholders by an affirmative vote of at least two-thirds of the
outstanding voting stock not owned by the interested
stockholder.
|
Stockholders
may, by adopting an amendment to the corporation's certificate of incorporation
or bylaws, elect for the corporation not to be governed by Section 203,
effective 12 months after adoption. Neither our certificate of
incorporation nor our bylaws exempt us from the restrictions imposed under
Section 203. It is anticipated that the provisions of Section 203 may
encourage companies interested in acquiring us to negotiate in advance with
our
board.
Charter
and bylaw provisions.
Delaware
law permits any Delaware corporation to classify its board of directors into
as
many as three (3) classes as equally as possible with staggered terms of
office. After initial implementation of a classified board, one class will
be
elected at each annual meeting of the stockholders to serve for a term of one,
two or three years (depending upon the number of classes into which directors
are classified) or until their successors are elected and take office. Our
certificate of incorporation and bylaws provide for a classified board of
directors by dividing the board into three (3) classes, with no class
having more than one director more than any other class. The stockholders of
a
Delaware corporation with a classified board of directors may remove a director
only “for cause” unless the company's certificate of incorporation provides
otherwise. Our bylaws restrict the removal of a director except “for
cause.”
Transfer
Agent and Registrar
Our
Transfer Agent and Registrar for our common stock is American Stock Transfer
& Trust Company. Its phone number (800) 937-5449.
The
shares of our common stock covered by this prospectus are being offered by
the
selling stockholder referenced in the table below.
This
prospectus does not and will not cover subsequent sales of common stock
purchased from the selling stockholder named in this prospectus.
The
following table sets forth the name of the selling stockholder, the amount
of
shares of our common stock beneficially owned by the selling stockholder prior
to the offering, the amount being offered for the stockholder's account and
the
amount to be owned by such stockholder after completion of the offering,
assuming that all shares held are sold pursuant to this prospectus. Because
the selling stockholder may transfer all, some or none of the shares pursuant
to
this prospectus, or may transfer or otherwise dispose of shares in transactions
exempt from the registration requirements of the Securities Act of 1933, we
do
not know the exact number of shares of our common stock or the percentage of
common stock outstanding that will be held by the selling stockholder after
completion of the sale of shares hereunder. The selling stockholder is under
no
obligation to sell or dispose of all or any portion of the shares held by it,
nor is the selling stockholder obligated to sell or dispose of any such shares
immediately pursuant to this prospectus. The selling stockholder does not
beneficially own any other common stock issued by us.
We
prepared the table based on information supplied to us by the selling
stockholder. We have not sought to verify such information.
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Name
|
|
Number
of Shares of Common Stock Beneficially Owned Prior to the
Offering
(1)
|
|
Number
of Shares of Common Stock Being Offered Hereby
|
|
Number
of Shares of Common Stock Beneficially Owned After Completion of
the
Offering (1)
|
|
Percentage
of Shares of Common Stock Beneficially Owned After Completion of
the
Offering
|
|
|
Oil
States Energy Services, Inc.(2)
|
|
|
26,462,137
|
|
|
26,462,137
|
|
|
—
|
|
|
*
|
|
* Less
than
1%.
|
(1)
|
Ownership
is determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934.
|
|
(2)
|
Douglas
E. Swanson, a director of our company, is a director of Oil States
Energy
Services and a director and executive officer of Oil States International,
Inc., the parent of Oil States Energy Services. Cindy B. Taylor,
a
director of our company, is a director and an executive officer of
Oil
States Energy Services and an executive officer of Oil States
International.
|
We
are
registering the shares of common stock on behalf of the selling stockholder
pursuant to the terms of a registration rights agreement.
The
selling stockholder, including some of its transferees who may later hold its
interest in the shares of our common stock covered by this prospectus and who
are otherwise entitled to resell their shares using this prospectus, may sell
the shares of common stock covered by this prospectus from time to time in
any
legal manner selected by the selling stockholder, including directly to
purchasers or through underwriters, brokers, dealers, agents or other persons,
who may receive compensation in the form of discounts, concessions or
commissions from the selling stockholder or the purchasers. These discounts,
concessions or commissions as to any particular underwriter, broker, dealer,
agent or other person may be in excess of those customary in the types of
transactions involved. The selling stockholder will act independently of us
in
making decisions with respect to the pricing, timing, manner and size of each
sale of the common stock covered by this prospectus.
The
selling stockholder has advised us that the shares may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at prices related to the prevailing market prices, at varying prices determined
at the time of sale and/or at negotiated prices. These sales may be effected
at
various times in one or more transactions, which may include:
| |
·
|
ordinary
brokers' transactions;
|
| |
·
|
transactions
involving cross or block trades or otherwise on the American Stock
Exchange;
|
| |
·
|
transactions
in the over-the-counter market;
|
| |
·
|
transactions
otherwise than on the American Stock Exchange or in the over-the-counter
market;
|
| |
·
|
transactions
in which brokers, dealers or underwriters purchase the shares for
resale,
including without limitation on a firm commitment or best efforts
basis or
for their own account;
|
| |
·
|
transactions
"at the market" to or through market makers of our common stock or
into an
existing market for our common stock, and in other ways not involving
market makers or established trading markets, including direct sales
of
the shares to purchasers or sales through
agents;
|
| |
·
|
privately
negotiated transactions;
|
| |
·
|
any
other method permitted under applicable law;
or
|
| |
·
|
any
combination of the foregoing.
|
In
addition, the selling stockholder may also enter into hedging and/or other
monetization transactions. For example, the selling stockholder
may:
| |
·
|
enter
into transactions with a broker-dealer or affiliate of a broker-dealer
or
other third party in connection with which that other party will
become a
selling stockholder and engage in short sales of our common stock
under
this prospectus, in which case the other party may use shares of
our
common stock received from the selling stockholder to close out any
short
positions;
|
| |
·
|
itself
sell short our common stock under this prospectus and use shares
of our
common stock held by it to close out any short positions;
|
| |
·
|
enter
into options, forwards or other transactions that require the selling
stockholder to deliver, in a transaction exempt from registration
under
the Securities Act, our common stock to a broker-dealer or an affiliate
of
a broker-dealer or other third party who may then become a selling
stockholder and publicly resell or otherwise transfer our common
stock
under this prospectus, as amended or supplemented to reflect such
transaction; or
|
| |
·
|
loan
or pledge our common stock to a broker-dealer or affiliate of a
broker-dealer or other third party who may then become a selling
stockholder and sell the loaned shares or, in an event of default
in the
case of a pledge, become a selling stockholder and sell the pledged
shares, in each case under this prospectus, as amended or supplemented
to
reflect such transaction.
|
The
selling stockholder may also may donate the shares registered hereunder to
a
third party and such donee may effect sales of the shares pursuant to this
prospectus, as supplemented or amended to reflect such transaction.
To
our
knowledge, there are currently no plans, arrangements or understandings between
the selling stockholder and any underwriter, broker, dealer, agent or other
person regarding the sale of common stock by the selling stockholder. To the
extent required, the shares to be sold, the name of the selling stockholder,
the
respective purchase prices and public offering prices, the names of any
underwriter, broker, dealer, agent or other person, and any applicable
commissions or discounts with respect to a particular offer will be set forth
in
an accompanying prospectus supplement filed with the SEC under Rule 424(b)
under
the Securities Act or, if appropriate, a post-effective amendment to the shelf
registration statement of which this prospectus is a part. The selling
stockholder may sell any or all of the shares of our common stock offered by
it
pursuant to this prospectus. In addition, there can be no assurance that the
selling stockholder will not transfer, devise or gift the shares of common
stock
by other means not described in this prospectus.
There
can
be no assurance that the selling stockholder will sell any or all of the shares
of common stock pursuant to this prospectus. In addition, any common stock
covered by this prospectus that qualifies for sale pursuant to an exemption
from
the registration requirements of the Securities Act (including without
limitation Rule 144 thereunder) may be sold pursuant to that exemption (subject
to the terms of the stockholder agreement) rather than under this prospectus.
The common stock may be sold in some states only through registered or licensed
brokers or dealers. In addition, in some states the shares of our common stock
may not be sold unless they have been registered or qualified for sale or an
exemption from registration or qualification is available and complied
with.
The
aggregate proceeds to the selling stockholder from the sale of the shares
offered by it will be the purchase price of the shares less discounts and
commissions, if any. If the shares of common stock are sold through underwriters
or broker-dealers, the selling stockholder will be responsible for underwriting
discounts and commissions and/or agent's commissions. We will not receive any
of
the proceeds from the sale of the shares of common stock covered by this
prospectus.
The
selling stockholder has acknowledged that it understands its obligations to
comply with the provisions of the Exchange Act and the rules and regulations
thereunder relating to stock manipulation, including without limitation
Regulation M, which may limit the timing of purchases and sales of our common
stock by the selling stockholder. In addition, Regulation M may restrict the
ability of any person engaged in the distribution of the common stock to engage
in market making activities with respect to the particular common stock being
distributed. This may affect the marketability of the common stock and the
ability of any person or entity to engage in market-making activities with
respect to the common stock.
The
selling stockholder and any underwriters, brokers, dealers, agents or other
persons who act in connection with the sale of common stock hereunder may be
deemed to be "underwriters" as that term is defined in the Securities Act,
and
any discounts, commissions or fees received by them and any profit on the resale
of the common stock as principal might be deemed to be underwriting discounts
and commissions under the Securities Act. If the selling stockholder is deemed
to be an "underwriter" within the meaning of the Securities Act, it will be
subject to the prospectus delivery requirements of the Securities
Act.
Subject
to certain limitations, we have agreed to indemnify the selling stockholder
its
officers, directors, employees, partners, attorneys and agents, each
underwriter, broker or other person acting on behalf of the selling stockholder
and each person who controls any of the foregoing persons against certain
liabilities, including specified liabilities under the Securities Act, or to
contribute with respect to payments which such persons may be required to make
in respect of such liabilities. Subject to certain limitations, the selling
stockholder has agreed to indemnify us, our directors, our officers who sign
the
registration statement of which this prospectus is a part and each person who
controls any of the foregoing persons against certain liabilities, including
specified liabilities under the Securities Act, but only to the extent such
liabilities are caused by written information furnished to us by it for
inclusion in this prospectus or any supplement or amendment heretoor to
contribute with respect to payments in connection with such
liabilities.
We
have
agreed to pay all of the costs, fees and expenses incident to the registration
of the resale of the selling stockholder's common stock. We will not pay any
legal fees or other expenses of the selling stockholder or any commissions,
fees
and discounts of underwriters, brokers, dealers and agents.
We
will
use our reasonable best efforts to keep the registration statement of which
this
prospectus is a part effective until the earlier of (i) the later of (A) March
3, 2008 and (B) such time as the selling stockholder ceases to own at least
5%
of our outstanding shares of common stock and (ii) the later of (x) March 3,
2010 and (y) the earliest date that the selling stockholder may then dispose
of
all its registrable shares without restriction under Rule 144(k) promulgated
under the Securities Act. Notwithstanding the foregoing, our obligation to
keep
such registration statement effective shall immediately terminate upon the
sale
of all registrable shares covered by any shelf registration statement that
we
file in the manner set forth and as contemplated in such shelf registration
statement.
The
validity of the issuance of the common stock covered by this prospectus has
been
passed upon for us by Thompson & Knight LLP.
Our
consolidated financial statements as of December 31, 2004 and 2003 and for
the years then ended, appearing in our Annual Report (Form 10-K) for the
year ended December 31, 2004, have been audited by UHY
Mann
Frankfort Stein & Lipp CPAs, LLP,
independent registered public accounting firm, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon
such
report given on the authority of such firm as experts in accounting and
auditing.
The
combined balance sheets of the Hydraulic Well Control Business of Oil States
International, Inc. as of December 31, 2004 and 2003, and the related
combined statements of operations, stockholder equity, and cash flows for
each
of the three years in the period ended December 31, 2004, appearing in our
Definitive Proxy Statement (Schedule 14A) filed with the Securities and Exchange
Commission on January 30, 2006, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and
incorporated herein by reference. Such combined financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
WHERE
YOU
CAN FIND MORE INFORMATION
Our
SEC
filings are available to the public over the Internet at the SEC's web site
at
www.sec.gov.
You may
also read and copy any document we file at the SEC's public reference rooms
located at 450 Fifth Street, N.W., Washington D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms
and
their copy charges. In addition, through our website, wwwbootsandcoots.com,
you can
access electronic copies of documents we file with the SEC, including our annual
reports on Form 10-K, quarterly reports on Form 10-Q, and current
reports on Form 8-K and any amendments to those reports. Information on our
website is not incorporated by reference in this prospectus. Access to those
electronic filings is available as soon as practical after filing with the
SEC.
You may also request a copy of those filings, excluding exhibits, at no cost
by
writing, emailing or telephoning Brian Keith, Corporate Secretary and General
Counsel, at our principal executive office, which is:
Boots
& Coots International Well Control, Inc.
11615
N.
Houston Rosslyn
Houston,
Texas 77086
(281) 931-8884
The
following documents we filed with the SEC pursuant to the Exchange Act are
incorporated herein by reference:
|
·
|
our
annual report on Form 10-K for the fiscal year ended
December 31, 2004
|
|
·
|
our
quarterly report on Form 10-Q for the fiscal quarter ended
March 31, 2005;
|
|
·
|
our
quarterly report on Form 10-Q for the fiscal quarter ended
June 30, 2005;
|
|
·
|
our
quarterly report on Form 10-Q for the fiscal quarter ended
September 30, 2005;
|
|
·
|
our
current reports on Form 8-K filed on March 15, 2005, April 20, 2005,
May 11, 2005, August 10, 2005, November 14, 2005, November 22, 2005,
November 28, 2005, February 8, 2006 and March 9, 2006 (excluding
any
information furnished pursuant to Item 2.02 or Item 7.01 of any such
Current Reports on Form 8-K);
|
|
·
|
the
audited combined balance sheets of the Hydraulic Well Control Business
of
Oil States International, Inc. as of December 31, 2004 and 2003, the
related audited combined statements of operations, stockholder equity,
and
cash flows for each of the three years in the period ended December
31,
2004, and the unaudited combined financial statements of the Hydraulic
Well Control Business of Oil States International, Inc. as of September
30, 2005 and for the nine months ended September 30, 2005 and 2004,
beginning on page F-1 of our Definitive Proxy Statement on Schedule
14A, filed with the Securities and Exchange Commission on January
30,
2006; and
|
|
·
|
the
unaudited pro forma condensed consolidated financial information
beginning
on page 39 of our Definitive Proxy Statement on Schedule 14A, filed
with
the Securities and Exchange Commission on January 30,
2006.
|
All
documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act (excluding any information furnished pursuant to Item 2.02 or
Item
7.01 on any current report on Form 8-K) subsequent to the date of this
filing and prior to the termination of this offering shall be deemed to be
incorporated in this prospectus and to be a part hereof from the date of the
filing of such document. Any statement contained in a document incorporated
by
reference herein shall be deemed to be modified or superseded for all purposes
to the extent that a statement contained in this prospectus, or in any other
subsequently filed document which is also incorporated or deemed to be
incorporated by reference, modifies or supersedes such statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
Included
and incorporated by reference in this prospectus are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts, included
in
or incorporated by reference into this prospectus that address activities,
events or developments that we expect or anticipate will or may occur in the
future are forward-looking statements. The words “should,” “believe,” “intend,”
“expect,” “anticipate,” “project,” “estimate,” “predict,” “plan” and similar
expressions are also intended to identify forward-looking
statements.
These
forward-looking statements include, but are not limited to, statements
regarding:
|
·
|
estimates
of future commodity prices;
|
|
·
|
amounts
and types of capital expenditures and operating
expenses;
|
|
·
|
expansion
and growth of our business and
operations;
|
|
·
|
expansion
and development trends of the oil and natural gas
industry;
|
|
·
|
operating
results and working capital; and
|
|
·
|
future
methods and types of financing.
|
Such
forward-looking statements involve assumptions and are subject to known and
unknown risks and uncertainties that could cause actual results or performance
to differ materially from those expressed or implied by such forward-looking
statements. Although we believe that the assumptions reflected in such
forward-looking statements are reasonable, we can give no assurance that such
assumptions will prove to have been correct. You should read the section
entitled “Risk Factors” for a discussion of some of the factors that may affect
these assumptions. Forward-looking statements speak only as of the date they
are
made and we undertake no obligation to update them.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
Item
14.
|
Other
Expenses of Issuance and
Distribution
|
The
expenses of this offering (all of which are to be paid by the registrant) are
estimated to be as follows:
|
Securities
and Exchange Commission registration fee
|
|
$
|
4,800
|
|
|
Legal
fees and expenses
|
|
|
40,000
|
|
|
Accounting
fees and expenses
|
|
|
10,000
|
|
|
Printing
expenses
|
|
|
10,000
|
|
|
Miscellaneous
|
|
|
1,000
|
|
|
TOTAL
|
|
$
|
65,800
|
|
|
Item
15.
|
Indemnification
Of Officers And Directors
|
Our
certificate of incorporation contains certain provisions permitted under the
Delaware General Corporation Law (“DGCL”) relating to the liability of
directors. These provisions eliminate a director's personal liability for
monetary damages resulting from a breach of fiduciary duty, except that a
director will be personally liable:
| |
·
|
for
any breach of the duty of loyalty to us or our
stockholders;
|
| |
·
|
for
an act or omission not in good faith that constitutes a breach of
duty of
the director to us or involving intentional misconduct or a knowing
violation of law;
|
| |
·
|
for
any transaction from which the director derived an improper personal
benefit;
|
| |
·
|
under
Section 174 of the DGCL relating to unlawful stock repurchases
or
dividends; and
|
| |
·
|
an
act or omission for which the liability of a director is expressly
provided for by an applicable
statute.
|
These
provisions do not limit or eliminate our rights or those of any stockholder
to
seek nonmonetary relief, such as an injunction or rescission, in the event
of a
breach of a director's fiduciary duty. These provisions will not alter a
director's liability under federal securities laws.
Our
certificate of incorporation and bylaws also provide that we must indemnify
our
directors and officers to the fullest extent permitted by Delaware law and
also
provide that we must advance expenses, as incurred, to our directors and
officers in connection with a legal proceeding to the fullest extent permitted
by Delaware law, subject to very limited exceptions.
Section 145
of the DGCL, inter alia, authorizes a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, other than an action by or in the
right
of the corporation, because such person is or was a director, officer, employee
or agent of the corporation or was serving at the request of the corporation
as
a director, officer, employee or agent of another corporation or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reason to believe his conduct was unlawful. Similar indemnity is authorized
for
such persons against expenses, including attorneys' fees, actually and
reasonably incurred in defense or settlement of any such pending, completed
or
threatened action or suit by or in the right of the corporation if such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and provided further that,
unless a court of competent jurisdiction otherwise provides, such person shall
not have been adjudged liable to the corporation. Any such indemnification
may
be made only as authorized in each specific case upon a determination by the
stockholders or disinterested directors that indemnification is proper because
the indemnitee has met the applicable standard of conduct.
Section 145
further authorizes a corporation to purchase and maintain insurance on behalf
of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him. We maintain policies insuring
our and our subsidiaries' officers and directors against specified liabilities
for actions taken in such capacities, including liabilities under the Securities
Act of 1933.
We
have
entered into separate indemnification agreements with our directors and officers
that may, in some cases, be broader than the specific indemnification provisions
contained in our certificate of incorporation, bylaws or the DGCL. The
indemnification agreements may require us, among other things, to indemnify
our
officers and directors against certain liabilities, other than liabilities
arising from willful misconduct, that may arise by reason of their status or
service as directors or officers. We believe that these indemnification
arrangements are necessary to attract and retain qualified individuals to serve
as directors and officers.
|
Item
16.
|
Exhibits
And Financial Statement
Schedules
|
(a)
Exhibits.
The
following exhibits are filed herewith pursuant to the requirements of Item
601
of Regulation S-K:
|
Exhibit
No.
|
|
Description
|
|
4.1
|
|
Registration
Rights Agreement dated March 3, 2006 between Boots & Coots
International Well Control, Inc. and Oil States Energy Services,
Inc.
(formerly known as HWC Energy Services, Inc.)(incorporated by reference
to
Exhibit 4.1 to the Current Report on Form 8-K filed on March 9,
2006).
|
|
5.1
|
|
Opinion
of Thompson & Knight LLP
|
|
23.1
|
|
Consent
of UHY Mann Frankfort
Stein & Lipp CPAs, LLP
|
|
23.2
|
|
Consent
of Ernst & Young LLP
|
|
23.3
|
|
Consent
of Thompson & Knight LLP (included in
Exhibit 5.1)
|
|
24
|
|
Power
of Attorney (included in the signature page of this Registration
Statement)
|
The
undersigned registrant hereby undertakes:
(a) To
file,
during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective Registration Statement; and
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
provided,
however, that paragraphs (a)(i), (ii) and (iii) above do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission
by
the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement, or is contained in a form of prospectus filed pursuant
to Rule 424(b) that is part of this registration
statement.
(b) That,
for
the purpose of determining any liability under the Securities Act of 1933,
each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) To
remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the
offering.
(d) That,
for
the purpose of determining liability under the Securities Act of 1933 to any
purchaser, each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relaying on Rule 430B or other than prospectuses filed in reliance
on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness; provided,
however, that
no
statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of
the
registration statement will, as to a purchaser with a time of contract of sale
prior to such first use, supersede or modify any statement that was made in
the
registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to the date of first use.
(e) That,
for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant’s annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan’s annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a
new registration statement relating to the securities offered therein, and
the
offering of such securities at that time shall be deemed to be the initial
bona
fide offering thereof.
(f) Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, that registrant will, unless
in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas
on March 17, 2006.
| |
BOOTS
& COOTS INTERNATIONAL WELL CONTROL, INC.
|
| |
|
|
| |
By:
|
/s/
Jerry Winchester
|
|
| |
Name:
|
Jerry
Winchester
|
| |
Title:
|
President,
Chief Executive Officer, and Chief Operating
Officer
|
POWER
OF ATTORNEY
We,
the
undersigned directors and officers of Boots & Coots International Well
Control, Inc., a Delaware corporation, do hereby constitute and appoint Jerry
L.
Winchester and Dewitt H. Edwards, and each of them, our true and lawful
attorney-in-fact and agent, to do any and all acts and things in our names
and
on our behalf in our capacities as directors and officers and to execute any
and
all instruments for us and in our name in the capacities indicated below, which
said attorney and agent may deem necessary or advisable to enable said
Registrant to comply with the Securities Act of 1933 and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the registration statements, or any registration statement for this offering
that is to be effective upon filing pursuant to Rule 462 under the Securities
Act of 1933, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below,
any
and all amendments (including post-effective amendments) hereof; and we do
hereby ratify and confirm all that said attorneys and agents shall do or cause
to be done by virtue thereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the date
indicated.
|
Signature
|
|
Capacity
|
|
Date
|
| |
|
|
|
|
|
/s/
Jerry Winchester
|
|
President,
Chief Executive Officer, Chief Operating
|
|
March
17, 2006
|
|
Jerry
Winchester
|
|
Officer,
and Director
|
|
|
| |
|
(Principal
Executive Officer)
|
|
|
| |
|
|
|
|
|
/s/
Gabriel Aldape
|
|
Senior
Vice President—Finance and Administration
|
|
March
17, 2006
|
|
Gabriel
Aldape
|
|
(Principal
Financial Officer)
|
|
|
| |
|
|
|
|
|
/s/
Kevin Johnson
|
|
Vice
President—Accounting
|
|
March
17, 2006
|
|
Kevin
Johnson
|
|
(Principal
Accounting Officer
|
|
|
| |
|
|
|
|
|
/s/
K. Kirk Krist
|
|
Chairman
of the Board
|
|
March
17, 2006
|
|
K.
Kirk Krist
|
|
|
|
|
| |
|
|
|
|
|
/s/
W. Richard Anderson
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Director
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March
17, 2006
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W.
Richard Anderson
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/s/
E. J. DiPaolo
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Director
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March
17, 2006
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E.
J. DiPaolo
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/s/
Robert S. Herlin
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Director
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March
17, 2006
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Robert
S. Herlin
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Director
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Douglas
E. Swanson
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Director
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Cindy
B. Taylor
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INDEX
TO EXHIBITS
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Exhibit
No.
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Description
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4.1
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Registration
Rights Agreement dated March 3, 2006 between Boots & Coots
International Well Control, Inc. and Oil States Energy Services,
Inc.
(formerly known as HWC Energy Services, Inc.)(incorporated by reference
to
Exhibit 4.1 to the Current Report on Form 8-K filed on March 9,
2006).
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Opinion
of Thompson & Knight LLP
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Consent
of UHY Mann Frankfort
Stein & Lipp CPAs, LLP
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Consent
of Ernst & Young LLP
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23.3
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Consent
of Thompson & Knight LLP (included in
Exhibit 5.1)
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24
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Power
of Attorney (included in the signature page of this Registration
Statement)
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