KLX Energy to issue notes to buy Motley, boost cash on balance sheet

By Devika Patel

Knoxville, Tenn., Oct. 22 – KLX Energy Services Holdings, Inc. will use the proceeds of a $250 million senior secured debt financing, which announced Monday, to fund its planned acquisition of Motley Services, LLC, a well completion services provider.

Following the acquisition, the combined company will have $154 million in cash, an increase of over $100 million from KLX Energy’s current cash position, and “modest” leverage.

Under the terms of the agreement, KLX Energy will pay Motley $148 million, consisting of $139 million in cash and $9 million of KLX Energy common stock.

“The company intends to use the majority of the proceeds of the notes offering, which we launched this morning, to acquire Motley Services,” chairman and chief executive officer Amin J. Khoury said on the company’s conference call announcing the acquisition on Monday.

“KLX Energy Services intends to issue $250 million of seven-year senior secured notes,” Khoury said.

The combination of the two companies will result in a “strong” balance sheet with $154 million of cash.

“The combined company will have a strong balance sheet, substantial liquidity and modest proforma leverage,” senior vice president and chief financial officer Thomas P. McCaffrey said on the call.

“Specifically, we’ll have our $100 million asset-based lending facility with approximately $72 million available.

“Our proforma cash balance, including the approximate $104 million going to the balance sheet from the offering, will become $154 million and we have a modest proforma net leverage relative to our peers,” McCaffrey said.

The company currently has a “solid” balance sheet, a $100 million undrawn credit facility and no funded debt at the moment.

“We have a solid balance sheet with no funded debt and ample operating liquidity including over $50 million of cash and an undrawn $100 million ABL facility,” McCaffrey said.

“We also have plans to augment our liquidity in the future,” McCaffrey said.

The acquisition is expected to close in late October or early November.

The Wellington, Fla.-based oilfield services provider started a roadshow on Monday for a $250 million offering of seven-year senior secured notes.

The Rule 144A and Regulation S deal is expected to price on Friday.

Initial price talk has the notes coming with a yield in the mid-to-high 9% area.

J.P. Morgan Securities LLC is the lead.

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