KLX Energy Services Launches $125 Million Rights Offering to Cut Debt
KLX Energy Services has unveiled a $125 million rights offering, aiming to aggressively reduce its leverage by exchanging senior debt for common stock. The Houston-based oilfield services provider will offer shareholders the chance to purchase stock at $1.49 per share, backed by existing noteholders to ensure the capital raise succeeds.
The offering, slated to begin August 24, allows shareholders of record as of August 21 to purchase 3.885 shares for every right held. Backed by holders of the company's 2030 senior secured notes, the deal includes a $94 million commitment that could scale to the full $125 million. This arrangement functions as a debt-for-equity swap, where the backstop parties use their existing notes to cover any unsubscribed shares, effectively trimming the company's outstanding debt load.
Beyond the immediate capital infusion, the company is restructuring its debt terms to gain operational breathing room. Once the exchange concludes, KLX will adopt an amended indenture that relaxes leverage ratio tests and provides more flexibility for future indebtedness. The company plans to use any proceeds exceeding $31 million to repurchase additional 2030 notes at par, further cleaning up its balance sheet. Vinson & Elkins LLP is providing legal counsel to the company, while Perella Weinberg Partners is serving as financial advisor.
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