Dawson Production Services Rtgs Remain on S&PWatch,Neg.NEW YORK--(BUSINESS WIRE)--Aug. 12, 1998--Standard & Poor's single-'B'-plus corporate credit and senior notes ratings of Dawson Dawson or Dawson City, city (1991 pop. 972), W Yukon Territory, Canada, at the confluence of the Yukon and Klondike rivers. It is the trade center of the Klondike mining region and a tourist center. Production Services Inc. remain on CreditWatch with negative implications. The ratings were placed on CreditWatch July 2, 1998. The CreditWatch placement follows the announcement by unrated Key Energy Group Inc. that it had made an unsolicited un·so·lic·it·ed adj. Not looked for or requested; unsought: an unsolicited manuscript; unsolicited opinions. unsolicited Adjective bid to acquire Dawson's stock for about $180 million in cash. On Aug. 11, 1998 the companies announced they have signed a definitive agreement for the acquisition of Dawson by Key Energy for $17.50 per share in cash, giving the transaction a total value of approximately $352 million, including Dawson's debt of $150 million. The combined company likely will have revenues in excess of $800 million and operate approximately 1,400 service rigs, 71 drilling rigs, and over 1,000 oilfield service trucks out of 125 locations. Reportedly, Key Energy has a financing commitment from PNC PNC Purdue University North Central (Westville, Indiana) PnC Point 'n Click PNC Police National Computer PNC People's National Congress (Guyana) PNC People's National Congress Bank N.A. to complete the acquisition of Dawson as well as the refinancing Refinancing An extension and/or increase in amount of existing debt. of Key's existing debt. Key Energy has reportedly also received a highly confident letter Highly confident letter An investment banking firm's letter indicating that the firm is highly confident it will be able to arrange financing for a securities deal. highly confident letter from Dain Rauscher Wessels to arrange financing in the event the holders of Dawson's 9 3/8% senior notes exercise put rights triggered upon a change of control of Dawson. While the potential combination of Key Energy and Dawson would improve Dawson's market diversity and could provide significant consolidation benefits, Standard & Poor's believes that these benefits could be more than offset by the very high debt leverage of the combined entity should the acquisition be entirely debt financed. Standard & Poor's plans to meet with management to determine the extent, if any, to which the creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of the combined entity would erode Erode (ĕrōd`), city (1991 urban agglomeration pop. 361,755), Tamil Nadu state, S India, on the Kaveri River. The city is located in a cotton-growing region, and its industries include cotton ginning and the manufacture of transport equipment. from Dawson's level. -- CreditWire
CONTACT: Carlos Catoya, New York (1) 212-208-8081
Copyright 1998, Standard & Poor's Rating Services
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