Helmerich & Payne, Inc. Announces Private Offering of Senior Notes

Rhea-AI Summary

Helmerich & Payne (NYSE:HP) has announced a private offering of senior unsecured notes to qualified institutional buyers and non-U.S. persons. The proceeds will be used to finance the acquisition of KCA Deutag International (KCAD), repay KCAD's outstanding debt, and cover related expenses. This offering will reduce commitments under HP's existing bridge loan facility for the acquisition.

The notes will have a 'special mandatory redemption' clause if the acquisition doesn't occur by October 25, 2025, or if HP decides not to pursue it. The notes are not registered under the Securities Act and cannot be sold in the U.S. without registration or an exemption. This announcement does not constitute an offer to sell or solicit offers to buy the notes.

Positive

• Potential to strengthen HP's market position through the acquisition of KCAD
• Diversification of financing sources through senior notes offering
• Reduction of commitments under existing bridge loan facility

Negative

• Increase in long-term debt obligations
• Potential dilution of shareholder value if acquisition fails to deliver expected benefits
• Risk associated with 'special mandatory redemption' clause if acquisition doesn't materialize

Financial Analyst

Helmerich & Payne's private offering of senior notes is a strategic financial move to fund its acquisition of KCA Deutag International This debt issuance, combined with a term loan and cash, demonstrates H&P's commitment to expanding its global footprint in the drilling industry. The special mandatory redemption clause provides a safety net for investors if the acquisition falls through.

From an investor's perspective, this move could potentially enhance H&P's market position and revenue streams. However, it's important to monitor how this additional debt impacts the company's balance sheet and future financial flexibility. The success of this strategy will largely depend on the synergies realized from the KCAD acquisition and the company's ability to manage the increased debt load effectively.

Market Research Analyst

This private offering signifies H&P's aggressive growth strategy in the drilling sector. By acquiring KCAD, H&P is likely aiming to expand its international presence and diversify its service offerings. This move could potentially strengthen H&P's competitive position in the global market, especially in regions where KCAD has a strong foothold.

Investors should keep an eye on how this acquisition affects H&P's market share and its ability to secure new contracts in different geographical regions. The success of this strategy could lead to improved long-term growth prospects for H&P, but it also comes with integration risks and potential challenges in managing a larger, more complex organization.

Legal Expert

The private placement of senior notes to qualified institutional buyers under Rule 144A and Regulation S is a common practice for companies seeking to raise capital without the complexities of a public offering. This approach allows H&P to access funding quickly while avoiding the extensive disclosure requirements of a registered offering.

The special mandatory redemption clause is a important legal protection for noteholders, ensuring they can recoup their investment if the acquisition doesn't materialize. Investors should be aware that these notes come with transfer restrictions and may have liquidity in the secondary market. The success of this offering will depend on H&P's ability to attract institutional investors and negotiate favorable terms in the current market environment.

TULSA, Okla.--(BUSINESS WIRE)-- Helmerich & Payne, Inc. (NYSE:HP) (“H&P” or the “Company”) announced today that it intends to offer senior unsecured notes (the “Notes”) in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States in compliance with Regulation S under the Securities Act (the “Offering”). The timing of pricing and terms of the Notes are subject to market conditions and other factors.

The Company intends to use the net proceeds from the Offering, together with the proceeds of its term loan credit facility and cash on hand, to finance the purchase price for its previously announced pending acquisition (the “Acquisition”) of KCA Deutag International Limited (“KCAD”), to repay certain of KCAD’s outstanding indebtedness, and to pay related fees and expenses. The net proceeds from the Offering will result in a corresponding reduction to the commitments under the Company’s existing bridge loan facility for purposes of financing the Acquisition.

The Notes will be subject to a “special mandatory redemption” in the event that the consummation of the Acquisition does not occur on or before October 25, 2025, or if the Company notifies the trustee of the Notes that it will not pursue the consummation of the Acquisition.

The Notes have not been registered under the Securities Act or any state or other jurisdiction's securities laws and may not be offered or sold in the United States to, or for the benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable securities laws of any state or other jurisdiction.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any security, nor shall there be any sale of the Notes or any other security of the Company, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The Offering is being made solely pursuant to a private offering memorandum and only to such persons and in such jurisdictions as are permitted under applicable law.

About Helmerich & Payne, Inc.

Founded in 1920, Helmerich & Payne, Inc. is committed to delivering industry leading drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for our customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies.

Cautionary Statement Regarding Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this communication are forward-looking statements. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “predict,” “project,” “target,” “continue,” or the negative thereof or similar terminology, and such include, but are not limited to, statements regarding the consummation of the Acquisition, the terms of Offering and the intended use of the net proceeds therefrom.

Forward-looking statements are based upon current plans, estimates, and expectations that are subject to risks, uncertainties, and assumptions, many of which are beyond our control and any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The inclusion of such statements should not be regarded as a representation that such plans, estimates, or expectations will be achieved. Factors that could cause actual results to differ materially from those expressed in or implied by such forward-looking statements include, but are not limited to, our ability to consummate the Acquisition on the terms currently contemplated, risks and uncertainties related to economic, market or business conditions, including those which might affect the Offering, and additional factors disclosed in our 2023 Annual Report on Form 10-K, including under Part I, Item 1A— “Risk Factors” and Part II, Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” thereof, as updated by subsequent reports (including the Company’s Quarterly Reports on Form 10-Q) we file with the Securities and Exchange Commission.

All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. All forward-looking statements speak only as of the date they are made and are based on information available at that time. Because of the underlying risks and uncertainties, we caution you against placing undue reliance on these forward-looking statements. We assume no duty to update or revise these forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240910174577/en/

Dave Wilson, Vice President of Investor Relations

investor.relations@hpinc.com

918-588-5190



Media

Stephanie Higgins

Director of Communications

Stephanie.Higgins@hpinc.com

(918) 588-2670

Source: Helmerich & Payne, Inc.

FAQ

What is the purpose of Helmerich & Payne's (HP) senior notes offering?

The senior notes offering is intended to finance HP's acquisition of KCA Deutag International (KCAD), repay KCAD's outstanding debt, and cover related fees and expenses.

When is the deadline for Helmerich & Payne (HP) to complete the KCAD acquisition?

The acquisition of KCAD must be completed by October 25, 2025, or the notes will be subject to a 'special mandatory redemption'.

Who can purchase the senior notes offered by Helmerich & Payne (HP)?

The senior notes are being offered privately to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States under Regulation S of the Securities Act.

How will the senior notes offering affect Helmerich & Payne's (HP) existing bridge loan facility?

The net proceeds from the senior notes offering will reduce the commitments under HP's existing bridge loan facility that was intended to finance the KCAD acquisition.