Each one in plain English, with the numbers worked through for a shareholder.
31 Jan 2007asset acquisition disposition● Neutral
This amendment adds the financial statements the January 2007 Eagle Well acquisition required: audited Eagle accounts for the year ended July 31, 2006, and unaudited pro forma combined statements with Bronco. The deal terms are restated unchanged ($2.5M cash with $1M in escrow, 1,070,390 Bronco shares, about $3.0M assumed debt net of working capital). Eagle's audited figures show revenue of $13,277,838 and net income of $2,513,834, which included a $2,328,089 gain on sale of assets.
On January 9, 2007 Bronco acquired Eagle Well Services, Inc. by merger for $2.5 million cash (with $1 million held in escrow), 1,070,390 Bronco shares, and assumed debt net of working capital of about $3.0 million. The press release says it brings 31 workover rigs, 24 currently working, and calls it the first step in a diversification strategy beyond contract drilling. Bronco agreed to register the shares for resale by the Eagle holders, and the new shares dilute existing holders. This is a different company from the Eagle Drilling assets bought in 2005.
Stockholders approved the 2006 Stock Incentive Plan on June 9, 2006 (board adopted it April 20). It caps awards at 2,500,000 shares less the 1,000,000 shares underlying options already granted under the 2005 plan. Awards to employees, consultants and directors would dilute existing shareholders if used.
Bronco filed the audited financial statements of Big A Drilling and pro forma combined figures for the Big A purchase that closed January 18, 2006. Big A reported 2005 revenue of about $15.8 million and net income of about $3.2 million. This is a required paperwork update on an already completed deal, not a new transaction.
On March 23, 2006 Bronco priced a third share offering: 3,000,000 shares at $22.75, of which Bronco sells 1,700,000 and Bronco Drilling Holdings sells 1,300,000, with a 450,000-share over-allotment option granted by Holdings. Bronco gets no proceeds from Holdings' shares and says its own proceeds will repay borrowings under its revolving credit facility. New shares dilute existing holders, and Bronco, its officers and directors and Holdings agreed to a 90-day lock-up.
On February 7, 2006 Bronco told Nasdaq it no longer met the rule requiring three independent directors on its audit committee, because director Michael O. Thompson no longer qualifies as independent. The board intends to appoint William R. Snipes to the board and audit committee and expects Thompson to leave the committee, which would restore compliance.
20 Jan 2006asset acquisition disposition● NeutralMajor
Bronco closed the Big A Drilling purchase on January 18, 2006, resolving the deal announced in December: six operating rigs plus heavy haul trucks and excess equipment for $16.3 million cash and 72,571 shares (the earlier figure was 72,570). It also leased the Woodward, Oklahoma refurbishment yard ($5,000 a month, six-month initial term, option to extend three years, option to buy for $200,000). Separately, on January 13, 2006 it signed a new revolving credit facility of up to $150 million with Fortis Capital Corp. and a lender group, maturing January 13, 2009, at LIBOR plus 2.0%-3.0%, secured by substantially all assets. The filing does not say what the facility replaces or how much was drawn; it is an inference that it succeeds the Merrill Lynch term loan.
Bronco agreed on December 16, 2005 to buy six operating rigs, heavy haul trucks and excess equipment from Big A Drilling, L.C. for $16.3 million cash plus 72,570 Bronco shares worth $1,815,000, expected to close in the first quarter of 2006 subject to due diligence. It also plans to lease a Woodward, Oklahoma refurbishment yard from an affiliate of Big A at $5,000 a month, with an option to buy it for $200,000. Per the press release, the operating fleet would rise to 37 rigs with 27 inventoried. This is another fleet expansion following Thomas and Eagle.
19 Dec 2005asset acquisition disposition● NeutralMajor
Bronco filed the financial statements for the Eagle Drilling acquisition and confirmed it closed October 3, 2005 for about $50.0 million, resolving the pending Eagle deal from September. The filing says it covered five operating rigs and seven inventoried rigs (the September announcement said one rig being refurbished and six inventoried) plus equipment and parts. Eagle's statements show 2004 revenue of $1.0 million and nine-month 2005 revenue of $10.0 million.
Bronco's board (November 8) and a majority of stockholders (November 16) approved raising the 2005 Stock Incentive Plan's share cap by 500,000 shares, to a maximum of 1,000,000. This allows more stock-based awards to employees and directors, which would dilute existing shareholders if used.
Bronco signed an underwriting agreement on October 27, 2005 for a second share offering: 3,500,000 new shares at $23.00 to the public ($21.735 to underwriters), with a 30-day option for 525,000 more. The press release says about $50.0 million of the proceeds will repay borrowings from the Thomas Drilling acquisition, with the rest going to rig refurbishment and general purposes. Existing shareholders face dilution from the new shares, and the original IPO lock-up (ending February 12, 2006) is restated, now also covering COO Karl Benzer.
Bronco filed the required financial statements for the Strata Drilling acquisition, which it says closed July 13, 2005 for $20 million ($13 million cash funded by a loan from Alpha Investors LLC, $7 million in seller notes). The deal brought two operating rigs, one rig being refurbished and a 16-acre Oklahoma City yard. The filing's Strata financials show 2004 revenue of $6.1 million and six-month 2005 revenue of $3.7 million. Note: this gives a July 13 closing date, whereas earlier context recorded the acquisition as June 30, 2005 (the date of the purchase agreements); the $13M loan lender is named Alpha Investors here, versus Theta Investors in earlier context. The filing is mainly a required paperwork update, not a new deal.
On September 19, 2005 Bronco signed a term loan with Merrill Lynch Capital for up to $50.0 million (advances available until December 31, 2005) and immediately borrowed $43.0 million. It pays LIBOR plus 271 basis points, is secured by a first lien on substantially all assets and guaranteed by principal subsidiaries, and is due January 1, 2011. Proceeds are for working capital, rig refurbishment and buying more rigs. This replaces the GE facility repaid weeks earlier. It is inference, not stated, that it may help fund the pending rig acquisitions.
Bronco agreed on September 15, 2005 to buy five operating rigs, one rig being refurbished and six inventoried rigs from Eagle Drilling, L.L.C. and affiliates for $50 million cash, expected to close in Q4 2005 subject to due diligence. Per the press release, together with the pending Thomas deal the fleet would reach 62 rigs, 30 operating, and the five operating rigs all work in the Barnett Shale. This builds on the Thomas acquisition announced earlier in September.
Bronco agreed on September 2, 2005 to buy the assets of Thomas Drilling Co. for $68 million cash: nine operating rigs, two rigs under construction, two inventoried rigs, plus excess equipment and parts. Closing is expected within about 30 days, subject to due diligence and Hart-Scott-Rodino antitrust clearance. Per the press release, this takes the operating fleet to 25 rigs and opens the Barnett Shale and East Texas.
Bronco repaid in full its General Electric Capital Corporation loan facility on August 29, 2005: $22,235,141 of principal plus interest and fees, including a $643,500 prepayment fee, using IPO proceeds. The facility (up to $25.5 million, LIBOR plus 5.0%, maturing October 1, 2010) is now terminated, along with its covenants and security over company assets. This continues the use of IPO money to pay down debt.
The IPO closed on August 19, 2005 with 5,865,000 shares sold at $17.00 (5,715,000 by Bronco, 150,000 by the controlling stockholder), after the over-allotment option was exercised in full. Bronco received about $90.4 million in net proceeds and on August 22 used $13.2 million to repay in full the loan from Theta Investors, LLC (controlled by Wexford Capital, manager of the controlling stockholder), which had funded the Strata acquisition and was required to be repaid on IPO completion.
Bronco signed the underwriting agreement for its IPO: 5,100,000 new shares priced at $17.00 each (underwriters pay $15.81), with an option for 765,000 more (615,000 from Bronco, 150,000 from the controlling stockholder). The company says it will use proceeds to repay about $18.1 million of borrowings, including $13.0 million tied to the recent Strata acquisitions, and put the rest toward refurbishing rigs and general purposes. Officers, directors and the selling stockholder agreed to a 180-day lock-up on selling shares.
