Key Energy amends consent solicitation for 6 3/8%, 8 3/8% notes, ups payment

New York, July 16 - Key Energy Services Inc. said it amended its consent solicitation for its 6 3/8% senor notes due 2013 and 8 3/8% senior notes due 2008, increasing the payment on offer.

The company said the amendment comes after discussions with holders of more than 50% of each series of notes. It added that the holders said they intend to deliver consents.

The consent payment is increased to $5.00 per $1,000 principal amount of notes from $2.50 per $1,000 principal amount.

If Key Energy does not report the financial information required under the note indentures by Oct. 1, holders will receive a further consent payment of $2.50 per $1,000 principal amount if they consent within three business days. Additional consent payments will be made monthly up to Dec. 1 to holders who consent within three business days.

In addition, Key Energy will file selected financial and activity information for the quarter ended June 30 within 50 days after the end of the quarter on a form 8-K with the Securities and Exchange Commission. It will file further information monthly, also within 50 days.

The information to be filed on the 8-K forms will include revenues, certain expense data including interest expense, current assets including cash and cash equivalents and current liabilities, outstanding debt, capital expenditures, status of compliance with credit facility covenants including amounts available for borrowing, management discussion and analysis and disclosure of rig hours and trucking hours.

The consent solicitation continues to run through 5 p.m. ET on July 19.

Lehman Brothers (800 438-3242 or 212 528-7581) is the solicitation agent and D.F. King & Co. Inc. (800 848-2998 or 212 269-5550) is the information agent and tabulation agent for the offer.

Key Energy extended its consent solicitation from noteholders on Thursday to give it more time to prepare its 10-K for 2003 and 2004 10-Q reports. As extended, the offer will expire at 5 p.m. ET on July 19 instead of 5 p.m. ET on July 15.

The company announced the solicitation on July 6.

On June 1, the company received a notice from the indenture trustee that it had 90 days to file the reports or face default.

Key Energy said it believes the notice may be invalid because it does not meet certain requirements for giving notice as required by the indentures. Contrary to the letter from the trustee, the indentures actually would require the company to cure the deficiency within 60 days of the receipt of a notice, it said.

In any event, the Midland, Texas-based oil well services firm is asking for consents from holders of its 6 3/8% senior notes due 2013 and 8 3/8% senior notes due 2008.

A majority of both series must give their consents.

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