Baker Hughes Incorporated (NYSE:BHI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On November 29, 2016, Baker Hughes Oilfield Operations, Inc.
(BHOO), a wholly owned subsidiary of Baker
Hughes Incorporated (Baker Hughes); Allied
Completions Holdings, LLC (Partner), a portfolio
company of CSL Capital Management, LLC; BJ Services, LLC (the
Company), a wholly owned subsidiary of Baker
Hughes; and, for the purposes of certain provisions of the
Contribution Agreement (as defined below), Allied Energy JV
Contribution, LLC (Investor JV), an affiliate of
CSL Capital Management, LLC and West Street Energy Partners (a
fund managed by the Merchant Banking Division of Goldman, Sachs
Co.), entered into a Contribution Agreement (the
Contribution Agreement) to which, among other
things, (i) BHOO agreed to contribute its onshore pressure
pumping business in the United States and Canada, including
cementing, stimulation, hydraulic fracturing and acidizing
services and coiled tubing assets, to the Company, (ii) Partner
agreed to contribute cash and Partners pressure pumping services
(cementing, fracturing and acidizing) business (which is located
in the United States) to the Company, (iii) the Company will
receive a cash contribution from Investor JV (of which it will
retain $175 million), and (iv) BHOO and its affiliates will
receive $150 million in cash. Immediately following the Closing,
BHOO and a BHOO affiliate will hold, in the aggregate, 46.69% of
the outstanding membership interests of the Company and Investor
JV will hold 53.31% of the outstanding membership interests of
the Company.
The Contribution Agreement includes customary representations,
warranties, covenants and indemnification provisions, including,
among other things, representations and warranties by BHOO and
Partner regarding their respective contributed businesses, and
covenants regarding conducting their respective contributed
businesses in the ordinary course during the interim period
between the execution of the Contribution Agreement and the
Closing (as defined in the Contribution Agreement).
The obligation of the parties to consummate the Closing is
subject to customary conditions, including, among other things,
(i) the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the Canadian Competition Act, as amended;
and (ii) the absence of legal restraints and prohibitions. The
obligation of each party to consummate the Closing is also
conditioned upon the other partys representations and warranties
being true (subject to certain materiality exceptions) and the
other party having performed in all material respects its
obligations under the Contribution Agreement.
The Contribution Agreement contains certain other termination
rights for each of BHOO and Partner, including the right of each
party to terminate the Contribution Agreement if the Closing has
not been consummated by the termination date of August 29, 2017.
The Contribution Agreement provides for the payment by Investor
JV to the Company of a reverse termination fee of $25 million in
the case of certain events described in the Contribution
Agreement.
On the Closing Date (as defined in the Contribution Agreement),
the Company, BHOO, Baker Hughes International Holding Company, a
wholly owned subsidiary of BHOO, and Investor JV, will enter into
a limited liability company agreement in the form attached to the
Contribution Agreement (the LLC Agreement). The
LLC Agreement will provide, among other things, that:
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Board. The Company will be governed by a board of directors. The board of directors will consist of seven directors, of which three directors will be designated by BHOO and four directors will be designated by Investor JV; provided that if a person and its affiliates in the aggregate hold 15% or less of the Companys outstanding membership interests, such person will only have the right to designate one director and the number of directors constituting the whole board of the Company will be reduced accordingly. |
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Significant Actions. Certain board of director actions, including, among other things, matters relating to capital structure, mandatory capital contributions, incurrence of indebtedness above a certain threshold, acquisitions above a certain threshold and the entry by the Company into a new line of business, would require the affirmative vote from at least one director designated by BHOO and at least one director designated by Investor JV; provided that if a person and its affiliates in the aggregate hold 15% or less of the Companys outstanding membership interests, the matters requiring the affirmative vote from at least one director designated by such person decreases. |
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Transfer Restrictions. Until the earlier of (i) the day that is 15 months following the Closing Date and (ii) the expiration of any underwriter lock-up period associated with an initial public offering of equity securities of the Company, no member may transfer any membership interest in the Company other than certain permitted transfers, including, among other things, certain permitted transfers to such members affiliates. |
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Tag-Along; Drag-Along Rights; Right of First Offer. The LLC Agreement includes customary tag-along, drag-along and right of first offer provisions. |
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Non-Compete. The LLC Agreement includes a non-compete covenant, with respect to certain land based hydraulic fracturing services and land based well cementing and acidizing services in the United States and Canada, which is subject to certain exceptions. At any time following the three-year anniversary of the Closing Date, BHOO may elect to terminate the non-compete covenant; provided that if BHOO makes such election, the matters requiring the affirmative vote from at least one director designated by BHOO decreases. |
On the Closing Date, the Company and BHOO agree to enter into an
intellectual property license agreement in the form attached to
the Contribution Agreement (License Agreement).
The License Agreement will provide, among other things, a
non-exclusive cross-license between BHOO and the Company under
certain of technologies to be held by the respective parties
after the Closing Date for each partys use in its respective
businesses consistent with certain territory and field of use
restrictions.
The foregoing description of the Contribution Agreement, the LLC
Agreement and the License Agreement does not purport to be
complete, and is qualified in its entirety by reference to the
full text of the Contribution Agreement and the LLC Agreement and
License Agreement attached as exhibits thereto, which are
attached hereto as Exhibit 2.1 and incorporated herein by
reference.
A copy of the Contribution Agreement has been included to provide
investors and stockholders with information regarding its terms
and is not intended to provide any factual information about
Baker Hughes, BHOO, Partner, the Company or Investor JV or any of
their respective subsidiaries or affiliates. The representations,
warranties and covenants contained in the Contribution Agreement
have been made solely for the purposes of the Contribution
Agreement and as of specific dates; were solely for the benefit
of the parties to the Contribution Agreement; are not intended as
statements of fact to be relied upon by Baker Hughes, Partners or
any of their respective affiliates investors or stockholders, but
rather as a way of allocating contractual risk and governing the
contractual rights and relationships between the parties to the
Contribution Agreement; have been modified or qualified by
certain confidential disclosures that were made between the
parties in connection with the negotiation of the Contribution
Agreement, which disclosures are not reflected in the
Contribution Agreement itself; and may no longer be true as of a
given date; and may apply standards of materiality in a way that
is different from what may be viewed as material by investors or
stockholders. Baker Hughes investors and stockholders are not
third-party beneficiaries under the Contribution Agreements and
should not rely on the representations, warranties and covenants
or any descriptions thereof as characterizations of the actual
state of facts or condition of Baker Hughes, BHOO, Partner, the
Company, Investor JV or any of their respective subsidiaries or
affiliates. Moreover, information concerning the subject matter
of the representations and warranties may change after the date
of the Contribution Agreement, which subsequent information may
or may not be fully reflected in Baker Hughes public disclosures.
Baker Hughes acknowledges that, notwithstanding the inclusion of
the foregoing cautionary statements, it is responsible for
considering whether additional specific disclosures of material
information regarding material contractual provisions are
required to make the statements in this Form 8-K not misleading.
Caution Concerning Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking
statements (as defined in Section 21E of the Securities Exchange
Act of 1934, as amended) that reflect Baker Hughes expectations
regarding future events. These forward-looking statements reflect
Baker Hughes current beliefs and expectations and are based on
information currently available to Baker Hughes. Accordingly,
these statements are subject to known and unknown risks,
uncertainties and other factors that could cause actual events to
differ from those expressed in, or implied by, these statements.
See Baker Hughes Annual Report on Form 10-K/A for the year ended
December 31, 2015, Baker Hughes Quarterly Reports on Form 10-Q
for the quarterly periods ended June 30, 2016 and September 30,
2016 and Baker Hughes other filings with the U.S. Securities and
Exchange Commission for a discussion of other risks and
uncertainties. As a result, no assurance can be given that Baker
Hughes beliefs and expectations covered by such forward-looking
statements will be achieved. Baker Hughes is not obligated and
has no intention to update or revise these forward-looking
statements to reflect new events, information or circumstances.
Section 9 Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 2.1 |
Contribution Agreement, dated as of November 29, 2016, among BHOO, Partner, the Company, and, for the purposes of certain provisions of the Contribution Agreement, Investor JV* |
* Certain schedules, annexes and exhibits have been omitted to
Item 601(b)(2) of Regulation S-K. Baker Hughes agrees to furnish
supplementally a copy of such schedules, annexes and exhibits, or
any section thereof, to the SEC upon request.
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
| BAKER HUGHES INCORPORATED | |||||
| Date: | December 1, 2016 | By: | /s/ Lee Whitley | ||
| Name: | Lee Whitley | ||||
| Title: | Vice President and Corporate Secretary | ||||
EXHIBIT INDEX
| Exhibit No. | Description |
| 2.1 |
Contribution Agreement, dated as of November 29, 2016, among BHOO, Partner, the Company, and, for the purposes of certain provisions of the Contribution Agreement, Investor JV * |
* The schedules, annexes and exhibits have been omitted
About Baker Hughes Incorporated (NYSE:BHI)
Baker Hughes Incorporated is engaged in the oilfield services industry. The Company is a supplier of oilfield services, products, technology and systems used in the oil and natural gas industry around the world. The Company also provides industrial products and services for other businesses, including downstream chemicals, and process and pipeline services. It conducts its operations through its subsidiaries, affiliates, ventures and alliances. The Company has four geographical operating segments: North America, Latin America, Europe/Africa/Russia Caspian and Middle East/Asia Pacific. The Company also has an Industrial Services segment, which includes the downstream chemicals business and the process and pipeline services business. The Company’s oilfield products and services are of approximately two categories, Drilling and Evaluation or Completion and Production. The Company’s Industrial Services consists of its downstream chemicals and process, and pipeline services businesses. Baker Hughes Incorporated (NYSE:BHI) Recent Trading Information
Baker Hughes Incorporated (NYSE:BHI) closed its last trading session down -0.54 at 63.79 with 6,397,451 shares trading hands.