Flotek Industries Inc. said Tuesday it plans to offer up to $115 million worth of senior notes to finance its planned acquisition of Teledrift Inc.
The oilfield services provider will offer $100 million worth of senior convertible notes due in 2028. It will grant Bear Stearns, the sole underwriter, an option to purchase an additional $15 million worth of notes.
The notes will be convertible into Flotek stock, cash or a combination of both, at Flotek's option. The interest rate, conversion rate, conversion price and other terms of the offering have yet to be determined. Holders may require Flotek to repurchase the notes if it is involved in certain types of corporate transactions or other events that constitute a fundamental change.
Flotek reported its $95.2 million offer for Teledrift, which manufactures and rents wireless survey and measurement drilling tools, on Tuesday as well.
The company also plans to enter a share-lending agreement with Bear Stearns, under which it will loan the investment bank shares of its common stock to use in hedging against the note purchases. Flotek will receive a nominal lending fee but no proceeds from the stock sale.
Bear Stearns will return the borrowed shares as the notes are converted or redeemed. The stock and note sales are contingent upon one another.
Flotek shares fell $1.55, or 7.2 percent, to $20 in morning trading.
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