What happened

Shares of Oil States International (OIS 2.40%) had declined by more than 11% by 10:30 a.m. EDT on Wednesday. Weighing on the oil stock was the pricing of a convertible debt offering. 

So what

Oil States International priced a private offering of $135 million in 4.75% convertible senior notes due in 2026. It also granted purchasers the option to buy up to another $15 million of the notes. They will mature on April 1, 2026, unless repurchased, redeemed, or converted. Oil States has the option to redeem all or a portion of the notes on or after April 6, 2024. 

Red numbers on a screen.

Image source: Getty Images.

The oil-field services company expects to receive $130 million in cash from this offering. It intends to use $120 million of that to repurchase $125 million in the principal amount of its 1.5% convertible senior notes due in 2023. The company expects to use the remainder for general corporate purchases, which could include repurchasing additional 2023 convertible notes or repaying borrowings under its credit facility. 

Now what

Oil States is pushing out a portion of its convertible senior note maturities by issuing those due in 2026 to repurchase some that would have matured in 2023. It's paying a higher interest rate for this additional flexibility, which is weighing on its stock price. It's another step to enhance its balance sheet as it waits for activity in the oil market to improve.