Item 7.01
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Regulation FD Disclosure.
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The Company issued a press release announcing the filing of the chapter 11
cases, as described above in Item 1.03. The press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K.
As part of its
chapter 11 filing, the Debtors filed with the Bankruptcy Court a 13-week cash collateral budget (the Forecast), which is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
Management of Key prepared the Forecast from certain internal financial projections based on expectations,
beliefs, opinions, and assumptions of Keys management that Keys management believed were reasonable at the time they were made. Such expectations, beliefs, opinions, and assumptions may not be appropriate as of the date hereof in light
of developments in Keys business and the broader market for oil and natural gas and related services. Key cannot provide assurance that the financial projections will be realized; rather, actual future financial results are likely to vary
materially from the forward-looking information presented or incorporated by reference herein. The Forecast was prepared as part of the chapter 11 filing and not in accordance with generally accepted accounting principles (GAAP) or
published guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Thus, readers are cautioned not to place undue reliance on the prospective
financial information.
Neither the independent auditor of Key nor any other independent accountant has examined, compiled, or performed any procedures
with respect to the Forecast. Accordingly, none has expressed any opinion or any other form of assurance on such information or its achievability and none assumes any responsibility for the Forecast.
The Forecast:
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is speculative by its nature and was based upon numerous expectations, beliefs, opinions, and assumptions which are inherently uncertain and many of which are beyond the control of Key and its subsidiaries and which may
not prove to be accurate;
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may not reflect current results or future performance, which may be significantly more favorable or less favorable than as set forth in such information; and
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is not, and should not be regarded as, a representation that any of the expectations contained in, or forming a part of, the Forecast will be achieved.
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Except as required by law, Key does not currently intend to update or revise publicly the Forecast to reflect circumstances or other events occurring after
the date thereof or to reflect the occurrence of future events. These considerations should be taken into account in reviewing the Forecast, which was prepared as of an earlier date. For additional information on factors that may cause actual future
financial results to vary materially from the information presented herein, see the section entitled Cautionary Note Regarding Forward-Looking Statements below.
The information included in this Current Report on Form 8-K under Item 7.01 and Exhibits 99.1 and 99.2 is being furnished and shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to liabilities of that Section, unless the registrant specifically states that the information
is to be considered filed under the Exchange Act or incorporates it by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K and the exhibits hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Statements that are not historical in nature or that relate to future events and conditions are, or may be deemed to be, forward-looking statements. These statements are only predictions and are subject to substantial risks and
uncertainties and are not guarantees of performance. Future actions, events and conditions and future results of operations may differ materially from those expressed in these statements.
Important factors that may affect Keys expectations, estimates or projections include, but are not limited
to, the following: risks associated with Keys reorganization; the ability of Key to obtain confirmation of the Plan from the Bankruptcy Court and/or meet all of the conditions precedent therein necessary to effectuate the Plan; conditions in
the oil and natural gas industry, especially oil and natural gas prices and capital expenditures by oil and natural gas companies; volatility in oil and natural gas prices; Keys ability to implement price increases or maintain pricing on its
core services; industry capacity; increased labor costs or unavailability of skilled workers; asset impairments or other charges; the periodic low demand for Keys services and resulting operating losses and negative cash flows; Keys
highly competitive industry as well as operating risks, which are primarily self-insured, and the possibility that its insurance may not be adequate to cover all of its losses or liabilities; the economic, political and social instability and risks
of doing business in certain foreign countries; significant costs and potential liabilities resulting from compliance with applicable laws; Keys historically high employee turnover rate and its ability to replace or add workers, including
executive officers; Keys ability to incur debt or long- term lease obligations; Keys ability to implement technological developments and enhancements; significant costs and liabilities resulting from environmental, health and safety laws
and regulations, including those relating to hydraulic fracturing; severe weather impacts on Keys business; Keys ability to successfully identify, make and integrate acquisitions and its ability to finance future growth of its operations
or future acquisitions; the loss of one or more of Keys larger customers; the impact of compliance with climate change legislation or initiatives; Keys ability to generate sufficient cash flow to meet debt service obligations; the amount
of Keys debt and the limitations imposed by the covenants in the agreements governing its debt, including its ability to comply with covenants under its current debt agreements; an increase in Keys debt service obligations due to
variable rate indebtedness; Keys inability to achieve its financial, capital expenditure and operational projections, including quarterly and annual projections of revenue and/or operating income and its inaccurate assessment of future
activity levels, customer demand, and pricing stability which may not materialize (whether for Key as a whole or for geographic regions and/or business segments individually); Keys ability to execute its plans to withdraw from international
markets outside North America; Keys ability to achieve the benefits expected from acquisition and disposition transactions; Keys ability to respond to changing or declining market conditions, including Keys ability to reduce the
costs of labor, fuel, equipment and supplies employed and used in its businesses; Keys ability to maintain sufficient liquidity; adverse impact of litigation; and other factors affecting Keys business described in Item 1A. Risk
Factors in its Annual Report on Form 10-K for the year ended December 31, 2015 and its other filings with the SEC and in Article XI of the Disclosure Statement.