Item 1.01
Entry into a Material Definitive Agreement.
On August 3, 2017, Basic Energy Services, Inc. (“Basic”) entered into a Distribution Agreement (the “Distribution Agreement”) with Raymond James & Associates, Inc. (the “Sales Agent”). Pursuant to the terms of the Distribution Agreement, Basic may sell from time to time to or through the Sales Agent shares of common stock, par value $0.01 per share (the “Shares”), having an aggregate offering price of up to $50,000,000 (the “Offering”). Basic filed a prospectus supplement, dated August 3, 2017 (the “Prospectus Supplement”), with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the Offering. Sales of the Shares, if any, will be made by any method permitted by law that is deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on the New York Stock Exchange, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by Basic and the Sales Agent.
Under the terms of the Distribution Agreement, Basic will pay the Sales Agent a commission rate of up to 2.0% (unless otherwise agreed) of the gross sales price per Share. In addition, Basic may also sell Shares from time to time to the Sales Agent as principal for its own account at a price to be agreed upon at the time of sale. Any sale of Shares to the Sales Agent as principal would be pursuant to the terms of a separate terms agreement between Basic and the Sales Agent.
Basic intends to use the net proceeds from any sales pursuant to the Distribution Agreement, after deducting the Sales Agent’s commissions and Basic’s offering expenses, for general corporate and working capital purposes.
The Shares will be issued pursuant to Basic’s existing shelf registration statement on Form S-3 (File No. 333-217289), which was declared effective by the SEC on August 2, 2017, and the Prospectus Supplement.
The Distribution Agreement contains customary representations, warranties and agreements by Basic, indemnification obligations of Basic and the Sales Agent, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.
The summary of the Distribution Agreement in this Current Report on Form 8-K does not purport to be complete and is qualified by reference to the full text of the Distribution Agreement, a copy which is filed as Exhibit 1.1 hereto and is incorporated herein by reference. A legal opinion relating to the Shares is filed herewith as Exhibit 5.1.
The Sales Agent and its affiliates have, from time to time, performed, and may in the future perform, various financial advisory and commercial and investment banking services for Basic and its affiliates, for which they have received and in the future will receive customary compensation and expense reimbursement.