Struggling energy industry services company Weatherford International (NYSE: WFT) is raising some funds the old-fashioned way -- by issuing a fresh batch of securities: The company will float common shares, warrants, and bonds in order to help shore up its finances.
The stock issue will total 84.5 million shares, which are to be sold at a price of $5.40 apiece. This represents a 5% premium to the stock's closing price on the day before the announcement was made. All told, Weatherford stands to take in $456 million in gross proceeds from the move.
The warrant issue mirrors the share flotation; the warrants grant the rights to buy up to an aggregate of 84.5 million shares. If fully exercised, the warrants would reap $543 million for the company. The exercise price is $6.43 per share, and the expiration date is May 21, 2019.
The stock and warrant flotations are expected to close "on or about" Nov. 21. Weatherford said it intends to use the proceeds for "general corporate purposes," such as debt retirement.
The company is also floating an issue of senior notes. The aggregate principal amount of the issue is $540 million, the coupon is 9.875%, and the notes mature in 2024.
This offering is expected to close this Friday, Weatherford said. The funds are to be used to repay outstanding amounts from a subsidiary's revolving credit facility.
Like many of its clients, Weatherford is feeling the pinch from the sustained period of lower crude oil prices. The company has seen sharp declines in revenue, and it has lately been deep in the red on the bottom line despite assertive cost-cutting. Last week, it announced the resignation of Chairman and CEO Bernard Duroc-Danner.
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Eric Volkman has no position in any stocks mentioned.