KLX Energy Services Announces Rights Offering and Backstop Exchange

What Happened

• KLX Energy Services Holdings, Inc. announced completion of its Rights Offering (expired Sept 23, 2026) and the closing of the Backstop Exchange on September 29, 2026. Investors exercised subscription rights to purchase 24,975,001 shares at $1.49 per share, producing $37.2 million in gross proceeds.
• The company expects to use about $31.0 million of Rights Offering proceeds for general corporate purposes (including fees/expenses) and $6.2 million to redeem a portion of its Senior Secured Floating Rate Cash/PIK Notes due 2030 (the “2030 Notes”). A partial notice of redemption was issued on Sept 30, 2026 to redeem $6.2 million principal on Oct 10, 2026.
• Existing 2030 Note holders (the Backstop Parties) committed to backstop the offering with an aggregate $94.0 million exchange commitment (reduced to $87.8M after the $6.2M redemption). They exchanged 2030 Notes for 59,273,445 shares at the $1.49 subscription price in a private placement; the company expects 105,677,168 shares outstanding after these transactions.
• In connection with the Backstop Exchange, KLX and certain subsidiaries entered into an Amended and Restated Indenture (dated Sept 29, 2026) that amends the prior notes indenture and adjusts covenants and other terms.

Key Details

• Rights Offering: 24,975,001 shares sold at $1.49 per share = $37.2M gross proceeds.
• Use of proceeds: ~$31.0M for general corporate purposes; $6.2M to redeem 2030 Notes (redemption date: Oct 10, 2026, per partial notice).
• Backstop Exchange: $94.0M aggregate backstop commitment (net reduced to $87.8M after $6.2M redemption); 59,273,445 shares issued to Backstop Parties in private placement; shares have registration rights under a Registration Rights Agreement dated Sept 29, 2026.
• Indenture changes include: revised total net leverage maintenance covenant schedule (4.50x starting Q3 2026; 4.00x Q2 2027; 3.50x Q2 2028; 3.00x Q2 2029), relaxed incurrence test (2.50x → 3.00x), permanent exclusion of capital leases from certain indebtedness calculations, an increased purchase‑money/capital lease basket ($75M → $85M), par redemptions tied to the Backstop Agreement, and a shortened make‑whole premium window (now 2 years with premium reduced to 101%).

Why It Matters

• Reduced debt and covenant flexibility: The exchange and partial redemption will materially lower the outstanding principal on the 2030 Notes (aggregate reduction of about $94M) and the amended indenture relaxes leverage and incurrence tests, which can reduce near‑term default risk and give management more operational flexibility.
• Dilution and share count: The Backstop Exchange issues a substantial number of new shares (59.3M) and the company expects about 105.7M shares outstanding post‑transactions, which is important for shareholders to track because it dilutes existing ownership.
• Cash and timing: The company raised $37.2M in cash, mostly for general purposes, and has a scheduled partial redemption (Oct 10, 2026) that will immediately reduce debt and future interest/PIK accruals.
• Registration rights: Shares issued to Backstop Parties were issued in a private placement but are subject to registration rights, which affects liquidity timing for those shares.

Exhibits noted in the filing include the Amended and Restated Indenture (Exhibit 4.1), the Registration Rights Agreement (Exhibit 10.1), and a press release (Exhibit 99.1).