Helmerich & Payne announces private placement for acquisition

TULSA, Okla. – Helmerich & Payne, Inc. (NYSE:HP (NYSE:)), an industry leader in drilling productivity and reliability, revealed plans for a private placement of senior unsecured notes, contingent on market conditions and other factors. The company aims to direct the proceeds from this offering, together with its term loan credit facility and available cash, towards financing the acquisition of KCA Deutag International Limited (KCAD), repaying some of KCAD’s debt, and covering related fees and expenses.

The notes will be offered to qualified institutional buyers and non-U.S. persons in compliance with specific regulations. A special clause mandates redemption of the notes if the acquisition does not finalize by October 25, 2025, or if the company decides not to proceed with the acquisition.

These securities have not been registered under the Securities Act or any state securities laws, and thus cannot be offered or sold in the U.S. without registration or an exemption from registration requirements. The offering is being conducted through a private offering memorandum and is restricted to permitted persons and jurisdictions under applicable law.

This strategic move by Helmerich & Payne is part of its broader effort to enhance its operational capabilities and market reach. The acquisition of KCAD is expected to expand the company’s portfolio and deliver greater value to shareholders.

The company’s forward-looking statements suggest confidence in the completion of the acquisition and the private placement’s terms, although they are subject to various market and business risks. Investors are advised that these statements are not guarantees of future performance and are cautioned to consider the potential risks and uncertainties.

The information in this article is based on a press release statement from Helmerich & Payne, Inc.

In other recent news, Helmerich & Payne, a leader in the drilling industry, has announced several significant developments. The company recently appointed J. Kevin Vann as the new Chief Financial Officer, following the retirement of Mark W. Smith. Vann’s appointment comes as the company prepares to complete its planned acquisition of KCA Deutag, a strategic move set to bolster its international presence. The acquisition will increase the company’s rig count in the Middle East from 12 to 88, potentially tripling its contracted backlog and increasing its international EBITDA to between 20% and 25% of total EBITDA.

Analysts have responded to these developments with various upgrades and adjustments. RBC Capital Markets raised its price target for the company from $48 to $50, while CFRA upgraded Helmerich & Payne’s stock from Hold to Buy and raised the price target from $44 to $47. However, an unnamed investment firm reduced the company’s stock target from $44.00 to $39.00 due to a revised EBITDA forecast for 2025.

Following the acquisition, Helmerich & Payne plans to reorganize its operations into North America Solutions, International Solutions, and Offshore Solutions. The company also expects to realize approximately $25 million in synergies by 2026, primarily through overhead reductions and procurement savings. These are the recent developments in Helmerich & Payne’s ongoing strategic transformation.

InvestingPro Insights

As Helmerich & Payne, Inc. (NYSE:HP) navigates the financial aspects of its acquisition of KCA Deutag International Limited, the company’s stock is trading near its 52-week low, which could indicate a potential value opportunity for investors considering the company’s long-term performance. Helmerich & Payne’s commitment to shareholder returns is evident in its impressive track record of maintaining dividend payments for 54 consecutive years, a testament to its financial resilience and management’s confidence in the company’s stability.

InvestingPro data shows a market capitalization of $3.05 billion, with a P/E ratio of 8.97, reflecting a market sentiment that may have factored in the company’s strong fundamentals. The company’s liquid assets surpass short-term obligations, which suggests a solid financial position to manage the acquisition’s costs and associated debts. Moreover, with a dividend yield of 5.44% as of the last recorded date, Helmerich & Payne stands out as an attractive option for income-focused investors.

InvestingPro Tips also highlight that analysts have revised their earnings upwards for the upcoming period, signaling a positive outlook on the company’s profitability. This, coupled with the fact that cash flows can sufficiently cover interest payments, provides reassurance regarding the company’s financial health amidst the acquisition process. For those seeking more in-depth analysis, InvestingPro offers additional tips that can further inform investment decisions.

It’s worth noting that there are currently 6 additional InvestingPro Tips available, which provide insights into the company’s operational and financial metrics, such as its moderate level of debt and profitability over the last twelve months. Interested readers can find these tips and more detailed metrics at https://www.investing.com/pro/HP.

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