(By Balaseshan) Flotek Industries Inc. (NYSE: FTK), a diversified supplier of drilling and production related products and services, said it has entered into transactions to repurchase about $50 million of its outstanding convertible notes from existing holders.
The transactions, privately negotiated, provide for the company to repurchase $50.312 million of the outstanding notes from institutional holders for an average of about 100.59% of par value plus accrued interest.
The company will fund the repurchase with cash on hand and through its recently announced term loan under the $75 million credit facility with PNC bank. The transactions are scheduled to close on December 31, 2012.
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This repurchase leaves about $5 million of principal value of convertible notes that Flotek can redeem in February, 2013. The company plans to initiate the appropriate redemption process to do so in the coming weeks.
In addition, Flotek plans to provide notice to the underwriter of the original convertible notes of the redemption of such notes that will result in the return of shares lent to the underwriter in conjunction with the original convertible notes offering.
Upon conclusion of the redemption process, Flotek estimates it will have about $25 million of debt outstanding.
"With this repurchase, Flotek has reduced its debt by over $70 million in 2012 and over $120 million since March, 2009. Our outlook for the coming year suggests strong cash generation will allow us to continue to improve our balance sheet as well as fund strategic initiatives that enhance shareholder value," said John Chisholm, Chief Executive of Flotek.
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FTK closed Friday's regular session up 0.26% at $11.75. The stock has been trading between $8.46 and $14.73 for the past 52 weeks.