Drilling Tools to go public through SPAC merger with ROC

15 February 2023

The SPAC merger provides net cash proceeds of up to $217m, including nearly $209m cash from ROC’s trust account, and $45m cash from an equity fundraising (PIPE), which includes participation by Fifth Partners

Drilling Tools to combine with ROC. (Credit: Terry McGraw from Pixabay)

US-based oilfield services company Drilling Tools International has agreed to combine with ROC Energy Acquisition, a publicly traded special purpose acquisition company (SPAC).

The combined company will be listed on the Nasdaq.

The transaction is expected to provide net cash proceeds of up to around $217m, including nearly $209m cash from ROC’s trust account.

In addition, the deal includes $45m cash from an equity fundraising (PIPE), which is expected to see participation by Fifth Partners, an affiliate of ROC's sponsor.

DTI's existing shareholders, including Hicks Equity Partners, are expected to reinvest more than 95% of their equity holdings into the combined company.

The transaction values the combined company at around $319m on a pro forma basis.

The Boards of Directors of both DTI and ROC have unanimously approved the transaction.

The transaction is expected to be completed in the second quarter of 2023, subject to the approval of the ROC stockholders, regulatory approvals, and other closing conditions.

DTI president and chief executive officer Wayne Prejean said: “This transaction will help us grow our core business and facilitate our plan to expand via acquisitions into new markets and emerging technologies.

“In addition, this transaction will enable DTI to implement long-term plans to align with its long-term customers' needs for additional tools and services.

“We are also pleased this will provide our employees new opportunities for career development as we grow and require more resources to manage the business.”

Established in 1984, DTI is engaged in manufacturing and renting downhole drilling tools used in horizontal and directional drilling of oil and natural gas wells.

The company offers more than 65,000 tools, including drill collars, stabilizers, crossover subs, wellbore conditioning tools, drill pipes, and tubing.

It also rents surface control equipment such as blowout preventers and handling tools and provides downhole products for producing wells.

Jefferies served as capital markets advisor and private placement agent, and EarlyBirdCapital as financial advisor to ROC Energy Acquisition, on the transaction.

Bracewell served as legal advisor to Drilling Tools International, while Winston & Strawn served as legal advisor to ROC.

ROC chief executive officer Daniel Kimes said: “DTI is a market leader in its segment and has a platform poised for multiple avenues of growth. The Company has a phenomenal management team that has built a highly profitable and durable business.

“We believe macro trends favour significant increases in oil and gas activity levels, and DTI stands to benefit as a result. We are excited to partner with the team as they become a public company.”

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