Drilling Tools International Holdings, Inc., a leading oilfield services company that manufactures and provides a differentiated, rental-focused offering of tools for use in horizontal and directional drilling, announced today that it completed its business combination with ROC Energy Acquisition Corp. (“ROC”). The combined company will operate under the name Drilling Tools International Corp. (“DTI” or the “Company”).
Commencing June 21, 2023, at the open of trading, DTI’s common stock will trade on the Nasdaq Capital Market (“Nasdaq”) under the symbol “DTI”. The Company will continue to be led by Wayne Prejean, Chief Executive Officer, and David Johnson, Chief Financial Officer, alongside the rest of the current DTI management team.
The transaction was approved by ROC’s shareholders at a special meeting held on June 1, 2023 (the “Special Meeting”). Over 83% of the votes cast on the business combination proposal at the Special Meeting were in favor of approving the business combination. ROC’s shareholders also voted to approve all other proposals presented at the Special Meeting.
“We are enthusiastic about what lies ahead for DTI as we begin our next chapter as a publicly-traded company,” said Wayne Prejean, Chief Executive Officer of DTI. “We close this transaction in a strong strategic position, with zero debt and poised to execute on a pipeline of growth opportunities within our core competency. We could not have reached this point without the dedication and support of our employees, customers and partners, for whom we are grateful. Thank you all.”
Daniel Kimes, Chief Executive Officer of ROC added, “The merger between ROC and DTI is the culmination of an incredible amount of work and trust between both parties. We share the belief that it is a very advantageous time to go public. Secular trends in the energy industry point towards increased activity levels across the globe, which will help drive organic growth for DTI. Further, the oilfield services sector is ripe for consolidation, which will spur inorganic growth through M&A. DTI has the balance sheet and the distribution network to make it a natural acquiror in the sector. Finally, the shared vision, industry dynamics and trust in management is why we’ve committed significant PIPE capital in support of the Company.”
Transaction Overview
The transaction generated $25.9 million of cash from a common stock PIPE and $1.7 million of cash from ROC’s trust account, after giving effect to shareholder redemptions. In addition, existing DTI shareholders elected to reinvest $10.8 million of the cash they were to receive in the merger into the common stock PIPE, and affiliates of ROC’s sponsor reinvested the $4.1 million owed to them under convertible promissory notes into the common stock PIPE. The PIPE transaction, which totaled $40.8 million, included meaningful participation by Fifth Partners, an affiliate of ROC’s sponsor, as well as DTI’s existing preferred shareholders. A portion of the net proceeds of the transaction was used to repay all amounts outstanding under DTI’s revolving credit facility, leaving DTI with zero indebtedness under that facility at closing.
The public listing enables the Company, which has a proven acquisition history and a strong pipeline of M&A targets, to further pursue its strategic consolidation opportunities within the small-cap oilfield services market. DTI expects to benefit from a strong balance sheet, streamlined capital structure, a global footprint of facilities and a blue-chip customer base, which are expected to support continued growth and value creation.
Advisors
Bracewell LLP served as legal advisor to DTI. Winston & Strawn LLP acted as legal advisor to ROC. Jefferies served as capital markets advisor and private placement agent to ROC. Kirkland & Ellis LLP acted as legal counsel for Jefferies. EarlyBirdCapital, Inc. served as financial advisor to ROC.
