(Reuters) – Shares of Allis-Chalmers Energy Inc (ALY.N) fell more than 20 percent, a day after the oilfield services firm set plans to sell about 35.7 million shares through a rights offering, to repay outstanding debt.
The company said it plans to sell the shares to its current shareholders for $2.50 a piece, a 32 percent discount to its Wednesday closing price of $3.65.
Lime Rock Partners L.P, has agreed to backstop the offering by purchasing from Allis-Chalmers, at the same price, any shares not purchased by existing shareholders, the company said.
Allis-Chalmers said it expects the aggregate gross proceeds of the offering and the backstop commitment to be between about $79.9 million and $89.3 million.
Lime Rock has also agreed to purchase convertible preferred stock at a price of $1,000 per share, Allis-Chalmers said.
The company said it will use the proceeds of the offering to repay its debt under its bank credit facility and senior notes.
In April, Allis-Chalmers amended its $90 million revolving-credit agreement with its lenders, relaxing the leverage and interest-coverage covenants.
Shares of the company were trading down 18 percent, or 66 cents at $2.99 in early trade on the New York Stock Exchange. (Reporting by Sakthi Prasad in Bangalore, Editing by Dinesh Nair) ((email@example.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: firstname.lastname@example.org))