Filed Pursuant to Rule 424(b)3
Registration No. 333-100493
PROSPECTUS
[NABORS HOLDINGS 1, ULC LOGO]
OFFER TO EXCHANGE $225,000,000 4.875% SENIOR NOTES DUE 2009
FOR $225,000,000 4.875% SENIOR NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
FULLY AND UNCONDITIONALLY GUARANTEED BY
NABORS INDUSTRIES LTD.
AND NABORS INDUSTRIES, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5 P.M., NEW YORK CITY TIME, ON NOVEMBER
29, 2002 (THE 21ST BUSINESS DAY FOLLOWING THE DATE OF THIS PROSPECTUS), UNLESS
WE EXTEND THE EXCHANGE OFFER IN OUR SOLE AND ABSOLUTE DISCRETION.
The principal terms of the exchange offer are as follows:
- We will exchange the new notes for all outstanding old notes that are
validly tendered and not withdrawn pursuant to the exchange offer.
- You may withdraw tenders of old notes at any time prior to the expiration
of the exchange offer.
- The terms of the new notes are substantially identical to those of the
outstanding old notes, except that the transfer restrictions and
registration rights relating to the old notes will not apply to the new
notes.
- The exchange of old notes for new notes will not be a taxable transaction
for U.S. federal income tax purposes, but you should see the discussion
under the caption "Material Tax Considerations" beginning on page 40 for
more information, including information relating to Canadian federal tax
considerations.
- We will not receive any cash proceeds from the exchange offer.
- We issued the old notes in a transaction not requiring registration under
the Securities Act, and as a result, transfer of the old notes is
restricted. We are making the exchange offer to satisfy your registration
rights, as a holder of the old notes.
There is no established trading market for the new notes or the old notes.
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF RISKS YOU
SHOULD CONSIDER PRIOR TO TENDERING YOUR OUTSTANDING OLD NOTES FOR EXCHANGE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is October 28, 2002
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
Summary Information......................................... 1
Forward-Looking Statements.................................. 11
Risk Factors................................................ 12
Use of Proceeds............................................. 16
Ratio of Earnings to Fixed Charges.......................... 16
Selected Historical Consolidated Financial Data............. 17
The Exchange Offer.......................................... 18
Description of the New Notes................................ 25
Book-Entry System........................................... 36
Material Tax Considerations................................. 39
Plan of Distribution........................................ 41
Where You Can Find More Information......................... 42
Incorporation of Certain Documents by Reference............. 43
Legal Matters............................................... 44
Independent Accountants..................................... 44
</Table>
References in this prospectus to "Nabors Holdings," "we," "us," and "our"
refer to Nabors Holdings 1, ULC. References in this prospectus to "Nabors
Delaware" refer to Nabors Industries, Inc. and references to "Nabors" refer to
Nabors Industries Ltd.
The "old notes" consisting of the 4.875% Senior Notes due 2009 which were
issued on August 22, 2002 and the "new notes" consisting of the 4.875% Senior
Notes due 2009 offered pursuant to this prospectus are sometimes collectively
referred to in this prospectus as the "notes."
Rather than restate certain information in this prospectus that Nabors
Delaware and Nabors have already included in reports filed with the Securities
and Exchange Commission, we are incorporating this information by reference,
which means that we can disclose important business, financial and other
information to you by referring to those publicly filed documents that contain
the information. The information incorporated by reference is not included in or
delivered with this prospectus.
We will provide without charge to each person to whom this prospectus is
delivered, including each beneficial owner of old notes, upon request of such
person, a copy of any or all documents that are incorporated into this
prospectus by reference, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the documents that this
prospectus incorporates. You should direct such requests to: Nabors Corporate
Services, Inc., 515 West Greens Road, Suite 1200, Houston, Texas 77067,
Attention: Investor Relations, phone number (281) 874-0035.
IN ORDER TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST THIS INFORMATION NO
LATER THAN FIVE BUSINESS DAYS BEFORE YOU MUST MAKE YOUR INVESTMENT DECISION.
ACCORDINGLY, YOU MUST REQUEST THIS INFORMATION NO LATER THAN NOVEMBER 21, 2002.
SUMMARY INFORMATION
This summary highlights the information contained elsewhere in or
incorporated by reference into this prospectus. Because this is only a summary,
it does not contain all of the information that may be important to you. For a
complete understanding of this offering, we encourage you to read this entire
prospectus and the documents to which we refer you. You should read the
following summary together with the more detailed information and consolidated
financial statements and the notes to those statements included elsewhere in or
incorporated by reference into this prospectus.
NABORS HOLDINGS 1, ULC
We are an unlimited liability company formed under the Companies Act of
Nova Scotia on December 28, 2001. We are an indirect, wholly-owned finance
subsidiary of Nabors Delaware, which is an indirect, wholly-owned subsidiary of
Nabors, a Bermuda exempted company and the publicly-traded parent company of the
Nabors group of companies. We are a holding company whose only business is to
access bank financing and capital markets on behalf of the Canadian subsidiaries
of Nabors and to hold investments. Otherwise, we conduct no independent business
or operations.
Our registered office is located at 1959 Upper Water Street, Suite 900,
Halifax, Nova Scotia B35 2X2 Canada. Our principal executive offices are located
at 3000, 500-4th Avenue, S.W., Calgary, Alberta T2P 2V6 Canada and our telephone
number at that address is 403-263-6777.
NABORS INDUSTRIES, INC.
Nabors Delaware is a Delaware corporation and an indirect, wholly-owned
subsidiary of Nabors. Prior to the corporate reorganization described below in
the section entitled "Recent Developments," Nabors Delaware was a
publicly-traded corporation. Nabors Delaware was incorporated in Delaware on May
3, 1978. Nabors Delaware's principal executive offices are located at 515 West
Greens Road, Suite 1200, Houston, Texas 77067 and its telephone number at that
address is (281) 874-0035.
NABORS INDUSTRIES LTD.
Nabors became the publicly-traded parent company of the Nabors group of
companies, effective June 24, 2002, pursuant to the corporate reorganization
described below in the section entitled "Recent Developments." Nabors' common
shares are traded on the American Stock Exchange under the symbol "NBR."
Nabors, together with its subsidiaries, is the largest land drilling
contractor in the world, with almost 600 land drilling rigs as of August 31,
2002. Nabors conducts oil, gas and geothermal land drilling operations in the
U.S. lower 48 states, Alaska and Canada, and elsewhere, primarily in South and
Central America, the Middle East and Africa. Nabors is also one of the largest
land well-servicing and workover contractors in the United States and in Canada.
Nabors owns approximately 745 land well-servicing and workover rigs in the
southwestern and western United States, and approximately 233 land
well-servicing and workover rigs in certain other markets, including
approximately 193 rigs in Canada. Nabors also is a leading provider of offshore
platform workover and drilling rigs. Nabors markets 44 platform, 17 jackup and
three barge rigs in the Gulf of Mexico and other markets. These rigs provide
well-servicing, workover and drilling services.
To further supplement its primary business, Nabors offers a number of
ancillary well-site services, including oilfield management, engineering,
transportation, construction, maintenance, well logging and other support
services, in selected domestic and international markets. Nabors' land
transportation and hauling fleet includes approximately 240 rig and oilfield
equipment hauling tractor-trailers and a number of cranes, loaders and
light-duty vehicles. Nabors also maintains over 290 fluid hauling trucks,
approximately 700 fluid storage tanks, eight salt water disposal wells and other
auxiliary equipment used in domestic drilling and well-servicing operations. In
addition, Nabors markets a fleet of 30 marine transportation and support
vessels, primarily in the Gulf of Mexico, that provides transportation of
drilling materials, supplies
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and crews for offshore rig operations and support for other offshore operations.
And Nabors manufactures and leases or sells top drives for a broad range of
drilling rig applications, rig instrumentation and data collection equipment,
and rig reporting software.
Nabors was formed as a Bermuda exempted company on December 11, 2001.
Nabors' principal executive offices are located at 2nd Fl. International Trading
Centre, Warrens, St. Michael, Barbados. Its phone number at its principal
executive offices is (246) 421-9471.
RECENT DEVELOPMENTS
RYAN ACQUISITION
On August 12, 2002, Nabors entered into an arrangement agreement to acquire
Ryan Energy Technologies Inc., a corporation incorporated under the laws of
Alberta, Canada (which we refer to as Ryan in this prospectus). Nabors'
acquisition of Ryan was completed on October 9, 2002, and became effective
pursuant to a plan of arrangement approved by the securityholders of Ryan and
the Court of Queen's Bench of Alberta. Nabors agreed to pay Cdn$1.85 per Ryan
common share. The purchase price is payable, at the election of each individual
Ryan shareholder, in cash, in exchangeable shares of Nabors Exchangeco (Canada)
Inc., a Canadian corporation and indirect subsidiary of Nabors (which we refer
to as Exchangeco in this prospectus), or in a combination of cash and such
exchangeable shares. The exchangeable shares will be exchangeable for Nabors
common shares on a 1:1 basis, plus the aggregate amount of dividends payable and
unpaid, if any, on each such exchangeable share.
Under the terms of the arrangement each holder of Ryan common shares who so
elected will receive 0.0362 of an exchangeable share for each Ryan common share.
Each registered shareholder will receive only a whole number of exchangeable
shares, and will be paid a cash amount by Exchangeco in lieu of any fractional
entitlement. Each exchangeable share will have economic and voting rights
effectively equivalent to one Nabors common share and will be exchangeable at
any time for one Nabors common share. Pursuant to the arrangement, Exchangeco
acquired all of the issued and outstanding common shares of Ryan in exchange for
approximately Cdn$22.6 million in cash and 380,264 exchangeable shares of
Exchangeco, of which 219,493 exchangeable shares were immediately exchanged for
common shares of Nabors in accordance with the instructions of the holders of
those shares.
As a result of the arrangement, all options to acquire Ryan common shares
that have not previously been exercised or surrendered for termination were
terminated and each holder of such options will be paid in cash, in respect of
each such option, the greater of: (i) the positive difference, if any, between
Cdn$1.85 and the exercise price of such option for each Ryan common share
issuable on exercise of such option, and (ii) Cdn$0.10 per common share issuable
on exercise of such option, subject to required withholdings.
CORPORATE REORGANIZATION
Effective June 24, 2002, Nabors became the successor to Nabors Delaware
following a corporate reorganization, which effectively changed the jurisdiction
of incorporation of Nabors from Delaware to Bermuda. The reorganization was
accomplished through a merger of an indirect, newly formed Delaware subsidiary
of Nabors with and into Nabors Delaware. Nabors Delaware was the surviving
company in the merger. As a result of the merger, Nabors Delaware became a
wholly-owned, indirect subsidiary of Nabors. Upon consummation of the merger,
all outstanding shares of Nabors Delaware common stock automatically converted
into the right to receive Nabors common shares, with the result that the
shareholders of Nabors Delaware on the date of the merger became the
shareholders of Nabors. Nabors and its subsidiaries continue to conduct the
businesses previously conducted by Nabors Delaware and its subsidiaries. The
reorganization has been accounted for as a reorganization of entities under
common control and accordingly, it did not result in any changes to the
consolidated amounts of assets, liabilities and stockholders' equity.
The Board of Nabors Delaware approved the expatriation transaction because
international activities are an important part of Nabors' current business and
they believe that international operations will
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continue to grow in the future. Expansion of Nabors' international business is
an important part of its current business strategy and significant growth
opportunities exist in the international marketplace. Nabors believes that
reorganizing as a Bermuda company will allow Nabors to implement its business
strategy more effectively. In addition, Nabors believes that the reorganization
should increase its access to international capital markets and acquisition
opportunities, increase its attractiveness to non-U.S. investors, improve global
cash management, improve its global tax position and result in a more favorable
corporate structure for expansion of its current business.
Several members of the United States Congress have introduced legislation
that, if enacted, would have the effect of eliminating the tax benefits of the
reorganization. In particular, on June 18, 2002, the Senate Finance Committee
approved legislation introduced by Senator Charles Grassley, the Ranking
Minority Member of the Senate Finance Committee, along with Senator Max Baucus,
the Chairman of the Senate Finance Committee, (S. 2119) that, for United States
federal tax purposes, would treat a foreign corporation, such as Nabors, that
undertakes a corporate expatriation transaction, such as the reorganization, as
a domestic corporation and, thus, such foreign corporation would be subject to
United States federal income tax. S. 2119 is proposed to be effective for
corporate expatriation transactions completed after March 20, 2002. In addition,
on July 11, 2002, Representative Bill Thomas, Chairman of the House Committee on
Ways and Means, introduced legislation (H.R. 5095) that is substantially similar
to S. 2119 with respect to its treatment of corporations that undertake a
corporate expatriation transaction such as the reorganization, except that (i)
it is proposed to apply to transactions completed after March 20, 2002 and
before March 21, 2005 and (ii) it would not permit shareholders to qualify for
tax-free treatment with respect to a corporate expatriation transaction such as
the reorganization. If any of the proposed legislation, including S. 2119 or
H.R. 5095, were enacted with their proposed effective dates, the tax savings
would not be realized from the reorganization.
In addition, there has been significant, increased negative publicity and
criticism of corporate expatriation transactions from public pension funds and
other investors since the time Nabors completed its reorganization.
In light of such events and if and when any such legislation is enacted,
Nabors will consider the effects of such legislation and will evaluate all
strategic alternatives that may be necessary or prudent in response to such
legislation.
CONCURRENT EXCHANGE OFFER BY AFFILIATED ENTITY
On August 22, 2002, Nabors Delaware, an indirect wholly owned subsidiary of
Nabors, issued U.S.$275 million aggregate principal amount of 5.375% Senior
Notes due 2012, fully and unconditionally guaranteed by Nabors, to qualified
institutional buyers under Rule 144A of the Securities Act. Concurrent with this
exchange offer, Nabors Delaware is offering to exchange its 5.375% Senior Notes
due 2012 for 5.375% Senior Notes due 2012 which have been registered under the
Securities Act, and which are fully and unconditionally guaranteed by Nabors.
3
THE NABORS HOLDINGS 1, ULC EXCHANGE OFFER
Old Notes..................... 4.875% Senior Notes due 2009, which we issued
on August 22, 2002.
New Notes..................... 4.875% Senior Notes due 2009, the issuance of
which has been registered under the Securities
Act of 1933, as amended. The form and terms of
the new notes are identical in all material
respects to those of the old notes, except that
the transfer restrictions and registration
rights relating to the old notes do not apply
to the new notes.
Exchange Offer................ We are offering to issue up to $225,000,000
aggregate principal amount of the new notes in
exchange for a like principal amount of the old
notes to satisfy our obligations under the
registration rights agreement that we entered
into when the old notes were issued in
transactions in reliance upon the exemption
from registration provided by Rule 144A under
the Securities Act.
Expiration Date Tenders....... The exchange offer will expire at 5 p.m., New
York City time, on November 29, 2002, unless
extended in our sole and absolute discretion.
By tendering your old notes, you represent to
us that:
- you are not our "affiliate," as defined in
Rule 405 under the Securities Act;
- any new notes you receive in the exchange
offer are being acquired by you in the
ordinary course of your business;
- at the time of commencement of the exchange
offer, neither you nor, to your knowledge,
anyone receiving new notes from you, has any
arrangement or understanding with any person
to participate in the distribution, as
defined in the Securities Act, of the new
notes in violation of the Securities Act;
- if you are not a participating broker-dealer,
you are not engaged in, and do not intend to
engage in, the distribution of the new notes,
as defined in the Securities Act; and
- if you are a broker-dealer, you will receive
the new notes for your own account in
exchange for old notes that were acquired by
you as a result of your market making or
other trading activities and that you will
deliver a prospectus in connection with any
resale of the new notes you receive. For
further information regarding resales of the
new notes by participating broker-dealers,
see the discussion under the caption "Plan of
Distribution" beginning on page 41.
Withdrawal; Non-Acceptance.... You may withdraw any old notes tendered in the
exchange offer at any time prior to 5 p.m., New
York City time, on November 29, 2002, the 21st
business day following the date of this
prospectus. If we decide for any reason not to
accept any old notes tendered for exchange, the
old notes will be returned to the registered
holder at our expense promptly after the
expiration or termination of the exchange
offer. In the case of old notes tendered by
book-entry transfer into the exchange agents
account at The Depository Trust Company (which
we refer to as DTC in this prospectus), any
withdrawn or unaccepted old notes will be
4
credited to the tendering holder's account at
DTC. For further information regarding the
withdrawal of tendered old notes, see "The
Exchange Offer -- Terms of the Exchange Offer;
Period for Tendering Old Notes" on page 18 and
the "The Exchange Offer -- Withdrawal Rights"
on page 21.
Conditions to the Exchange
Offer......................... We are not required to accept for exchange, or
to issue new notes in exchange for any old
notes and we may terminate or amend the
exchange offer if any of the following events
occur prior to our acceptance of the old notes:
- the exchange offer violates any applicable
law or applicable interpretation of the staff
of the SEC;
- an action or proceeding shall have been
instituted or threatened in any court or by
any governmental agency that might materially
impair our or Nabors' ability to proceed with
the exchange offer;
- we shall not have received all governmental
approvals that we deem necessary to
consummate the exchange offer; or
- there has been proposed, adopted, or enacted
any law, statute, rule or regulation that, in
our reasonable judgment, would materially
impair our ability to consummate the exchange
offer.
We may waive any of the above conditions in our
reasonable discretion. See the discussion below
under the caption "The Exchange
Offer -- Conditions to the Exchange Offer"
beginning on page 22 for more information
regarding the conditions to the exchange offer.
Procedures for Tendering Old
Notes......................... Unless you comply with the procedures described
below under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures," (on
page 21) you must do one of the following on or
prior to the expiration or termination of the
exchange offer to participate in the exchange
offer:
- tender your old notes by sending the
certificates for your old notes, in proper
form for transfer, a properly completed and
duly executed letter of transmittal, with any
required signature guarantees, and all other
documents required by the letter of
transmittal, to Bank One, N.A., as exchange
agent, at the address listed below under the
caption "The Exchange Offer -- Exchange
Agent" beginning on page 23, or
- tender your old notes by using the book-entry
transfer procedures described below and
transmitting a properly completed and duly
executed letter of transmittal, with any
required signature guarantees, or an agent's
message instead of the letter of transmittal,
to the exchange agent. In order for a
book-entry transfer to constitute a valid
tender of your old notes in the exchange
offer, Bank One, N.A., as exchange agent,
must receive a confirmation of book-entry
transfer of your old notes into the exchange
agent's account at DTC prior to the
expiration or termination of the exchange
offer. For more information regarding the use
of book-entry transfer procedures, including
a description of the required agent's
message, see the discussion below under the
caption "The
5
Exchange Offer -- Book-Entry Transfers"
beginning on page 20.
Guaranteed Delivery
Procedures.................... If you are a registered holder of old notes and
wish to tender your old notes in the exchange
offer, but
- the old notes are not immediately available;
- time will not permit your old notes or other
required documents to reach the exchange
agent before the expiration or termination of
the exchange offer, or
- the procedure for book-entry transfer cannot
be completed prior to the expiration or
termination of the exchange offer,
then you may tender old notes by following the
procedures described below under the caption
"The Exchange Offer -- Guaranteed Delivery
Procedures" beginning on page 21.
Special Procedures for
Beneficial Owners............. If you are a beneficial owner whose old notes
are registered in the name of the broker,
dealer, commercial bank, trust company or other
nominee and you wish to tender your old notes
in the exchange offer, you should promptly
contact the person in whose name the old notes
are registered and instruct that person to
tender on your behalf. If you wish to tender in
the exchange offer on your behalf, prior to
completing and executing the letter of
transmittal and delivering your old notes, you
must either make appropriate arrangements to
register ownership of the old notes in your
name, or obtain a properly completed bond power
from the person in whose name the old notes are
registered.
Material Tax Considerations... The exchange of the old notes for new notes in
the exchange offer will not be a taxable
transaction for United States federal income
tax purposes. See the discussion below under
the caption "Material Tax Considerations"
beginning on page 39 for more information
regarding the tax consequences to you,
including Canadian federal tax considerations,
of the exchange offer.
Use of Proceeds............... We will not receive any cash proceeds from the
exchange offer.
Exchange Agent and Trustee.... Bank One, N.A. is the exchange agent for the
exchange offer. You can find the address and
telephone number of Bank One, N.A. below under
the caption "The Exchange Offer -- Exchange
Agent" beginning on page 23.
Resales....................... Based on interpretations by the staff of the
SEC, as set forth in no-action letters issued
to third parties, we believe that the new notes
issued in the exchange offer may be offered for
resale, resold or otherwise transferred by you
without compliance with the registration and
prospectus delivery requirements of the
Securities Act as long as:
- you are acquiring the new notes in the
ordinary course of your business;
- you are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate,
in a distribution of the new notes; and
6
- you are not our affiliate.
If you are an affiliate of ours, are engaged in
or intend to engage in or have any arrangement
or understanding with any person to participate
in the distribution of the new notes:
- you cannot rely on the applicable
interpretations of the staff of the SEC; and
- you must comply with the registration
requirements of the Securities Act in
connection with any resale transaction.
Each broker or dealer that receives new notes
for its own account in exchange for old notes
that were acquired as a result of market-
making or other trading activities must
acknowledge that it will comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any offer, resale, or other
transfer of the new notes issued in the
exchange offer, including information with
respect to any selling holder required by the
Securities Act in connection with any resale of
the new notes.
Furthermore, any broker-dealer that acquired
any of its old notes directly from us:
- may not rely on the applicable interpretation
of the staff of the SEC's position contained
in Exxon Capital Holdings Corp., SEC
no-action letter (April 13, 1988), Morgan,
Stanley & Co. Inc., SEC no-action letter
(June 5, 1991) and Shearman & Sterling, SEC
no-action letter (July 2, 1983); and
- must also be named as a selling noteholder in
connection with the registration and
prospectus delivery requirements of the
Securities Act relating to any resale
transaction.
Registration Rights
Agreement..................... When we issued the old notes in August 2002, we
entered into a registration rights agreement
with the initial purchaser of the old notes.
Under the terms of the registration rights
agreement, we agreed to use our reasonable best
efforts to file with the SEC and cause to
become effective, a registration statement
relating to an offer to exchange the old notes
for the new notes.
If we do not complete the exchange offer by
December 31, 2002, the interest rate borne by
the old notes will be increased 0.25% per annum
until the exchange offer is completed, or until
the old notes are freely transferable under
Rule 144 of the Securities Act. In addition, if
the exchange offer registration statement
ceases to be effective or usable in connection
with resales of the new notes during periods
specified in the registration rights agreement,
the interest rate borne by the old notes and
the new notes will be increased 0.25% per annum
until the registration defects are cured.
Under some circumstances set forth in the
registration rights agreement, holders of old
notes, including holders who are not permitted
to participate in the exchange offer or who may
not freely sell new notes received in the
exchange offer, may require
7
us to file and cause to become effective, a
shelf registration statement covering resales
of the old notes by these holders. If such
shelf registration statement ceases to be
effective or usable in connection with resales
of the new notes during periods specified in
the registration rights agreement, the interest
rate borne by the old notes and the new notes
will be increased 0.25% per annum until the
registration defects are cured.
A copy of the registration rights agreement is
included as an exhibit to the registration
statement of which this prospectus is a part.
Broker-Dealers................ Each broker-dealer that receives new notes for
its own account pursuant to the exchange offer
must acknowledge that it will deliver a
prospectus in connection with any resale of new
notes. The letter of transmittal states that by
so acknowledging and delivering a prospectus, a
broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of
the Securities Act. This prospectus, as it may
be amended or supplemented from time to time,
may be used by a broker-dealer in connection
with resales of new notes received in exchange
for old notes which were received by such
broker-dealer as a result of market making
activities or other trading activities. We have
agreed that for a period of up to 180 days
after the Expiration Date (as defined in this
prospectus) we will make this prospectus
available to any broker-dealer for use in
connection with any such resale. See "Plan of
Distribution" beginning on page 41 for more
information.
CONSEQUENCES OF NOT EXCHANGING YOUR OLD NOTES
If you do not exchange your old notes in the exchange offer, you will
continue to be subject to the restrictions on transfer described in the legend
on the certificate for your old notes. In general, you may offer or sell your
old notes only:
- if they are registered under the Securities Act and applicable state
securities laws;
- if they are offered or sold under an exemption from registration under
the Securities Act and applicable state securities laws; or
- if they are offered or sold in a transaction not subject to the
Securities Act and applicable state securities laws.
We do not currently intend to register the old notes under the Securities
Act. Under some circumstances, however, holders of the old notes, including
holders who are not permitted to participate in the exchange offer or who may
not freely sell new notes received in the exchange offer, may require us to
file, and to cause to become effective, a shelf registration statement covering
resales of the old notes by these holders. For more information regarding the
consequences of not tendering your old notes and our obligations to file a shelf
registration statement, see "The Exchange Offer -- Consequences of Exchanging or
Failing to Exchange Old Notes" beginning on page 23 and "Summary
Information -- Registration Rights Agreement" beginning on page 7.
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SUMMARY DESCRIPTION OF THE NEW NOTES
Issuer........................ Nabors Holdings 1, ULC
Guarantors.................... Nabors Industries, Inc. and Nabors Industries
Ltd.
Securities.................... $225,000,000 aggregate principal amount of
4.875% Senior Notes due 2009.
Maturity...................... August 15, 2009.
Interest Payment Dates........ February 15 and August 15 of each year,
commencing on February 15, 2003.
Interest Rate................. 4.875% per annum from August 22, 2002.
Guarantees.................... Nabors Delaware and Nabors will fully and
unconditionally, jointly and severally,
guarantee the due and punctual payment of the
principal of, premium, if any, additional
amounts, if any, interest on the new notes and
any other obligations of ours under the new
notes when and as they become due and payable,
whether at maturity, upon redemption, by
acceleration or otherwise if we are unable to
satisfy these obligations. The guarantees
provide that, in the event of a default on the
new notes, the holders of the new notes may
institute legal proceedings directly against
Nabors Delaware or Nabors to enforce the
guarantees without first proceeding against us.
See "Description of the New
Notes -- Guarantees" beginning on page 26.
Additional Amounts............ In the event that either we or a guarantor is
required to withhold or deduct on account of
any Canadian or Bermudan taxes due from any
payment made under or with respect to the new
notes or its guarantee, as the case may be, we
or the guarantor, as the case may be, will pay
additional amounts so that the net amount
received by each holder of new notes will equal
the amount that the holder would have received
if the Canadian or Bermudan taxes had not been
required to be withheld or deducted. See
"Description of the New Notes -- Payment of
Additional Amounts" beginning on page 26.
Ranking....................... The new notes will:
- be unsecured,
- be effectively junior in right of payment to
any of our future secured debt,
- rank equally in right of payment with any of
our future unsubordinated debt, and
- be senior in right of payment to any of our
existing and future senior subordinated or
subordinated debt.
As of the date of this prospectus, we have no
other indebtedness.
Each guarantee of our obligations under the new
notes will be a direct, unsecured and
unsubordinated obligation of the guarantor and
will have the same ranking with respect to its
indebtedness as the new notes will have with
respect to our indebtedness. See
9
"Description of the New Notes -- Guarantees"
beginning on page 26.
Optional Redemption........... We may, at our option, redeem some or all of
the new notes, in whole or in part, at any
time, at "make-whole" prices described in this
prospectus, plus additional amounts, if any,
and accrued and unpaid interest to the
redemption date. See "Description of the New
Notes -- Optional Redemption" beginning on page
28.
We may elect to redeem all, but not part, of
the new notes at par at any time if particular
changes occur in the laws or regulations
governing Canadian withholding taxes. See
"Description of the New Notes -- Optional
Redemption for Changes in Canadian Withholding
Taxes" beginning on page 28.
Use of Proceeds............... We will not receive any cash proceeds from the
exchange offer. See "Use of Proceeds" beginning
on page 16.
Covenants..................... We will issue the new notes under the
indenture, dated August 22, 2002, among us, as
issuer, Nabors Delaware and Nabors, as
guarantors, and Bank One, N.A., as trustee. The
indenture limits the ability of Nabors and its
subsidiaries to incur liens and to enter into
sale and lease-back transactions. Additionally,
the indenture limits both our and the
guarantors' ability to enter into mergers,
consolidations, or transfers of all or
substantially all of our or their assets unless
the successor company assumes our or the
guarantors' obligations under the indenture.
These covenants are subject to a number of
important qualifications and limitations. See
"Description of the New Notes -- Covenants"
beginning on page 28.
No Prior Market............... The new notes generally will be freely
transferable, but the new notes are a new issue
of securities and there is currently no
established trading market for the new notes.
Accordingly, there can be no assurance as to
the development or liquidity of any market for
the new notes. Lehman Brothers Inc., the
initial purchaser of the old notes, has advised
us that it currently intends to make a market
in the new notes. However, it is not obligated
to do so, and any market making with respect to
the new notes may be discontinued without
notice. We do not intend to apply for a listing
of the new notes on any securities exchange or
an automated dealer quotation system.
10
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in this prospectus by
reference contain forward-looking statements. We typically use words such as
"anticipate," "believe," "plan," "expect," "intend," "estimate," "project,"
"will," "should," "could," "may," "predict" and similar expressions to identify
forward-looking statements. You are cautioned that actual results could differ
materially from those anticipated in forward-looking statements. Any
forward-looking statements, including statements regarding the intent, belief or
current expectations of us or our management, are not guarantees of future
performance and involve risks, uncertainties and assumptions about us and the
industry in which we, Nabors Delaware and Nabors operate, including, among other
things:
- fluctuations in worldwide prices and demand for oil and natural gas;
- fluctuations to levels of oil and natural gas exploration and development
activities;
- fluctuations in the demand for contract drilling and workover services;
- the existence of competitors, technological changes and developments in
the oilfield services industry;
- the existence of operating risks inherent in the oilfield services
industry;
- the existence of regulatory and legislative uncertainties;
- outcomes of pending and future litigation;
- the possibility of political instability, war or acts of terrorism in any
of the countries in which we, Nabors or Nabors' subsidiaries do or will
do business;
- changes in capital needs;
- an inability to execute our business strategy; and
- general economic conditions.
All forward-looking statements in this prospectus are based on information
available to us on the date of this prospectus. We do not intend to update or
revise any forward-looking statements that we may make in this prospectus or
other documents, reports, filings or press releases, whether as a result of new
information, future events or otherwise.
11
RISK FACTORS
You should consider carefully the following factors, as well as the other
information contained in or incorporated by reference into this prospectus,
before tendering your old notes in the exchange offer. The risks and
uncertainties described below and incorporated by reference are not the only
risks we face. Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may impair our future business operations.
HOLDERS WHO FAIL TO EXCHANGE THEIR OLD NOTES WILL CONTINUE TO BE SUBJECT TO
RESTRICTIONS ON TRANSFER.
If you do not exchange your old notes for new notes in the exchange offer,
you will continue to be subject to the restrictions on transfer of your old
notes described in the legend on the certificates for your old notes. The
restrictions on transfer of your old notes arise because we issued the old notes
under exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, you may only offer or sell the old notes if they are registered under
the Securities Act and applicable state securities laws, or are offered and sold
under an exemption from these requirements. We do not plan to register the old
notes under the Securities Act. For further information regarding the
consequences of tendering your old notes in the exchange offer, see the
discussions below under the captions "The Exchange Offer -- Consequences of
Exchanging or Failing to Exchange Old Notes" beginning on page 23 and "Material
Tax Considerations" beginning on page 39.
YOU MUST COMPLY WITH THE EXCHANGE OFFER PROCEDURES IN ORDER TO RECEIVE NEW,
FREELY TRADABLE NOTES.
Delivery of new notes in exchange for old notes tendered and accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the exchange agent of the following:
- certificates for old notes or a book-entry confirmation of a book-entry
transfer of old notes into the exchange agent's account at DTC, New York,
New York as a depository, including an agent's message (as defined below)
if the tendering holder does not deliver a letter of transmittal;
- a completed and signed letter of transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry
transfer, an agent's message in lieu of the letter of transmittal; and
- any other documents required by the letter of transmittal.
Therefore, holders of old notes who would like to tender old notes in
exchange for new notes should be sure to allow enough time for the old notes to
be delivered on time. We are not required to notify you of defects or
irregularities in tenders of old notes for exchange. Old notes that are not
tendered or that are tendered but we do not accept for exchange will, following
consummation of the exchange offer, continue to be subject to the existing
transfer restrictions under the Securities Act and, upon consummation of the
exchange offer, certain registration and other rights under the registration
rights agreement will terminate. See "The Exchange Offer -- Procedures for
Tendering Old Notes" beginning on page 18 and "The Exchange
Offer -- Consequences of Exchanging or Failing to Exchange Old Notes" beginning
on page 23.
As used in this prospectus, the term "agent's message" means a message,
transmitted by DTC to and received by the exchange agent and forming a part of a
book-entry confirmation, which states that DTC has received an express
acknowledgment from the tendering participant stating that such participant has
received and agrees to be bound by the letter of transmittal and that we may
enforce such letter of transmittal against such participant.
SOME HOLDERS WHO EXCHANGE THEIR OLD NOTES MAY BE DEEMED TO BE UNDERWRITERS AND
THESE HOLDERS WILL BE REQUIRED TO COMPLY WITH THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS IN CONNECTION WITH ANY RESALE TRANSACTION.
If you exchange your old notes in the exchange offer for the purpose of
participating in a distribution of the new notes, you may be deemed to have
received restricted securities and, if so, will be required to
12
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
ALTHOUGH THE NEW NOTES ARE REFERRED TO AS "SENIOR NOTES," YOUR RIGHT TO RECEIVE
PAYMENT ON THE NEW NOTES AND THE GUARANTEES IS UNSECURED AND WILL BE EFFECTIVELY
SUBORDINATED TO ANY EXISTING AND FUTURE SECURED DEBT TO THE EXTENT OF THE VALUE
OF THE COLLATERAL THEREFORE.
The new notes are general senior unsecured obligations and therefore will
be effectively subordinated in right of payment to our existing or future
secured indebtedness and Nabors Delaware's and Nabors' guarantee are effectively
subordinated in right of payment to the claims of existing and future secured
creditors of Nabors Delaware and Nabors, respectively, in each case, to the
extent of the collateral therefor. If we default on the new notes, become
bankrupt, liquidate or reorganize, any secured creditors could use their
collateral to satisfy their secured indebtedness before you would receive any
payment on the new notes. If the value of such collateral is not sufficient to
pay any secured indebtedness in full, our secured creditors would share the
value of our other assets, if any, with you and the holders of other claims
against us which rank equally with the new notes.
The respective guarantees of the new notes will have a similar ranking as
they relate to secured indebtedness of Nabors Delaware and Nabors as the new
notes do with respect to our secured indebtedness.
THERE IS NO ESTABLISHED TRADING MARKET FOR THE NEW NOTES AND YOU MAY FIND IT
DIFFICULT TO SELL YOUR NEW NOTES.
There is currently no established trading market for the new notes. We have
no plans to list the new notes on any securities exchange or an automated dealer
quotation system. Lehman Brothers Inc. advised us that it presently intends, but
it is not obligated, to make a market in the new notes. Any market making
activity, if initiated, may be discontinued at any time, for any reason, without
notice. If Lehman Brothers Inc. ceases to act as a market maker for the new
notes for any reason, we cannot assure you that another firm or person will make
a market in the new notes. The liquidity of any market for the new notes will
depend upon the number of holders of the new notes, our results of operations
and financial condition, the market for similar securities, the interest of
securities dealers in making a market in the new notes and other factors. An
active or liquid trading market may not develop for the new notes.
NABORS AND NABORS DELAWARE, AS HOLDING COMPANIES, DEPEND ON THEIR RESPECTIVE
SUBSIDIARIES TO MEET THEIR FINANCIAL OBLIGATIONS.
Nabors Delaware and Nabors are each holding companies and depend on the
business of and distributions from their subsidiaries to satisfy their
obligations under the guarantees. Nabors Delaware and Nabors are each holding
companies with no significant assets other than the stock of their subsidiaries
and intercompany loans to their subsidiaries. In order to satisfy their
obligations under the guarantees of the notes, Nabors Delaware and Nabors each
rely exclusively on repayments of interest and principal on intercompany loans
made by Nabors Delaware and Nabors to their operating subsidiaries and income
from dividends and other cash flows from such subsidiaries. There can be no
assurance that these operating subsidiaries will generate sufficient net income
to pay upstream dividends or cash flows to make payments of interest and
principal to Nabors Delaware and Nabors in respect of these intercompany loans.
In addition, from time to time, these operating subsidiaries may enter into
financing arrangements which may contractually restrict or prohibit such
upstream payments and interest and principal to Nabors Delaware or Nabors.
13
WE, AS AN INDIRECT, WHOLLY OWNED-FINANCE SUBSIDIARY OF NABORS DELAWARE, ARE
DEPENDING ON THE REPAYMENT OF INTERCOMPANY OBLIGATIONS AND FINANCIAL SUPPORT
FROM WITHIN THE NABORS DELAWARE GROUP TO MEET OUR FINANCIAL OBLIGATIONS
INCLUDING OUR OBLIGATIONS UNDER THE NOTES.
We are an indirect, wholly-owned finance subsidiary of Nabors Delaware,
which is an indirect, wholly-owned subsidiary of Nabors. Our only business is to
access bank financing and capital markets on behalf of the Canadian subsidiaries
of Nabors Delaware and to hold investments. Otherwise, we conduct no independent
business or operations. In order to satisfy our obligations under the notes we
rely exclusively on repayment of interest and principal on intercompany loans,
if any, made by us to other Canadian subsidiaries of Nabors Delaware and
distributions from our 99.9% owned subsidiary, AH Finance Limited Partnership,
which in turn relies on the return on investments made by it in the Canadian
subsidiaries of Nabors Delaware. We can not assure you that these operating
subsidiaries will generate sufficient net income to meet their obligations to us
or to our subsidiary in respect of these intercompany investments. In addition,
from time to time, these operating subsidiaries may enter into financing
arrangements which may contractually restrict or prohibit them from making
payments to us or to our subsidiary.
NABORS' SIGNIFICANT LEVEL OF DEBT COULD ADVERSELY AFFECT ITS FINANCIAL CONDITION
AND PREVENT IT FROM FULFILLING ITS OBLIGATIONS UNDER ITS GUARANTEE.
As of August 31, 2002, Nabors' consolidated total indebtedness was
approximately $2.086 billion, its funded debt to capital ratio was 49.2%, and
its net funded debt to capital ratio was 26.6%, after giving effect to the
exchange offer contemplated by this prospectus and the concurrent exchange offer
(which we refer to as the concurrent exchange offer in this prospectus) in which
Nabors Delaware, an indirect, wholly-owned subsidiary of Nabors, is offering to
exchange its 5.375% senior notes due 2012 for 5.375% senior notes due 2012 which
have been registered under the Securities Act, and which are fully and
unconditionally guaranteed by Nabors.
Funded debt to capital ratio is calculated by dividing funded debt by
funded debt plus capital. Funded debt is defined as the sum of (1) short-term
borrowings, (2) current portion of long-term obligations and (3) long-term
obligations. Capital is defined as stockholders' equity. The net funded debt to
capital ratio nets cash and cash equivalents, short-term marketable securities
and long-term marketable securities against funded debt. This ratio is
calculated by dividing net funded debt by net funded debt plus capital. Both of
these ratios are a method for calculating the amount of leverage a company has
in relation to its capital. Nabors' level of indebtedness could adversely affect
its financial condition and prevent Nabors or Nabors Delaware from fulfilling
their obligations under their respective guarantees.
Nabors and its subsidiaries may still be able to incur substantially more
debt. The terms of the indenture governing the new notes and the agreement
governing Nabors' other indebtedness (including the indenture governing the
notes offered by Nabors Delaware in the concurrent exchange offer) permit
additional borrowings and any such borrowings may be senior in right of payment
to the new notes and the related guarantees. Nabors' incurrence of additional
debt could further exacerbate the risks described in this prospectus.
NABORS DELAWARE'S AND NABORS' GUARANTEES COULD BE VOIDED OR SUBORDINATED BY
FEDERAL BANKRUPTCY LAW OR COMPARABLE FOREIGN AND STATE LAW PROVISIONS.
Our obligations under the new notes are guaranteed by Nabors Delaware and
Nabors. Under the federal bankruptcy law and comparable provisions of foreign
and state fraudulent transfer laws, one or more of the guarantees could be
voided, or claims in respect of a guarantee could be subordinated to all other
debts of that guarantor if, among other things, the guarantor, at the time it
incurred the indebtedness evidenced by its guarantees, received less than
reasonably equivalent value or fair consideration for the incurrence of such
guarantees and:
- was insolvent or rendered insolvent by reason of such incurrence;
14
- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantees could
be voided and required to be returned to the guarantor or to a fund for the
benefit of the creditors of the guarantor.
The measure of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, was greater than
the fair saleable value of all of its assets;
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
We cannot be sure as to the standards that a court would use to determine
whether or not the guarantors were solvent at the relevant time, or, regardless
of the standard that the court uses, that the issuance of the guarantees of the
new notes would not be voided or the guarantees of the new notes would not be
subordinated to that guarantor's other debt.
If the guarantees were legally challenged, any guarantees could also be
subject to the claim that, since the guarantees were incurred for our benefit,
and only indirectly for the benefit of the guarantor, the obligations of the
applicable guarantor were incurred for less than fair consideration.
A court could thus void the obligations under the guarantees or subordinate
the guarantees to the applicable guarantor's other debt or take other action
detrimental to holders of the new notes.
15
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange offer. Any old
notes that are properly tendered and exchanged pursuant to the exchange offer
will be retired and cancelled.
RATIO OF EARNINGS TO FIXED CHARGES
Nabors Holdings was formed in December 2001. Since its inception, Nabors
Holdings has not generated any earnings and has not incurred any debt or
liabilities other than debt and liabilities associated with the old notes and
the exchange offer.
Nabors Delaware, prior to June 24, 2002, the effective date of the
reorganization, and Nabors, after June 24, 2002, have calculated their ratio of
earnings to fixed charges by dividing earnings by fixed charges. For purposes of
computing the ratio of earnings to fixed charges, earnings consist of pretax
income from continuing operations less undistributed earnings from
unconsolidated affiliates (net of dividends) plus amortization of capitalized
interest and fixed charges (excluding capitalized interest). Fixed charges
consist of interest incurred (whether expensed or capitalized), amortization of
debt expense, and that portion of rental expense on operating leases deemed to
be the equivalent of interest.
<Table>
<Caption>
SIX THREE
MONTHS FISCAL YEAR MONTHS
ENDED FISCAL YEAR ENDED ENDED ENDED
- -------- --------------------------------------------------------- ------------- ------------
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
2002 2001 2000 1999 1998 1997 1997
- -------- ------------ ------------ ------------ ------------ ------------- ------------
3.43x 9.11x 6.21x 2.48x 11.60x 10.97x 15.18x
</Table>
16
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data of Nabors in the table
below were derived from Nabors' audited consolidated financial statements as of
December 31, 2001 and 2000 and for the three years ended December 31, 2001,
which appears in Nabors' Current Report on Form 8-K dated as of October 10,
2002, and from Nabors Delaware's Annual Reports on Form 10-K as of and for the
years ended December 31, 1999, 1998 and September 30, 1997, respectively, and a
transition period for the three months ended December 31, 1997 and Nabors'
unaudited interim condensed consolidated financial statements as of and for the
six months ended June 30, 2002 and 2001. Nabors changed its fiscal year end from
September 30 to December 31, effective for the fiscal year beginning January 1,
1998. A three-month transition period from October 1, 1997 through December 31,
1997 preceded the start of Nabors' new fiscal year. Nabors has recast its
financial data to conform to the presentation of the twelve months ended
December 31, 1997 by adjusting its audited results for the year ended September
30, 1997 to exclude the unaudited results for the quarter ended December 31,
1996 and to include the audited results for the quarter ended December 31, 1997.
In Nabors management's opinion, the unaudited interim condensed consolidated
financial statements have been prepared on the same basis as the audited
consolidated financial statements and include all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the results of
operations and financial position of Nabors for the periods presented. This data
should be read in conjunction with the audited and unaudited interim
consolidated financial statements of Nabors, including the notes to the
financial statements, incorporated by reference into this prospectus.
As previously reported in Nabors Delaware's Form 10-K for the year ended
December 31, 2001, as reclassified in Nabors' Form 8-K dated as of October 10,
2002, and the Forms 10-Q for the first and second quarters ended March 31, 2002
and June 30, 2002, as amended by Form 10-Q/A dated as of October 10, 2002,
respectively, Nabors adopted the following new accounting pronouncements during
the first six months of 2002. Effective April 1, 2002, Nabors adopted Statement
of Financial Accounting Standards (SFAS) No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections". As a result, Nabors no longer classifies gains and losses from
extinguishment of debt that are usual and frequent as extraordinary items and,
as required by SFAS No. 145, Nabors reclassified to other income any similar
debt extinguishment items that had been reported as extraordinary items in
comparative prior periods. Additionally, Nabors adopted Emerging Issues Task
Force (EITF) No. 01-14, "Income Statement Characterization of Reimbursements
Received for Out-of-Pocket Expenses Incurred", in the second quarter of 2002.
Previously, Nabors recognized reimbursements received as a reduction to the
related direct costs. EITF 01-14 requires that reimbursements received from its
customers be recorded in operating revenues and "out-of-pocket" expenses be
recorded in direct costs. The transition provisions of these accounting
pronouncements require comparative prior periods to reflect reclassifications
consistent with the pronouncements not later than the time of its next audited
financial statements. Nabors has elected to reflect these reclassifications in
its Form 8-K dated as of October 10, 2002 for its consolidated financial
statements for each of the three years in the period ended December 31, 2001.
In addition, as of January 1, 2002, Nabors adopted SFAS No. 142, "Goodwill
and Other Intangible Assets", and therefore no longer amortizes goodwill. The
effect of eliminating goodwill amortization is reflected for the six months
ended June 30, 2002 but for no other period presented in this prospectus. The
effect of eliminating goodwill amortization on the three years in the period
ended December 31, 2001 is disclosed in Note 1 of Nabors' Current Report on Form
8-K dated as of October 10, 2002, as required by SFAS No. 142.
NABORS INDUSTRIES LTD.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
<Table>
<Caption>
SIX MONTHS ENDED TWELVE MONTHS
JUNE 30, YEAR ENDED DECEMBER 31, ENDED
----------------------- ------------------------------------------------- DECEMBER 31,
2002 2001 2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ---------- -------------
UNAUDITED UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Operating revenues......... $ 721,959 $1,132,404 $2,191,183 $1,377,453 $ 666,429 $ 968,462 $1,114,758
Net income................. 67,362 187,153 357,450 137,356 27,704 124,988 136,020
Net income per diluted
share.................... $ .45 $ 1.14 $ 2.24 $ .90 $ .23 $ 1.16 $ 1.24
Dividends per common
share.................... -- -- -- -- -- -- --
Total assets............... 4,432,778 4,180,581 4,151,915 3,136,868 2,398,003 1,465,907 1,281,306
Long-term obligations...... 1,099,096 1,707,390 1,567,616 854,777 482,600 217,034 226,299
Stockholders' equity....... $2,163,843 $1,864,912 $1,857,866 $1,806,468 $1,470,074 $ 867,469 $ 767,340
<Caption>
THREE MONTHS
ENDED YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1997
------------ -------------
(IN THOUSANDS, EXCEPT PER S
Operating revenues......... $302,831 $1,028,853
Net income................. 41,327 114,808
Net income per diluted
share.................... $ .37 $ 1.08
Dividends per common
share.................... -- --
Total assets............... 1,234,232
Long-term obligations...... 229,507
Stockholders' equity....... $ 727,843
</Table>
17
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Subject to terms and conditions, we will accept for exchange old notes
which are properly tendered on or prior to the Expiration Date and not withdrawn
as permitted below. As used herein, the term "Expiration Date" means the later
of 5 p.m., New York City time, November 29, 2002, the 21st business day
following the date of this prospectus, and the latest time and date by which we,
in our sole and absolute discretion, extend the exchange offer.
As of the date of this prospectus, $225 million principal amount of old
notes are outstanding. This prospectus, together with the letter of transmittal,
is being sent to all holders of old notes known to us. Our obligation to accept
old notes for exchange pursuant to the exchange offer is subject to certain
obligations as set forth under "-- Conditions to the Exchange Offer."
We expressly reserve the right, at any time, to extend the period of time
during which the exchange offer is open, and delay acceptance for exchange of
any old notes, by giving oral or written notice of such extension to the holders
thereof as described below. During any such extension, all old notes previously
tendered will remain subject to the exchange offer and may be accepted for
exchange by us. Any old notes not accepted for exchange for any reason will be
returned without expense to the tendering holder as promptly as practicable
after the expiration or termination of the exchange offer.
Old notes tendered in the exchange offer must be in denominations of
principal amount of $1,000 and any integral multiple thereof.
We expressly reserve the right to amend or terminate the exchange offer,
and not to accept for exchange any old notes, upon the occurrence of any of the
conditions of the exchange offer specified under "-- Conditions to the Exchange
Offer." We will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the old notes as promptly as
practicable. Such notice, in the case of any extension, will be issued by means
of a press release or other public announcement no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to us of old notes by you as set forth below and our acceptance
of the old notes will constitute a binding agreement between us and you upon the
terms and subject to the conditions set forth in this prospectus and in the
accompanying letter of transmittal. Except as set forth below, to tender old
notes for exchange pursuant to the exchange offer, you must transmit a properly
completed and duly executed letter of transmittal, including all other documents
required by such letter of transmittal or, in the case of a book-entry transfer,
an agent's message in lieu of such letter of transmittal, to Bank One, N.A., as
exchange agent, at the address set forth below under "-- Exchange Agent" on or
prior to the Expiration Date. In addition, either:
- certificates for such old notes must be received by the exchange agent
along with the letter of transmittal, or
- a timely confirmation of a book-entry transfer (a "book-entry
confirmation") of such old notes, if such procedure is available, into
the exchange agent's account at DTC pursuant to the procedure for
book-entry transfer described beginning on page 20 must be received by
the exchange agent, prior to the Expiration Date, with the letter of
transmittal or an agent's message in lieu of such letter of transmittal,
or the holder must comply with the guaranteed delivery procedures
described below.
As used in this prospectus, the term "agent's message" means a message,
transmitted by DTC to and received by the exchange agent and forming a part of a
book-entry confirmation, which states that DTC has received an express
acknowledgment from the tendering participant stating that such participant has
18
received and agrees to be bound by the letter of transmittal and that we may
enforce such letter of transmittal against such participant.
The method of delivery of old notes, letters of transmittal and all other
required documents is at your election and risk. If such delivery is by mail, it
is recommended that you use registered mail, properly insured, with return
receipt requested. In all cases, you should allow sufficient time to assure
timely delivery. No letter of transmittal or old notes should be sent to us.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old notes surrendered for exchange
are tendered:
- by a holder of the old notes who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
letter of transmittal, or
- for the account of an Eligible Institution (as defined below).
In the event that signatures on a letter of transmittal or a notice of
withdrawal are required to be guaranteed, such guarantees must be by a firm
which is a member of the Securities Transfer Agent Medallion Program, the Stock
Exchanges Medallion Program or the New York Stock Exchange Medallion Program (we
refer to each such entity as an Eligible Institution in this prospectus). If old
notes are registered in the name of a person other than the signer of the letter
of transmittal, the old notes surrendered for exchange must be endorsed by, or
be accompanied by a written instrument or instruments of transfer or exchange,
in satisfactory form as we or the exchange agent determine in our sole
discretion, duly executed by the registered holders with the signature thereon
guaranteed by an Eligible Institution.
We or the exchange agent in our sole discretion will make a final and
binding determination on all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of old notes tendered for exchange.
We reserve the absolute right to reject any and all tenders of any particular
old note not properly tendered or to not accept any particular old note which
acceptance might, in our judgment or our counsel's, be unlawful. We also reserve
the absolute right to waive any defects or irregularities or conditions of the
exchange offer as to any particular old note either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender old notes in the exchange offer). Our or the exchange
agent's interpretation of the terms and conditions of the exchange offer as to
any particular old note either before or after the Expiration Date (including
the letter of transmittal and the instructions thereto) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of old notes for exchange must be cured within a
reasonable period of time, as we determine. We are not, nor is the exchange
agent or any other person, under any duty to notify you of any defect or
irregularity with respect to your tender of old notes for exchange, and no one
will be liable for failing to provide such notification.
If the letter of transmittal is signed by a person or persons other than
the registered holder or holders of old notes, such old notes must be endorsed
or accompanied by powers of attorney signed exactly as the name(s) of the
registered holder(s) that appear on the old notes.
If the letter of transmittal or any old notes or powers of attorneys are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing. Unless waived by us or
the exchange agent, proper evidence satisfactory to us of their authority to so
act must be submitted with the letter of transmittal.
By tendering old notes, you represent to us that, among other things:
- the new notes acquired pursuant to the exchange offer are being obtained
in the ordinary course of business of the person receiving such new
notes, whether or not such person is the holder; and
- neither the holder nor such other person has any arrangement or
understanding with any person, to participate in the distribution of the
new notes.
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In the case of a holder that is not a broker-dealer, that holder, by
tendering, will also represent to us that the holder is not engaged in or does
not intend to engage in a distribution of the new notes.
If you are our "affiliate," as defined under Rule 405 under the Securities
Act, and engage in or intend to engage in or have an arrangement or
understanding with any person to participate in a distribution of such new notes
to be acquired pursuant to the exchange offer, you or any such other person:
- could not rely on the applicable interpretations of the staff of the SEC;
and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction.
Each broker-dealer that receives new notes for its own account in exchange
for old notes, where such old notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such new
notes. See "Plan of Distribution" beginning on page 41. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the Expiration Date, all old notes properly
tendered and will issue the new notes promptly after acceptance of the old
notes. See "-- Conditions to the Exchange Offer." For purposes of the exchange
offer, we will be deemed to have accepted properly tendered old notes for
exchange if and when we give oral (confirmed in writing) or written notice to
the exchange agent.
The holder of each old note accepted for exchange will receive a new note
in the amount equal to the surrendered old note. Accordingly, registered holders
of new notes on the relevant record date for the first interest payment date
following the consummation of the exchange offer will receive interest accruing
from the most recent date to which interest has been paid on the old notes.
Holders of new notes will not receive any payment in respect of accrued interest
on old notes otherwise payable on any interest payment date, the record date for
which occurs on or after the consummation of the exchange offer.
In all cases, issuance of new notes for old notes that are accepted for
exchange will be made only after timely receipt by the exchange agent of:
- certificates for such old notes or a timely book-entry confirmation of
such old notes into the exchange agent's account at DTC,
- a properly completed and duly executed letter of transmittal or an
agent's message in lieu thereof, and
- all other required documents.
If any tendered old notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if old notes are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted or
non-exchanged old notes will be returned without expense to the tendering holder
(or, in the case of old notes tendered by book-entry transfer into the exchange
agent's account at DTC pursuant to the book-entry procedures described below,
such non-exchanged old notes will be credited to an account maintained with DTC)
as promptly as practicable after the expiration or termination of the exchange
offer.
BOOK-ENTRY TRANSFERS
For purposes of the exchange offer, the exchange agent will request that an
account be established with respect to the old notes at DTC within two business
days after the date of this prospectus, unless the exchange agent already has
established an account with DTC suitable for the exchange offer. Any financial
institution that is a participant in DTC may make book-entry delivery of old
notes by causing DTC to
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transfer such old notes into the exchange agent's account at DTC in accordance
with DTC's procedures for transfer. Although delivery of old notes may be
effected through book-entry transfer at DTC, the letter of transmittal or
facsimile thereof or an agent's message in lieu thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the exchange agent at the address set forth under
"-- Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If you desire to tender your old notes and your old notes are not
immediately available, or time will not permit your old notes or other required
documents to reach the exchange agent before the Expiration Date, a tender may
be effected if:
- prior to the Expiration Date, the exchange agent received from such
Eligible Institution a notice of guaranteed delivery, substantially in
the form we provide (by telegram, telex, facsimile transmission, mail or
hand delivery), setting forth your name and address, the amount of old
notes tendered, stating that the tender is being made thereby and
guaranteeing that within three American Stock Exchange (which we refer to
as the AMEX in this prospectus) trading days after the date of execution
of the notice of guaranteed delivery, the certificates for all physically
tendered old notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, together with a properly completed and
duly executed appropriate letter of transmittal or facsimile thereof or
agent's message in lieu thereof, with any required signature guarantees
and any other documents required by the letter of transmittal will be
deposited by such Eligible Institution with the exchange agent, and
- the certificates for all physically tendered old notes, in proper form
for transfer, or a book-entry confirmation, as the case may be, together
with a properly completed and duly executed appropriate letter of
transmittal or facsimile thereof or agent's message in lieu thereof, with
any required signature guarantees and all other documents required by the
letter of transmittal, are received by the exchange agent within three
AMEX trading days after the date of execution of the notice of guaranteed
delivery.
WITHDRAWAL RIGHTS
You may withdraw your tender of old notes at any time prior to the
Expiration Date. To be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses set forth under
"-- Exchange Agent." This notice must specify:
- the name of the person having tendered the old notes to be withdrawn,
- the old notes to be withdrawn (including the principal amount of such old
notes), and
- where certificates for old notes have been transmitted, the name in which
such old notes are registered, if different from that of the withdrawing
holder.
If certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of such certificates, the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution, unless such holder is an Eligible
Institution. If old notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn old
notes and otherwise comply with the procedures of DTC.
We or the exchange agent will make a final and binding determination on all
questions as to the validity, form and eligibility (including time of receipt)
of such notices. Any old notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the exchange offer. Any old notes
tendered for exchange but not exchanged for any reason will be returned to the
holder without cost
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to such holder (or, in the case of old notes tendered by book-entry transfer
into the exchange agent's account at DTC pursuant to the book-entry transfer
procedures described above, such old notes will be credited to an account
maintained with DTC for the old notes) as soon as practicable after withdrawal,
rejection of tender or termination of the exchange offer. Properly withdrawn old
notes may be re-tendered by following one of the procedures described under
"-- Procedures for Tendering Old Notes" above at any time on or prior to the
Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we are not
required to accept for exchange, or to issue new notes in exchange for, any old
notes and may terminate or amend the exchange offer, if any of the following
events occur prior to acceptance of such old notes:
- the exchange offer violates any applicable law or applicable
interpretation of the staff of the SEC;
- an action or proceeding shall have been instituted or threatened in any
court or by any governmental agency that might materially impair our or
Nabors' ability to proceed with the exchange offer;
- we shall not have received all governmental approvals that we deem
necessary to consummate the exchange offer; or
- there has been proposed, adopted, or enacted any law, statute, rule or
regulation that, in our reasonable judgment, would materially impair our
ability to consummate the exchange offer.
The conditions stated above are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any condition or may be waived
by us in whole or in part at any time in our reasonable discretion. Our failure
at any time to exercise any of the foregoing rights will not be deemed a waiver
of any such right and each such right will be deemed an ongoing right which may
be asserted at any time.
In addition, we will not accept for exchange any old notes tendered, and no
new notes will be issued in exchange for any such old notes, if at such time any
stop order by the Securities and Exchange Commission is threatened or in effect
with respect to the Registration Statement, of which this prospectus constitutes
a part, or the qualification of the indenture under the Trust Indenture Act.
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EXCHANGE AGENT
Bank One, N.A. has been appointed as the exchange agent for the exchange
offer. All executed letters of transmittal should be directed to the exchange
agent at the address set forth below. Questions and requests for assistance,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for notices of guaranteed delivery should be directed
to the exchange agent addressed as follows:
BANK ONE, N.A., EXCHANGE AGENT
By Hand, Overnight Delivery or by Mail:
1111 Polaris Parkway, Suite N1-OH1-0184
Columbus, Ohio 43240
Attention: Exchanges
By Facsimile Transmission
(for Eligible Institutions only):
(614) 248-9987
Confirm by Telephone:
(800) 346-5153
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE LETTER OF
TRANSMITTAL.
FEES AND EXPENSES
The principal solicitation is being made by mail by Bank One, N.A., as
exchange agent. We will pay the exchange agent customary fees for its services,
reimburse the exchange agent for its reasonable out-of-pocket expenses incurred
in connection with the provision of these services and pay other registration
expenses, including fees and expenses of the trustee under the indenture
relating to the new notes, filing fees, blue sky fees and printing and
distribution expenses. We estimate these expenses in the aggregate to be
approximately $145,000. We will not make any payment to brokers, dealers or
others soliciting acceptances of the exchange offer.
Additional solicitation may be made by telephone, facsimile or in person by
our and our affiliates' officers and regular employees and by persons so engaged
by the exchange agent.
ACCOUNTING TREATMENT
We will record the new notes at the same carrying value as the old notes,
as reflected in our accounting records on the date of the exchange. Accordingly,
we will not recognize any gain or loss for accounting purposes. The expenses of
the exchange offer will be amortized over the term of the new notes.
TRANSFER TAXES
You will not be obligated to pay any transfer taxes in connection with the
tender of old notes in the exchange offer unless you instruct us to register new
notes in the name of, or request that old notes not tendered or not accepted in
the exchange offer be returned to, a person other than the registered tendering
holder. In those cases, you will be responsible for the payment of any
potentially applicable transfer tax.
CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE OLD NOTES
If you do not exchange your old notes for new notes in the exchange offer,
your old notes will continue to be subject to the provisions of the indenture
relating to the notes regarding transfer and exchange of the old notes and the
restrictions on transfer of the old notes described in the legend on your
certificates. These transfer restrictions are required because the old notes
were issued under an exemption
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from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the old notes
may not be offered or sold unless registered under the Securities Act, except
under an exemption from, or in a transaction not subject to, the Securities Act
and applicable state securities laws. We do not plan to register the old notes
under the Securities Act.
Under existing interpretations of the Securities Act by the SEC's staff
contained in several no-action letters to third parties, and subject to the
immediately following sentence, we believe that the new notes would generally be
freely transferable by holders after the exchange offer without further
registration under the Securities Act, subject to certain representations
required to be made by each holder of new notes, as set forth below. However,
any purchaser of new notes who is one of our "affiliates" (as defined in Rule
405 under the Securities Act) or who intends to participate in the exchange
offer for the purpose of distributing the new notes:
- will not be able to rely on the interpretation of the SEC's staff;
- will not be able to tender its old notes in the exchange offer; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the new
notes unless such sale or transfer is made pursuant to an exemption from
such requirements. See "Plan of Distribution" beginning on page 41.
We do not intend to seek our own interpretation regarding the exchange
offer and there can be no assurance that the SEC's staff would make a similar
determination with respect to the new notes as it has in other interpretations
to other parties, although we have no reason to believe otherwise.
Each broker-dealer that receives new notes for its own account in exchange
for old notes, where the old notes were acquired by it as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus that meets the requirements of the Securities Act in
connection with any resale of the new notes. The letter of transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
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DESCRIPTION OF THE NEW NOTES
The form and terms of the new notes and the old notes are identical in all
material respects, except that transfer restrictions and registration rights
applicable to the old notes do not apply to the new notes. The new notes will be
issued under the indenture, dated as of August 22, 2002, among us, Nabors
Delaware, Nabors and Bank One, N.A., as trustee (which we refer to as the
indenture in this prospectus). This is the same indenture under which the old
notes were issued.
The terms of the new notes include those expressly set forth in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939, as amended (which we refer to as the Trust Indenture Act
in this prospectus). The indenture is unlimited in aggregate principal amount,
although the issuance of new notes in this prospectus will be limited to $225
million and will mature on August 15, 2009. We may issue an unlimited principal
amount of additional notes having identical terms and conditions as the new
notes (which we refer to as the additional notes in this prospectus). Any
additional notes will be part of the same issue as the new notes that we are
currently offering and will vote on all matters with the holders of the new
notes.
This description of the new notes is intended to be a useful overview of
the material provisions of the new notes, the guarantees and the indenture.
Since this description is only a summary, you should refer to the indenture for
a complete description of our obligations, the obligations of the guarantors and
your rights.
The new notes will:
- be unsecured,
- be effectively junior in right of payment to any of our future secured
debt,
- rank equally in right of payment with all of our existing and future
unsubordinated debt, and
- be senior in right of payment to any of our existing and future senior
subordinated or subordinated debt.
Our obligations under the new notes will be fully and unconditionally
guaranteed by Nabors Delaware and Nabors. The indenture does not contain any
restrictions on the amount of additional indebtedness that we, Nabors Delaware
or Nabors may issue or guarantee in the future.
INTEREST
Interest on each new note will accrue from the last interest payment date
on which interest was paid on the old note surrendered in exchange for the new
note or, if no interest has been paid on such old note, from the date of the old
note's original issue, August 22, 2002, at a rate of 4.875% per annum.
Interest will be payable semiannually on February 15 and August 15 of each
year, beginning February 15, 2003, to the persons in whose names the new notes
are registered at the close of business on the preceding February 1 and August
1, respectively. Interest on the new notes will be computed on the basis of a
360-day year comprised of twelve 30-day months.
PAYMENTS ON THE NEW NOTES; PAYING AGENT AND REGISTRAR
We will pay principal of, premium, if any, additional amounts (as defined
below), if any, and interest on the new notes at the office or agency we
designate in the Borough of Manhattan, The City of New York, except that we may,
at our option, pay interest on any new notes in physical, certificated form
either at the corporate trust office of the trustee or by check mailed to
holders of the new notes at their registered addresses as they appear in the
registrar's books. We have initially designated the corporate trust office of
Bank One, N.A. in New York, New York to act as our paying agent and registrar.
We may, however, change the paying agent or registrar without prior notice to
the holders of the new notes, and Nabors or any of its subsidiaries may act as
paying agent or registrar.
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We will pay principal of, premium, if any, additional amounts, if any, and
interest on any new note in global form registered in the name of or held by The
Depository Trust Company or its nominee in immediately available funds to The
Depository Trust Company or its nominee, as the case may be, as the registered
holder of such global note.
TRANSFER AND EXCHANGE
A holder of new notes may transfer or exchange the new notes at the office
of the registrar in accordance with the indenture. The registrar and the trustee
may require a holder, among other things, to furnish appropriate endorsements
and transfer documents. No service charge will be imposed by us, the trustee or
the registrar for any registration of transfer or exchange of new notes, but we
may require a holder to pay a sum sufficient to cover any transfer tax or other
similar governmental charge required by law or permitted by the indenture. We
are not required to transfer or exchange any new note selected for redemption.
Also, we are not required to transfer or exchange any note for a period of 15
days before a mailing of notice of redemption.
The registered holder of a new note will be treated as the owner of it for
all purposes.
GUARANTEES
Nabors Delaware and Nabors will fully and unconditionally, jointly and
severally, guarantee the due and punctual payment of the principal of, premium,
if any, additional amounts, if any, and interest on the new notes and any other
obligations of ours under the new notes when and as they become due and payable,
whether at maturity, upon redemption, by acceleration or otherwise, if we are
unable to satisfy these obligations. Each guarantor's guarantee of our
obligations under the new notes will be its unsecured and unsubordinated
obligation and will have the same ranking with respect to Nabors' indebtedness
as the new notes will have with respect to our indebtedness. The guarantees will
provide that, in the event of a default in payment by us on the new notes, the
holders of the new notes may institute legal proceedings directly against either
Nabors Delaware or Nabors to enforce its guarantee without first proceeding
against us.
PAYMENT OF ADDITIONAL AMOUNTS
Unless otherwise required by Canadian or Bermudan law, neither we, Nabors
Delaware nor Nabors will deduct or withhold from payments made with respect to
the new notes and the guarantees on account of any present or future taxes,
duties, levies, imposts, assessments or governmental charges of whatever nature
imposed or levied by or on behalf of any political subdivisions or taxing
authorities in Canada or Bermuda having the power to tax. In the event that
either we or either guarantor is required to withhold or deduct on account of
any Canadian or Bermudan taxes due from any payment made under or with respect
to the new notes or the guarantees, as the case may be, we, Nabors Delaware or
Nabors, as the case may be, will pay additional amounts so that the net amount
received by each holder of notes will equal the amount that the holder would
have received if the Canadian or Bermudan taxes had not been required to be
withheld or deducted. The amounts that we, Nabors Delaware or Nabors are
required to pay to preserve the net amount receivable by the holders of the new
notes are referred to as "additional amounts."
Additional amounts will not be payable with respect to a payment made to a
holder of the new notes who does not deal at arm's length (within the meaning of
the Income Tax Act (Canada)) with us, Nabors or Nabors Delaware.
Also, additional amounts will not be payable with respect to a payment made
to a holder of the new notes to the extent:
- that any Canadian or Bermudan taxes would not have been so imposed but
for the existence of any present or former connection between the holder
and Canada or Bermuda or a province or territory of Canada, other than
the mere receipt of the payment, the acquisition, ownership or
disposition of
26
such notes or the exercise or enforcement of rights under the new notes,
the guarantees or the indenture;
- of any estate, inheritance, gift, sales, transfer or personal property
taxes imposed with respect to the new notes, except as described below or
as otherwise provided in the indenture;
- that any such Canadian or Bermudan taxes would not have been imposed but
for the presentation of the new notes, where presentation is required,
for payment on a date more than 30 days after the date on which the
payment became due and payable or the date on which payment thereof is
duly provided for, whichever is later, except to the extent that the
beneficiary or holder thereof would have been entitled to additional
amounts had the new notes been presented for payment on any date during
such 30-day period; or
- that the holder would not be liable or subject to such withholding or
deduction of Canadian or Bermudan taxes but for the failure to make a
valid declaration of non-residence or other similar claim for exemption,
if:
- the making of the declaration or claim is required or imposed by
statute, treaty, regulation, ruling or administrative practice of the
relevant taxing authority as a precondition to an exemption from, or
reduction in, the relevant taxes; and
- at least 60 days prior to the first payment date with respect to which
we, Nabors Delaware or Nabors shall apply this clause, we, Nabors
Delaware or Nabors shall have notified all holders of the new notes in
writing that they shall be required to provide this declaration or
claim.
We, Nabors Delaware and Nabors will also:
- withhold or deduct such Canadian or Bermudan taxes as required;
- remit the full amount of taxes deducted or withheld to the relevant
taxing authority in accordance with all applicable laws;
- use reasonable efforts to obtain from each relevant taxing authority
imposing the taxes certified copies of tax receipts evidencing the
payment of any taxes deducted or withheld; and
- upon request, make available to the holders of the new notes, within 60
days after the date the payment of any taxes deducted or withheld is due
pursuant to applicable law, certified copies of tax receipts evidencing
such payment by us, Nabors Delaware or Nabors and, notwithstanding our or
such guarantor's efforts to obtain the receipts, if the same are not
obtainable, other evidence of such payments.
In addition, we, Nabors Delaware or Nabors will pay any stamp, issue,
registration, documentary or other similar taxes and duties, including interest,
penalties and additional amounts with respect thereto, payable in Canada,
Bermuda or the United States or any political subdivision or taxing authority of
or in the foregoing with respect to the creation, issue, offering, enforcement,
redemption or retirement of the new notes or guarantees.
If payments with respect of the new notes or the guarantees become subject
generally to the taxing jurisdiction of any Territory or any political
subdivision or taxing authority having power to tax, other than or in addition
to any political subdivision or taxing authority in Canada or Bermuda having the
power to tax, immediately upon becoming aware thereof we will notify the trustee
of such event, and we or the guarantors, as the case may be, will pay additional
amounts in respect thereof on terms corresponding to the terms of the foregoing
provisions of this "Payment of Additional Amounts" section with the substitution
for (or, as the case may be, in addition to) the references herein to any
political subdivisions or taxing authority in Canada or Bermuda having the power
to tax with references to that other or additional Territory or any political
subdivision or taxing authority having the power to tax to whose taxing
jurisdiction such payments shall have become subject as aforesaid. The term
"Territory" means for this purpose any jurisdiction in which we or a guarantor,
as the case may be, is incorporated or in which we or it has our or its place of
central management or central control.
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OPTIONAL REDEMPTION
The new notes will be subject to redemption by us, in whole or in part, at
any time at a redemption price equal to the greater of:
- 100% of the principal amount of the new notes then outstanding to be
redeemed; or
- the sum of the present values of the remaining scheduled payments of
principal and interest thereon (exclusive of the interest accrued to the
date of redemption) computed by discounting such payments to the
redemption date on a semiannual basis, assuming a 360-day year consisting
of twelve 30-day months, at a rate equal to the sum of 25 basis points
plus the adjusted treasury rate, as that term is generally used in the
industry, on the third business day prior to the redemption date, as
calculated by an independent investment banker.
We will mail notice of redemption at least 20 days but not more than 75
days before the applicable redemption date to each holder of the new notes to be
redeemed. If we elect to redeem the new notes in part, the trustee will select
the new notes to be redeemed in a fair and appropriate manner.
Upon the payment of the redemption price, premium, if any, additional
amounts, if any, plus accrued and unpaid interest, if any, to the date of
redemption, interest will cease to accrue on and after the applicable redemption
date on the new notes or portions thereof called for redemption.
OPTIONAL REDEMPTION FOR CHANGES IN CANADIAN WITHHOLDING TAXES
The new notes will be subject to redemption by us in whole, but not in
part, at our option and at any time, on not fewer than 30 nor more than 60 days'
prior written notice, at 100% of their principal amount, plus accrued and unpaid
interest, if any, to the redemption date, in the event that either we, Nabors
Delaware, Nabors or any other obligor under the new notes, as the case may be,
has become or would become, obligated to pay, on the next date on which any
amount would be payable with respect to the new notes, any additional amounts
relating to any present or future tax, duty, levy, impost, assessment or other
governmental charge imposed or levied by or on behalf of Canada or any of its
provinces or territories or by any authority or agency therein having power to
tax, and provided that the obligation to pay additional amounts results from a
change in the taxing laws and/or regulations of Canada that is announced or
becomes effective on or after the date of initial issuance of the new notes.
Provided, however:
- no notice of redemption will be given earlier than 60 days prior to the
earliest date on which we, Nabors Delaware, Nabors or any other obligor
under the new notes, as the case may be, would be obligated to pay any of
these additional amounts if a payment with respect to the new notes were
then due;
- at the time any redemption notice is given, the obligation to pay these
additional amounts must remain in effect through the redemption date; and
- we cannot avoid paying the additional amounts by taking reasonable
measures available to us that we determine would not have an adverse
impact on us.
Prior to any redemption of the new notes under these provisions, we will
deliver to the trustee or any paying agent an officers' certificate stating that
we are entitled to effect the redemption and setting forth a statement of facts
showing that the conditions precedent to the right of redemption have occurred.
COVENANTS
LIMITATIONS ON LIENS
So long as any new notes are outstanding, Nabors will not, nor will it
permit any Nabors subsidiary (as defined below) to, issue, assume, guarantee or
suffer to exist any debt for money borrowed (which we refer to as debt in this
prospectus) if such debt is secured by a mortgage, pledge, security interest or
lien
28
(which we refer to as a mortgage or mortgages in this prospectus) upon any
properties of Nabors or any Nabors subsidiary or upon any securities or
indebtedness of any Nabors subsidiary (whether such properties, securities or
indebtedness is now owned or hereafter acquired) without in any such case
effectively providing that the new notes shall be secured equally and ratably
with (or prior to) such debt, except that the foregoing restrictions shall not
apply to:
(a) mortgages on any property acquired, constructed or improved by
Nabors or any Nabors subsidiary (or mortgages on the securities of a
special purpose Nabors subsidiary which holds no material assets other than
the property being acquired, constructed or improved) after the date of the
indenture which are created within 180 days after such acquisition (or in
the case of property constructed or improved, after the completion and
commencement of commercial operation of such property, whichever is later)
to secure or provide for the payment of the purchase price or cost thereof;
provided that in the case of such construction or improvement the mortgages
shall not apply to any property owned by Nabors or any Nabors subsidiary
before such construction or improvement other than (1) unimproved real
property on which the property so constructed, or the improvement, is
located or (2) personal property which is so improved;
(b) mortgages existing on the date of issuance of the old notes,
existing mortgages on property acquired (including mortgages on any
property acquired from a person which is consolidated with or merged with
or into Nabors or a Nabors subsidiary) or mortgages outstanding at the time
any corporation, partnership or other entity becomes a Nabors subsidiary;
provided that such mortgages shall only apply to property owned by such
corporation, partnership or other entity at the time it becomes a Nabors
subsidiary or that is acquired thereafter other than from Nabors or another
Nabors subsidiary;
(c) mortgages in favor of Nabors or any Nabors subsidiary;
(d) mortgages in favor of domestic or foreign governmental bodies to
secure advances or other payments pursuant to any contract or statute or to
secure indebtedness incurred to finance the purchase price or cost of
constructing or improving the property subject to such mortgages, including
mortgages to secure debt of the pollution control or industrial revenue
bond type;
(e) mortgages consisting of pledges or deposits by Nabors or any
Nabors subsidiary under worker's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of debt) or leases to
which Nabors or any Nabors subsidiary is a party, or deposits to secure
public or statutory obligations of Nabors or any Nabors subsidiary or
deposits or cash or United States government bonds to secure surety or
appeal bonds to which it is a party, or deposits as security for contested
taxes or import or customs duties or for the payment of rent, in each case
incurred in the ordinary course of business;
(f) mortgages imposed by law, including carriers', warehousemen's,
repairman's, landlords' and mechanics' liens, in each case for sums not yet
due or being contested in good faith by appropriate proceedings if a
reserve or other appropriate provisions, if any, as shall be required by
generally accepted accounting principles shall have been made in respect
thereof;
(g) mortgages for taxes, assessments or other governmental charges
that are not yet delinquent or which are being contested in good faith by
appropriate proceedings provided appropriate reserves required pursuant to
generally accepted accounting principles have been made in respect thereof;
(h) mortgages in favor of issuers of surety or performance bonds or
letters of credit or bankers' acceptances issued pursuant to the request of
and for the account of Nabors or any Nabors subsidiary in the ordinary
course of its business;
(i) mortgages consisting of encumbrances, easements or reservations
of, or rights of others for, licenses, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or
mortgages consisting of zoning or other restrictions as to the use of real
properties or mortgages incidental to the conduct of the business of Nabors
or a Nabors subsidiary or to the ownership of its
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properties which do not materially adversely affect the value of said
properties or materially impair their use in the operation of the business
of Nabors or a Nabors subsidiary;
(j) mortgages arising by virtue of any statutory or common law
provisions relating to bankers' liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
depositary institution; provided that:
(x) such deposit account is not a dedicated cash collateral account
and is not subject to restrictions against access by us in excess of
those set forth by regulations promulgated by the Federal Reserve Board;
and
(y) such deposit account is not intended by Nabors or any Nabors
subsidiary to provide collateral to the depository institution;
(k) mortgages arising from Uniform Commercial Code financing statement
filings regarding operating leases Nabors and its Nabors subsidiaries enter
into in the ordinary course of business;
(l) any mortgage over goods (or any documents relating thereto)
arising either in favor of a bank issuing a form of documentary credit in
connection with the purchase of such goods or by way of retention of title
by the supplier of such goods where such goods are supplied on credit,
subject to such retention of title, and in both cases where such goods are
acquired in the ordinary course of business;
(m) any mortgage pursuant to any order of attachment, execution,
enforcement, distraint or similar legal process arising in connection with
court proceedings; provided that such process is effectively stayed,
discharged or otherwise set aside within 30 days;
(n) any lease, sublease and sublicense granted to any third party
constituting a mortgage and any mortgage pursuant to farm-in and farm-out
agreements, operating agreements, development agreements and any other
similar arrangements, which are customary in the oil and gas industry or in
the ordinary course of business of Nabors or any Nabors subsidiary; or
(o) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage referred to
in the foregoing clauses (a) through (n), inclusive; provided that the
principal amount of debt secured thereby shall not exceed the principal
amount of debt so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement shall be
limited to all or a part of the property which secured the mortgage so
extended, renewed or replaced (plus improvements in such property).
As used in this prospectus "Nabors subsidiary" means a corporation,
partnership or other entity more than 50% of the outstanding voting securities
of which is owned, directly or indirectly, by Nabors or one or more other
subsidiaries, or by Nabors and one or more other subsidiaries. For purposes of
this definition, "voting securities" means securities which ordinarily have
voting power for the election of a governing board, whether at all times or only
so long as no senior class of securities has such voting power by reason of any
contingency.
In addition to the foregoing, Nabors and any Nabors subsidiary may, without
securing the new notes, issue, assume or guarantee secured debt that, with
certain other debt described in the following sentence, does not exceed 15% of
the amount of total stockholders' equity shown in the most recent consolidated
statement of financial position of Nabors, as filed with the SEC (which we refer
to as consolidated net worth in this prospectus), as shown on a consolidated
balance sheet of Nabors as of a date not more than 90 days prior to the proposed
transaction, prepared by Nabors in accordance with generally accepted accounting
principles in the United States. The other debt to be aggregated for purpose of
this exception is all attributable debt (as used in this prospectus,
attributable debt means, with respect to any sale and lease-back transaction as
of any particular time, the present value discounted at the rate of interest
implicit in the terms of the lease of the obligations of the lessee under such
lease for net rental payments during the remaining term of the lease) in respect
of sale and lease-back transactions of Nabors and any Nabors subsidiary under
the exception in clause (e)(2) below existing at such time. Sale and lease-back
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transaction as used in this prospectus means any arrangement with any person
providing for the leasing by Nabors or any Nabors subsidiary of any property,
whereby such property had been sold or transferred by Nabors or any Nabors
subsidiary to such person.
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS
So long as any new notes are outstanding, Nabors will not, nor will it
permit any Nabors subsidiary to, enter into any sale and lease-back transaction,
other than any sale and lease-back transaction:
(a) entered into within 180 days of the later of the acquisition or
placing into service of the property subject thereto by Nabors or the
Nabors subsidiary;
(b) involving a lease of less than five years;
(c) entered into in connection with an industrial revenue bond or
pollution control financing;
(d) between Nabors and/or one or more Nabors subsidiaries;
(e) as to which Nabors or such Nabors subsidiary would be entitled to
incur debt secured by a mortgage on the property to be leased in an amount
equal to the attributable debt with respect to such sale and lease-back
transaction without equally and ratably securing the new notes (1) under
clauses (a) through (o) in "-- Limitations on Liens" above or (2) under the
last paragraph of that covenant; or
(f) as to which Nabors will apply an amount equal to the net proceeds
from the sale of the property so leased to (1) the retirement (other than
any mandatory retirement), within 180 days of the effective date of any
such sale and lease-back transaction, of new notes or of funded debt (as
defined below) of Nabors or a Nabors subsidiary or (2) the purchase or
construction of other property, provided that such property is owned by
Nabors or a Nabors subsidiary free and clear of all mortgages.
As used in this prospectus, funded debt means indebtedness for money
borrowed which by its terms matures at, or is extendible or renewable at the
option of the obligor to, a date more than twelve months after the date of the
creation of such indebtedness.
CONSOLIDATION, MERGER, CONVEYANCE OF ASSETS
The indenture provides, in general, that neither we, Nabors Delaware nor
Nabors will consolidate with or merge into any other entity or convey, transfer
or lease our or its assets substantially as an entirety to any person, unless:
- the entity formed by the consolidation or into which we, Nabors Delaware
or Nabors is merged, or the person who acquires the assets, (a) shall be
organized (1), in the case of ourself or Nabors Delaware, under the laws
of the United States, any state thereof, or the District of Columbia or
(2), in our case, under the laws of Bermuda, Barbados or Canada or any
province or territory thereof, and (b), in any case, expressly assumes
our or the relevant guarantor's obligations under the indenture, the new
notes and the guarantees; and
- immediately after giving effect to that type of transaction, no event of
default, and no event that, after notice or lapse of time or both, would
become an event of default, shall have happened and be continuing.
In addition, we may assign our obligations under the new notes and the
indenture to Nabors Delaware or any other wholly-owned subsidiary of Nabors
organized under the laws of the United States, any state thereof, the District
of Columbia, Canada or any province or territory thereof, at any time, provided
that the assignee agrees to be bound by the terms of the new notes and the
indenture and that the full and unconditional guarantee of Nabors Delaware
remains in full force and effect if the assignee is not Nabors Delaware.
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EVENT RISK
Except for the limitations described above under the subsections
"-- Limitations on Liens" and "-- Limitations on Sale and Lease-Back
Transactions," neither the indenture, the guarantees nor the new notes will
afford holders of the new notes protection in the event of a highly leveraged
transaction involving us or either guarantor or will contain any restrictions on
the amount of additional indebtedness that we or either guarantor may incur.
MANDATORY REDEMPTION; SINKING FUND
We are not required to make either mandatory redemption or sinking fund
payments with respect to the new notes.
BOOK-ENTRY; DELIVERY AND FORM
The new notes will initially be issued only in registered, book-entry form,
in denominations of $1,000 and any integral multiples of $1,000 as described
under "-- Book-Entry System." We will issue one or more global notes in
denominations that together equal the total principal amount of the outstanding
new notes.
MODIFICATION OF THE INDENTURE
Amendments of the indenture may be made by us, Nabors Delaware, Nabors and
Bank One, N.A. with the consent of the holders of a majority in principal amount
of the outstanding new notes; provided, however, that no such amendment may,
without the consent of the holder of each outstanding new note affected thereby:
- extend the final maturity of the principal of any of the new notes;
- reduce the principal amount of any of the new notes;
- reduce the rate or extend the time of payment of interest or additional
amounts, if any, on any of the new notes;
- reduce any amount payable on redemption of any of the new notes;
- change the currency in which the principal of or interest or additional
amounts, if any, on any of the new notes is payable;
- impair the right to institute suit for the enforcement of any payment on
any of the new notes when due; or
- make any change in the percentage in principal amount of the new notes,
the consent of the holders of which is required for any such amendment.
Without the consent of any holder of outstanding new notes, we may amend
the indenture and the new notes to:
- cure any ambiguity or inconsistency;
- provide for the assumption by a successor to the obligations of Nabors or
ourselves under the indenture;
- provide for uncertificated new notes in addition to or in place of
certificated new notes (provided that the uncertificated new notes are
issued in registered form for purposes of Section 163(f) of the Code, or
in a manner such that the uncertificated new notes are described in
Section 163(f)(2)(B) of the Code);
- secure all or any of the new notes;
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- add to the covenants of Nabors or ourselves or events of default for the
benefit of the holders or surrender any right or power conferred upon us
or Nabors;
- comply with any requirement of the SEC in connection with the
qualification of the indenture under the Trust Indenture Act; or
- make other provisions that do not adversely affect the rights of any
holder of outstanding new notes.
The holders of a majority in principal amount of the outstanding notes may,
on behalf of the holders of all notes, waive any past default under the
indenture, except a default in the payment of the principal of, premium, if any,
additional amounts, if any, or interest on any new note or in respect of a
provision which under the indenture cannot be amended without the consent of the
holder of each outstanding new note affected.
It is not necessary for the consent of the holders under the indenture to
approve the particular form of any proposed amendment or waiver. It is
sufficient if such consent approves the substance of the proposed amendment or
waiver. A consent to any amendment or waiver under the indenture by any holder
of new notes given in connection with a tender of such holder's new notes will
not be rendered invalid by such tender. After an amendment or waiver under the
indenture becomes effective, we are required to mail to the holders a notice
briefly describing such amendment or waiver. However, the failure to mail such
notice, or any defect in the notice, will not impair or affect the validity of
the amendment or waiver.
EVENTS OF DEFAULT
In general, the indenture defines an event of default as being:
- a default for 10 days in payment of any principal or premium, if any, on
the new notes, either at maturity, upon any redemption, by declaration or
otherwise;
- a default for 30 days in payment of any interest or additional amounts,
if any, on the new notes;
- a default for 90 days after written notice from the trustee or holders of
at least 25% in principal amount of the outstanding new notes in the
observance or performance of any covenant in the new notes or the
indenture;
- an event of our, Nabors Delaware's or Nabors' bankruptcy, insolvency or
reorganization; or
- the failure to keep Nabors Delaware's or Nabors' full and unconditional
guarantee in place.
If an event of default shall occur and be continuing, either Bank One, N.A.
or the holders of at least 25% in principal amount of the outstanding new notes
may declare the principal amount of all new notes to be due and payable
immediately. However, any time after a declaration of acceleration with respect
to the new notes has been made, but before a judgment or decree based on such
acceleration has been obtained, the holders of a majority in principal amount of
outstanding new notes may, under some circumstances, rescind and annul such
acceleration. The majority holders, however, may not annul or waive a continuing
default in payment of principal of, premium, if any, additional amounts, if any,
or interest on the new notes.
The indenture provides that the holders of the new notes will indemnify
Bank One, N.A. before Bank One, N.A. exercises any of its rights or powers under
the indenture. This indemnification is subject to the Bank One, N.A.'s duty, as
trustee, to act with the required standard of care during a default.
The holders of a majority in principal amount of the outstanding new notes
may direct the time, method and place of:
- the conduct of any proceeding for any remedy available to the trustee; or
- the exercise of any trust or power conferred on the trustee.
This right of the holders of the new notes is, however, subject to the
provisions in the indenture providing for the indemnification of the trustee and
other specified limitations.
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In general, the indenture provides that holders of new notes may institute
an action against us, Nabors Delaware, Nabors or any other obligor under the new
notes only if the following four conditions are fulfilled:
- the holder previously has given to the trustee written notice of default
and the default continues;
- the holders of at least 25% in principal amount of the new notes then
outstanding have both requested the trustee to institute such action and
offered the trustee reasonable indemnity;
- the trustee has not instituted this action within 60 days of receipt of
such request; and
- the trustee has not received a direction inconsistent with such written
request by the holders of a majority in principal amount of the new notes
then outstanding.
The above four conditions do not apply to actions by holders of the new
notes against us, Nabors Delaware, Nabors or any other obligor under the new
notes for payment of principal of, premium, if any, additional amounts, if any,
or interest on or after the due date.
The indenture contains a covenant that we, Nabors Delaware, Nabors and any
other obligor under the new notes will file annually with the trustee a
certificate of no default or a certificate specifying any default that exists.
DISCHARGE, LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may discharge or defease our obligations under the indenture as set
forth below.
Under terms satisfactory to the trustee, we may discharge certain
obligations to holders of the new notes that have not already been delivered to
the trustee for cancellation. The new notes must also:
- have become due and payable;
- be due and payable by their terms within one year; or
- be scheduled for redemption by their terms within one year.
We may discharge the new notes by irrevocably depositing an amount
certified to be sufficient to pay at maturity, or upon redemption, the
principal, premium, if any, additional amounts, if any, and interest on the new
notes. We may make the deposit in cash or U.S. Government Obligations, as
defined in the indenture.
We may terminate all our obligations under the new notes and the indenture
at any time, except for certain obligations, including those respecting the
defeasance trust and obligations to register the transfer or exchange of the new
notes, to replace mutilated, destroyed, lost or stolen new notes and to maintain
a registrar and paying agent in respect of the new notes. This is referred to as
"legal defeasance." If we exercise our legal defeasance option, the guarantees
in effect at such time will terminate.
Under terms satisfactory to the trustee, we, Nabors Delaware and Nabors may
be released with respect to any outstanding new notes from the obligations
imposed by the sections of the indenture that contain the covenants described
above limiting liens, sale and lease-back transactions and consolidations,
mergers and conveyances of assets. Also under terms satisfactory to the trustee,
we may no longer be required to comply with these sections without the creation
of an event of default. This is typically referred to as "covenant defeasance."
If we exercise our covenant defeasance option, the guarantees in effect at such
time will terminate. We may exercise our legal defeasance option notwithstanding
our prior exercise of our covenant defeasance option.
Legal defeasance or covenant defeasance may be effected by us only if,
among other things:
- we irrevocably deposit with the trustee cash or U.S. Government
Obligations as trust funds in an amount certified to be sufficient to pay
at maturity or upon redemption the principal of, premium, if any,
additional amounts, if any, and interest on all outstanding new notes;
and
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- we deliver to the trustee opinions of counsel to the effect that the
holders of the new notes will not recognize income, gain or loss for
United States or Canadian federal income tax purposes as a result of our
legal defeasance or covenant defeasance. These opinions must further
state that these holders will be subject to United States and Canadian
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if our legal defeasance or
covenant defeasance had not occurred. In the case of a legal defeasance,
these opinions, insofar as they relate to U.S. taxes, must be based on a
ruling of the Internal Revenue Service or a change in United States
federal income tax law occurring after the date of the indenture, since
this result would not occur under current United States tax law.
CONCERNING THE TRUSTEE
The trustee, Bank One, N.A., is one of a number of banks with which Nabors
and its subsidiaries maintain ordinary banking relationships and is the trustee
with respect to Nabors Delaware's Zero Coupon Convertible Senior Debentures due
2021 and Zero Coupon Convertible Senior Debentures due 2020. We have appointed
the trustee as registrar and paying agent under the indenture.
GOVERNING LAW
The indenture, the new notes and the guarantees will be governed by, and
construed in accordance with, the laws of the State of New York.
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BOOK-ENTRY SYSTEM
GENERAL
The old notes are, and the new notes will be, issued in the form of one or
more global certificates, know as "global notes." Except as described below, the
new notes will be initially represented by one or more global notes in fully
registered form without interest coupons. The global notes will be deposited
with, or on behalf of DTC, and registered in the name of Cede & Co., as nominee
of DTC, or will remain in the custody of the trustee pursuant to the FAST
Balance Certificate Agreement between DTC and the trustee.
Ownership of beneficial interests in each global note will be limited to
persons who have accounts with DTC ("DTC participants") or persons who hold
interests through DTC participants. We expect that under procedures established
by DTC, ownership of beneficial interests in each global note will be shown on,
and transfer of ownership of those interests will be effected only through,
records maintained by DTC (with respect to interests of DTC participants) and
the records of DTC participants (with respect to other owners of beneficial
interests in the global note).
DEPOSITARY PROCEDURES
The descriptions of the operations and procedures of DTC set forth below
are controlled by that settlement system and may be changed at any time. We
undertake no obligation to update you regarding changes in these operations and
procedures and urge investors to contact DTC or its participants directly to
discuss these matters.
DTC has advised us that it is a:
- limited purpose trust company organized under the laws of the State of
New York;
- banking organization within the meaning of the laws of the State of New
York;
- member of the Federal Reserve System;
- clearing corporation within the meaning of the New York Uniform
Commercial Code; and
- clearing agency registered pursuant to the provisions of Section 17A of
the Exchange Act.
DTC was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
through electronic book-entry changes in their accounts, thereby eliminating the
need for physical movement of securities represented by physical certificates.
DTC's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations. Banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, referred to as "indirect participants," also
have access to DTC's book-entry system. Investors who are not DTC participants
may beneficially own notes held by or on behalf of DTC only through DTC
participants or indirect participants in DTC.
Upon deposit of the global notes with DTC, it will credit, on its
book-entry registration and transfer system, the accounts of those participants
designated by the initial purchaser with the principal amounts of the global
notes held by or through the participants. The records of DTC will show
ownership and effect the transfer of ownership of the global notes by its
participants. The records of the participants will show ownership and effect the
transfer of ownership of the global notes by persons holding beneficial
interests in the global notes through them.
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So long as DTC or its nominee is the registered owner of the global notes,
DTC or such nominee will be considered the sole owner and holder of the notes
for all purposes under the indenture. Except as set forth below, if you own a
beneficial interest in the global notes, you will not:
- be entitled to have the notes registered in your name;
- receive or be entitled to receive physical delivery of a certificate in
definitive form representing the notes; or
- be considered the owner or holder of the notes under the indenture for
any purpose, including with respect to the giving of any directions,
approvals or instructions to the trustee.
Therefore, if you are required by state law to take physical delivery of
the new notes in definitive form, you may not be able to own, transfer or pledge
beneficial interests in the global notes. In addition, the lack of a physical
certificate evidencing your beneficial interests in the global notes may limit
your ability to pledge the interests to a person that is not a participant in
DTC.
If you own beneficial interests in a global note, you will have to rely on
the procedures of DTC and, if you are not a participant in DTC, the procedures
of the participant through which you hold your beneficial interests, to exercise
your rights as a holder of new notes under the indenture. DTC has advised us
that it will take any action permitted to be taken by a holder of beneficial
interests in the global notes only at the direction of one or more of the
participants to whose accounts the interests are credited. We understand that,
under existing industry practice, when a beneficial owner of a global note wants
to give any notice or take any action that a registered holder is entitled to
take, at our request or under the indenture, DTC will authorize the participant
to give the notice or take the action, and the participant will authorize its
beneficial owners to give the notice or take the action. Accordingly, we, the
guarantors, the trustee and the paying agent will treat as a holder of
beneficial interests in the global notes anyone designated as such in writing by
DTC for purposes of obtaining any consents or directions required under the
indenture.
We will make all payments on the notes through the trustee or paying agent
to DTC or its nominee, as the registered holder of the global notes, in
immediately available funds. We expect DTC or its nominee, upon receipt of any
payments, to immediately credit each participant's account with payments in
amounts proportionate to that participant's beneficial interest as shown on the
records of DTC or its nominee. We also expect each participant to pay each owner
of beneficial interests in the global notes held through that participant in
accordance with standing customer instructions and customary practices. These
payments will be the sole responsibility of the participants.
Neither we, Nabors Delaware, Nabors, the trustee nor the paying agent will
assume any responsibility or liability for any aspect of the records relating
to, payments made on account of or actions taken with respect to the beneficial
ownership interests in the global notes, or for any other aspect of the
relationship between DTC and its participants, or between the participants and
the owners of beneficial interests. We, Nabors Delaware, Nabors, the trustee and
the paying agent may conclusively rely on instructions from DTC for all
purposes.
We have obtained the above information about DTC and its book-entry system
from sources we believe are reliable, but we take no responsibility for the
accuracy of the information.
SETTLEMENT PROCEDURES
Initial settlement of the notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC's rules and procedures and will be settled
in immediately available funds.
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EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
We will exchange beneficial interests in global notes for certificated
notes only if:
- DTC notifies the trustee that it is unwilling or unable to continue as a
depositary for the global notes or DTC ceases to be a clearing agency
registered under the Exchange Act, and, in either case, we fail to
appoint a successor depositary within 90 days; or
- we decide at any time not to have the securities represented by global
notes and so notify the trustee.
If there is an exchange, upon the surrender by DTC of the global notes, we
will issue certificated notes in authorized denominations and registered in the
names that DTC directs.
Neither we, Nabors Delaware, Nabors nor the trustee shall be liable for any
delay by DTC or any participant or indirect participant in identifying the
beneficial owners of the related notes and each such person may conclusively
rely on, and shall be protected in relying on, instructions from DTC for all
purposes, including with respect to the registration and delivery, and the
respective principal amounts, of the notes to be issued.
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MATERIAL TAX CONSIDERATIONS
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a general discussion of certain United States federal
income tax consequences associated with the exchange of the old notes by an
investor who exchanges the old notes for the new notes pursuant to the exchange
offer. This discussion does not purport to discuss all aspects of United States
federal taxation that may be important to a particular holder in light of his,
her or its particular investment or tax circumstances, or to certain types of
holders subject to special tax rules including, insurance companies, tax exempt
organizations, financial institutions, broker-dealers, certain expatriates,
holders whose functional currency is not the United States dollar, or holders
who hold the old notes as a hedge against currency risks or as part of a
straddle or a synthetic security. In addition, this discussion does not discuss
any foreign, state, local or other taxing jurisdiction tax considerations. If a
partnership, or other entity treated as a partnership for United States federal
income tax purposes, holds old notes, the tax treatment of a partner generally
will depend upon the status of the partner and the activities of the
partnership. A holder that is a partnership and partners in such partnership are
urged to consult their tax advisors about the United States federal tax
consequences associated with the exchange of the old notes for the new notes
pursuant to the exchange offer. This discussion is based upon the Internal
Revenue Code of 1986, as amended, United States Treasury regulations promulgated
thereunder, published rulings and court decisions, all as in effect on the date
hereof, which are subject to change, possibly retroactively. Prospective
investors are urged to consult their tax advisors regarding the United States
federal tax consequences associated with the exchange of the old notes for the
new notes pursuant to the exchange offer, as well as any tax consequences that
may arise under the laws of any relevant foreign, state, local or other taxing
jurisdiction.
For United States federal income tax purposes, we, Nabors Holdings 1, ULC,
will not be treated as an entity separate from Oak Leaf Investments, Inc., an
indirect wholly-owned subsidiary of Nabors Industries, Inc.
The exchange of the old notes for the new notes issued in the exchange
offer should not be treated as an "exchange" for United States federal income
tax purposes because the new notes issued in the exchange offer should not be
considered to differ materially in kind or extent from the old notes. Rather,
the new notes issued in the exchange offer received by a holder should be
treated as a continuation of the old notes in the hands of such holder. As a
result there should be no United States federal income tax consequences to
holders exchanging the outstanding old notes for the new notes issued in the
exchange offer, and any exchanging holder of old notes should have the same tax
basis and holding period in the new notes issued in the exchange offer as such
holder had in the old notes immediately prior to the exchange.
Prospective holders of the new notes issued in the exchange offer are urged
to consult their tax advisors concerning the particular tax consequences of
exchanging such holders' old notes for the new notes issued in the exchange
offer, including the applicability and effect of any state, local or foreign
income and other tax laws.
MATERIAL CANADIAN FEDERAL TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal income tax
consequences generally applicable to the exchange of old notes for new notes
pursuant to the exchange offer by a holder who at all relevant times, for the
purposes of the Income Tax Act (Canada) (the "Act"), is not and is not deemed to
be resident in Canada, deals with us at arm's length, holds the old notes and
new notes as capital property and does not use or hold and is not deemed to use
or hold the old notes or new notes in carrying on a business in Canada (a
"Holder"). For the purposes of the Act, related persons (as therein defined) are
deemed not to deal at arm's length. It is a question of fact whether persons not
related to each other deal at arm's length.
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This summary does not address the special tax consequences which may apply
to a Holder who is an insurer carrying on business in Canada and elsewhere for
the purposes of the Act. This summary is based on the current provisions of the
Act and the regulations thereunder, our understanding of the current published
administrative and assessing practices of the Canada Customs and Revenue Agency,
and all specific proposals to amend the Act and the regulations publicly
announced by the Minister of Finance (Canada) prior to the date hereof. This
summary is not exhaustive of all possible Canadian federal income tax
considerations and does not otherwise take into account or anticipate changes in
the law, whether by judicial, governmental or legislative decisions or action,
nor does it take into account tax legislation or considerations of any province
or territory of Canada or any jurisdiction other than Canada.
A Holder who exchanges old notes for new notes in the exchange offer will
not be subject to tax under the Act in respect of such exchange. The payment by
us or the guarantors of interest, principal or premium, if any, to a Holder of
new notes will be exempt from Canadian withholding tax. No other tax on income
or capital gains will be payable under the Act in respect of the holding,
redemption or disposition of new notes by a Holder.
This summary is of a general nature only and does not constitute legal or
tax advice to any particular Holder. No representation is made with respect to
the tax consequences to any particular Holder. Consequently, Holders should
consult their own tax advisors with respect to their particular circumstances.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of these new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 180 days after the
expiration of the exchange offer, we will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until December 8, 2002, all dealers effecting transactions
in the new notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such new notes. Any broker-dealer that
resells new notes that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit of any such resale of new notes and any commission
or concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. Any broker-dealer that resells new notes
that were received by it for its own account in the exchange offer and any
broker-dealer that participates in a distribution of those new notes may be
deemed to be an underwriter within the meaning of the Securities Act and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, including the delivery
of a prospectus that contains information with respect to any selling holder
required by the Securities Act in connection with any resale of the new notes.
The letter of transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
Furthermore, any broker-dealer that acquired any of the old notes directly
from us:
- may not rely on the applicable interpretation of the staff of the SEC's
position contained in Exxon Capital Holdings Corp., SEC no-action letter
(April 13, 1988), Morgan, Stanley & Co. Inc., SEC no-action letter (June
5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1983);
and
- must also be named as a selling noteholder in connection with the
registration and prospectus delivery requirements of the Securities Act
relating to any resale transaction.
For a period of 180 days after the expiration of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer other than commissions or concessions of any broker-dealer and
will indemnify the holders of the old notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
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WHERE YOU CAN FIND MORE INFORMATION
Nabors files annual, quarterly and current reports, proxy and information
statements and other information with the Securities and Exchange Commission.
Nabors Delaware previously filed such reports and materials but is no longer
required to do so following the corporate reorganization on June 24, 2002
described above in the section entitled "Summary Information -- Recent
Developments" beginning on page 2. Nabors Holdings is not expected to be
required to file such reports and material with the Securities and Exchange
Commission. You may inspect and copy such reports, proxy and information
statements, and other information filed with the Commission at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
SEC's regional offices at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and at 233 Broadway, New York, New York 10279. You may
also obtain copies of such material from the Securities and Exchange Commission
at prescribed rates by writing to the Public Reference Section of the Securities
and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, reports, proxy and information statements and other information
concerning Nabors can be inspected at the American Stock Exchange, 86 Trinity
Place, New York, New York 10006, where Nabors' common shares are listed.
You may obtain information on the operation of the Public Reference Room by
calling the Securities and Exchange Commission at 1-800-SEC-0330. Copies of
reports, proxy and information statements and other information regarding
registrants that file electronically (including Nabors and prior to July 23,
2002, Nabors Delaware) are available on the Commission's website at
http://www.sec.gov. Nabors' website address is http://www.nabors.com. Nabors'
website materials are not part of this prospectus.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Rather than restate certain information in this prospectus that Nabors
Delaware and Nabors have already included in reports filed with the Securities
and Exchange Commission, we are incorporating this information by reference,
which means that we can disclose important business, financial and other
information to you by referring to those publicly filed documents that contain
the information. The information incorporated by reference is not included in or
delivered with this prospectus. The information incorporated by reference is
considered to be part of this prospectus, and information that Nabors files
later with the Securities and Exchange Commission will automatically update and
supersede the information in this prospectus. Accordingly, we incorporate by
reference the following documents filed by Nabors Delaware and Nabors:
- Nabors Delaware's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 (File No. 001-09245), as amended by Form 10-K/A filed
by Nabors on June 26, 2002 (File No. 000-49887);
- Nabors Delaware's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002 (File No. 001-09245);
- Nabors Delaware's Current Reports on Form 8-K filed on January 3, 2002,
January 25, 2002, April 18, 2002, June 14, 2002, and June 25, 2002 (File
No. 001-09245);
- Nabors' Quarterly Report on Form 10-Q for the quarter ended June 30,
2002, as amended by Form 10-Q/A filed by Nabors on October 11, 2002 (File
No. 000-49887);
- Nabors' Current Reports on Form 8-K filed on June 25, 2002 (File No.
333-76198), June 26, 2002, July 18, 2002, August 14, 2002, August 16,
2002, August 21, 2002, October 1, 2002, and October 11, 2002 (File No.
000-49887); and
- Nabors' Registration Statement on Form S-4 (Registration No. 333-76198).
In addition, all reports and other documents Nabors subsequently files
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (which we refer to in this prospectus as the Exchange Act)
after the date of this prospectus and before the termination of this offering
shall be deemed to be incorporated by reference in this prospectus and to be
part of this prospectus from the date of the filing of such reports and
documents. Any statement contained in this prospectus or in a document
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for the purposes of this prospectus to the extent that
a statement contained in any subsequently filed document which is or is deemed
to be incorporated by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
We will provide without charge to each person to whom this prospectus is
delivered, including each beneficial owner of old notes, upon request of such
person, a copy of any or all documents that are incorporated into this
prospectus by reference, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the documents that this
prospectus incorporates. You should direct such requests to: Nabors Corporate
Services, Inc., 515 West Greens Road, Suite 1200, Houston, Texas 77067,
Attention: Investor Relations, phone number (281) 874-0035.
IN ORDER TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST THIS INFORMATION NO
LATER THAN FIVE BUSINESS DAYS BEFORE YOU MUST MAKE YOUR INVESTMENT DECISION.
ACCORDINGLY, YOU MUST REQUEST THIS INFORMATION NO LATER THAN NOVEMBER 21, 2002.
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LEGAL MATTERS
The validity and enforceability of the new notes offered by this prospectus
will be passed on for us by Skadden, Arps, Slate, Meagher & Flom LLP, New York,
New York. The validity and enforceability of the guarantees of the new notes
will be passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP and by
Appleby Spurling & Kempe, Hamilton, Bermuda. Certain matters of Canadian law
will be passed on for us by Stikeman Elliot, Calgary, Canada and Stewart
McKelvey Stirling Scales, Halifax, Canada.
INDEPENDENT ACCOUNTANTS
The historical financial statements of Nabors as of December 31, 2001 and
2000 and for each of the three years in the period ended December 31, 2001
incorporated in this prospectus by reference to the Current Report on Form 8-K
of Nabors dated as of October 10, 2002 and the financial statement schedule
incorporated in this prospectus by reference to the Annual Report on Form 10-K
of Nabors Delaware for the year ended December 31, 2001 have been so
incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
With respect to the unaudited financial information of Nabors Delaware for
the three-month periods ended March 31, 2002 and 2001 and of Nabors for the
six-month periods ended June 30, 2002 and 2001, incorporated by reference in
this prospectus, PricewaterhouseCoopers LLP reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports dated April 17, 2002, except
for Notes 1 and 2, as to which the date is April 29, 2002, and July 17, 2002,
except for Note 11, as to which the date is August 13, 2002, and Notes 4 and 10,
as to which the date is October 10, 2002, incorporated by reference herein,
state that they did not audit and they do not express an opinion on that
unaudited financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. PricewaterhouseCoopers LLP is not subject to
the liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited financial information because that report is not a
"report" or a "part" of the registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.
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