KLX Energy Services Holdings, Inc. (NASDAQ: KLXE) announced a $125 million rights offering of common stock, with the proceeds intended partly to reduce the company's outstanding debt.

The offering, approved by the company's board of directors, will distribute transferable subscription rights to holders of record as of August 21, 2026. Each holder will receive one right per share owned, with each right entitling the holder to purchase 3.885 shares at $1.49 per share. The offering is expected to commence August 24, 2026, and expire September 23, 2026, with the rights expected to trade on Nasdaq under the symbol "KLXER."

Holders of the company's Senior Secured Floating Rate Cash/PIK Notes due 2030 (the "2030 Notes") have backstopped the offering for up to $94 million, with the option to increase that commitment to the full $125 million before August 21, 2026. Under the backstop agreement, these noteholders will exchange 2030 Notes at par plus accrued interest for common stock at the $1.49 subscription price to cover any unsubscribed shares.

KLX said it plans to use net cash proceeds up to $31 million for general corporate purposes, with any amount above that used to repurchase 2030 Notes at par. Upon completion of the backstop exchange, the outstanding principal of the 2030 Notes is expected to be reduced by $94 million.

The company also plans to enter into an amended and restated indenture governing the 2030 Notes, which would reset leverage covenant step-down schedules, relax certain incurrence tests, and increase the basket for purchase money obligations and capital lease obligations from $75 million to $85 million, among other changes.

No single holder may own more than 9.995% of outstanding common stock on a pro forma basis following the offering. Vinson & Elkins LLP served as legal counsel to KLX, while Perella Weinberg Partners acted as financial advisor. White & Case LLP represented the backstop parties.