Sec Form 13D Filing - HHEP-Directional L.P. filing for DRILLING TOOLS INTERNATIONAL C (DTI) - 2023-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.     )*

DRILLING TOOLS INTERNATIONAL CORPORATION

(Name of Issuer)

Common Stock, par value $0.0001 per share

(Title of Class of Securities)

26205E 107

(CUSIP Number)

Thomas O. Hicks

2200 Ross Avenue, Suite 4600W

Dallas, Texas 75201

(214) 615-2300

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

June 20, 2023

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ☐

The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provision of the Act (however, see the Notes).

This statement on Schedule 13D (this “Schedule 13D”) relates to the common stock, par value $0.0001 per share (the “Common Stock”), of Drilling Tools International Corporation (the “Issuer”), a Delaware corporation. The address of the Issuer’s principal executive office is 3701 Briarpark Drive, Suite 150, Houston, Texas 77042.

(a) This Schedule 13D is filed by HHEP-Directional, L.P. (“HHEP LP”), HHEP-Directional GP, L.P. (“HHEP GP”), HH Directional LLC (“HH LLC”), Hicks Holdings Operating LLC (“HHO LLC”), WCH Ventures, Ltd. (“WCH”), CFH Ventures, Ltd. (“CFH”) and Thomas O. Hicks (together, with HHEP LP, HHEP GP, HH LLC, HHO LLC, WCH and CFH the “Reporting Persons”). HHEP GP is the general partner of HHEP LP. HH LLC is the general partner of HHEP GP. Mr. Hicks is the sole member of HH LLC, the sole owner of HHO LLC and the trustee of each of WCH and CFH.

(b) The business address of the Reporting Persons is 2200 Ross Avenue, Suite 4600W, Dallas, Texas 75201.

(c) The principal business of HHEP LP is holding securities of the Issuer. The principal business of HHEP GP is to act as general partner of HHEP LP. The principal business of HH LLC is to act as general partner of HHEP GP. The principal business of HHO LLC is to render transaction, financing advisory and other similar services to the Issuer and other investment vehicles. The principal business of Mr. Hicks is a private equity investor. The principal business of each of WCH and CFH is to hold investments for the benefit of certain of Mr. Hicks’ family members.

(d) During the last five years, none of the Reporting Persons have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) During the last five years, none of the Reporting Persons was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) HHEP LP is a Delaware limited partnership. HHEP GP is a Delaware limited partnership. HH LLC is a Texas limited liability company. HHO LLC is a Texas limited liability company. Mr. Hicks is a citizen of the United States of America. Each of WCH and CFH is a Texas limited partnership.

On June 20, 2023 (the “Closing Date”), Drilling Tools International Holdings, Inc., a Delaware corporation (“DTIH”), ROC Energy Acquisition Corp., a Delaware corporation (“ROC”), and ROC Merger Sub, Inc., a Delaware corporation and a directly, wholly owned subsidiary of ROC (“Merger Sub”), consummated a business combination pursuant to an agreement and plan of merger, dated February 13, 2023 (the “Initial Merger Agreement”), by and among DTIH, ROC and Merger Sub, as amended by the First Amendment to the Agreement and Plan of Merger, dated June 5, 2023 (the “Merger Agreement Amendment,” and, the Initial Merger Agreement as amended thereby, the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into DTIH, with DTIH surviving the merger as a wholly owned subsidiary of ROC (the “Merger,” and together with the other transactions contemplated by the Merger Agreement and the other agreements contemplated thereby, the “Business Combination”). In connection with the consummation of the Business Combination (the “Closing”), ROC changed its name to “Drilling Tools International Corporation”.

In connection with the Closing, and pursuant to the terms of the Merger Agreement, among other things, each share of (i) common stock of DTIH (“DTIH Common Stock”) issued an d outstanding immediately prior to the Closing was converted into the right to receive 0.2282 shares of Common Stock and (ii) each share of preferred stock of DTIH (“DTIH Preferred Stock”) issued and outstanding immediately prior to the Closing was converted into the right to receive (a) $0.54 in cash per share of DTIH Preferred Stock (the “Preferred Cash Consideration”) and (b) 0.3299 shares of Common Stock. Pursuant to the terms of an Exchange Agreement by and between the applicable Reporting Person, ROC Energy Holdings, LLC, a Delaware limited liability company (“ROC Holdings”), Merger Sub and DTIH, dated as of the Closing Date (each, an “Exchange Agreement”), each of HHEP, Mr. Hicks, WCH and CFH elected to exchange the Preferred Cash Consideration it was entitled to receive pursuant to the Merger Agreement into 1,801,178; 20,663; 3,444 and 3,444 shares of Common Stock, respectively, which are included in the reported amount.

In connection with the Closing, HHEP LP, HHO LLC, Mr. Hicks, WCH and CFH received 15,928,111; 262,429; 218,096; 36,350 and 36,350 shares of Common Stock, respectively, in exchange for its shares of DTIH Common Stock and DTIH Preferred Stock, which includes any shares of Common Stock received under an Exchange Agreement.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Initial Merger Agreement, which is attached hereto as Exhibit 2 and is incorporated herein by reference, and the full text of the Merger Agreement Amendment, which is attached hereto as Exhibit 3 and is incorporated herein by reference.

The foregoing description of the Exchange Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Exchange Agreement, which is attached hereto as Exhibit 4 and is incorporated herein by reference.

The information set forth in Item 3 of this Schedule 13D is incorporated herein by reference.

The Reporting Persons may, directly or through one or more affiliates, from time to time or at any time, acquire or seek to acquire additional Common Stock either in the open market or in private transactions, or dispose of or seek to dispose of all or a portion of such Common Stock now owned or hereafter acquired. HHEP LP may, from time to time or at any time, distribute Common Stock to its partners. In addition, the Reporting Persons may, directly or through one or more affiliates, from time to time or at any time, (i) engage in discussions with or make proposals to the Board of Directors (the “Board”) of the Issuer, other stockholders of the Issuer, and/or other third parties, or (ii) encourage, cause or seek to cause the Issuer or any of such persons: to consider or explore extraordinary corporate transactions involving the Issuer, including, among other things, a merger, reorganization, consolidation or other take-private transaction that could result in the de-listing or de-registration of the Common Stock; sales or acquisitions of assets or businesses; joint ventures; changes to the Issuer’s capitalization or dividend policy; or other material changes to the Issuer’s business or capital or governance structure. Any action or actions the Reporting Persons may undertake with respect to their investment in the Issuer will be dependent upon the Reporting Persons’ review of numerous factors, including, among other things, the Issuer’s business, prospects, and/or financial condition, the market for the Common Stock, general economic conditions, regulatory matters, tax considerations, debt and/or stock market conditions, other opportunities available to the Reporting Persons, and other factors and future developments.

Mr. Hicks and an employee of an affiliate of the Reporting Persons are members of the Board. In addition, Mr. Hicks, in his capacity as a director, may be entitled to receive cash compensation and equity compensation, including stock option or other equity awards, pursuant to the Issuer’s 2023 Omnibus Incentive Plan (the “2023 Omnibus Incentive Plan”), filed as Exhibit 5 to this Schedule 13D and incorporated herein by reference.

Item 5.                Interest in Securities of the Issuer.

(a) See Rows (11) and (13) of the cover pages to this Schedule 13D. The percentages used in this Schedule 13D are calculated based upon 29,768,568 shares of Common Stock outstanding after the Business Combination as of June 28, 2023.

(b) See Rows (7) through (10) of the cover pages to this Schedule 13D.

(c) Other than as disclosed in this Schedule 13D, none of the Reporting Persons has effected any transactions in the Issuer’s securities within the past 60 days.

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the shares of Common Stock held by the Reporting Persons.

(e) Not applicable.

On February 13, 2023, ROC, HHEP LP and other parties entered into the Amended and Restated Registration Rights Agreement (the “Amended and Restated Registration Rights Agreement”), which is attached hereto as Exhibit 6 and is incorporated herein by reference. Pursuant to the Amended and Restated Registration Rights Agreement, ROC agreed to use commercially reasonable efforts to file a registration statement under the Securities Act of 1933, as amended, to permit the resale of certain shares of Common Stock within 30 days of the Closing Date.

On February 13, 2023, ROC, DTIH and HHEP LP entered into the Company Stockholder Support Agreement (the “Company Stockholder Support Agreement”), which is attached hereto as Exhibit 7 and is incorporated herein by reference, whereby, among other things, HHEP LP agreed to vote its shares of DTIH Common Stock in favor of the Business Combination.

On the Closing Date, in connection with the Closing, the Issuer and HHEP LP entered into a Company Stockholder Lock-up Agreement (the “Lock-up Agreement”), a form of which is attached hereto as Exhibit 8 and is incorporated herein by reference. Pursuant to the Lock-up Agreement, HHEP LP agreed, subject to certain customary exceptions, that during the period that is the earlier of (i) the date that is 180 days following the Closing Date and (ii) the date specified in a written waiver of the provisions of the Lock-up Agreement duly executed by ROC Holdings and the Issuer, not to dispose of, directly or indirectly, any shares of Common Stock subject to the Lock-up Agreement, or take other related actions with respect to such shares. The shares of Common Stock subject to the Lock-up Agreement include all such shares held by HHEP LP, except for shares of Common Stock issued pursuant to its Exchange Agreement.

On the Closing Date, in connection with the Closing, the Issuer entered into an Indemnification Agreement with each member of the Board (collectively, the “Indemnification Agreements”), including Mr. Hicks, a form of which is attached hereto as Exhibit 9 and is incorporated herein by reference. The Indemnification Agreements require the Issuer to indemnify the members of the Board for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director in any action or proceeding arising out of their services to the Issuer or any other company or enterprise to which the person provides services at the Issuer’s request.

HHO LLC is party to that certain Monitoring and Oversight Agreement with DTIH, dated January 27, 2012 (the “Initial Monitoring Agreement”), as amended by the first amendment thereto dated February 13, 2023 (the “Amendment to the Monitoring Agreement” and, the Initial Monitoring Agreement as amended thereby, the “Monitoring Agreement”), each of which is attached hereto as Exhibit 10 and Exhibit 11. Pursuant to the Monitoring Agreement, HHO LLC provides financing and oversight monitoring services to DTIH as requested. As compensation for HHO LLC’s services under the Monitoring and Oversight Agreement, HHO LLC receives a quarterly fee equal to the greater of (i) $62,500 and (ii) 0.625% of the Company’s earnings before interest, taxes, depreciation and amortization for the last 12 months (subject to a one quarter lag), as calculated pursuant to the Monitoring Agreement, subject to a cap of $187,500 per quarter. On the Closing Date, DTIH and DTIC entered into an Assignment and Assumption Agreement with respect to the Monitoring Agreement (the “Assignment and Assumption Agreement”), which is attached hereto as Exhibit 12. Pursuant to the Assignment and Assumption Agreement, DTIH assigned to the Issuer all of its rights and obligations under the Monitoring Agreement.

The foregoing descriptions of the Amended and Restated Registration Rights Agreement, the Company Stockholder Support Agreement, the Lock-up Agreement, the Indemnification Agreements, the Monitoring Agreement and the Assignment and Assumption Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are attached as Exhibit 6, Exhibit 7, Exhibit 8, Exhibit 9, Exhibit 10, Exhibit 11 and Exhibit 12, respectively.

Except as otherwise described in this Schedule 13D, there are no contracts, arrangements, understandings or similar relationships with respect to the securities of the Issuer between any Reporting Persons and any other person or entity.

The information set forth in Item 3 with respect to the Merger Agreement and the Exchange Agreements, and Item 4 with respect to the 2023 Omnibus Incentive Plan, is incorporated herein by reference.

[The signature page follows.]

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: June 30, 2023