Schedule 13D: Cross Ocean Holds 21.3% of KLX Energy After Rights Deal

The news

Cross Ocean Partners Management LP and four affiliated reporting persons filed a Schedule 13D on Oct. 6, 2026 reporting beneficial ownership of 22,495,104 shares of KLX Energy Services Holdings, Inc. (KLXE), or 21.3% of the common stock. The percentage uses 105,677,168 shares that KLX expected to have outstanding after its rights offering and a related backstop exchange, as described in an 8-K the company filed on Sept. 30. One fund, Cross Ocean GSS Master Fund LP, directly accounts for 8,358,619 shares, or 7.9%. The event date is Sept. 29, 2026.

Most of the position arrived on that date. The Cross Ocean funds received 21,890,180 shares when KLX closed a $125 million rights offering and the funds’ backstop commitment was settled by exchange. KLX had given existing holders transferable subscription rights at $1.49 per share, with a record date of Aug. 21, 2026. Under a backstop agreement signed Aug. 6 with all holders of its 2030 notes, those holders agreed to take any unsubscribed shares at the same price by surrendering notes. The Cross Ocean funds gave up about $32.4 million of principal on the 2030 notes, plus roughly $0.2 million of accrued interest.

The funds were already creditors and, to a small degree, shareholders. In a March 2025 refinancing they received $85 million of Senior Secured Floating Rate Cash/PIK Notes due 2030 and warrants over 868,887 shares at $0.01, in exchange for $50.7 million in cash and $30.5 million of older 11.500% notes. A covenant amendment in March 2026 brought another 305,438 warrants. The funds exercised all the warrants and sold 569,401 shares in March and April 2026, which left 604,924 shares before the backstop exchange.

Our analysis

This is a lender turning part of its claim into equity at a price set by a rights offering. The structure is worth reading closely because the filing makes the mechanics plain: the exchange price for the notes was 100% of principal, and shares were issued at $1.49. Every backstop party was subject to a 30% cap on pro forma fully diluted ownership, and Cross Ocean’s 21.3% sits below that ceiling.

The governance consequences are in Item 4. Because the reporting persons now hold more than 10%, the backstop agreement gives them the right to designate one director. They say they have chosen a candidate independent of both Cross Ocean and KLX, and that they expect KLX to disclose the appointment. They also say they have engaged and intend to keep engaging with management and the board about operations, including cost structure, capitalization, governance and what the filing calls a broad range of consensual transactions. They add that they have no current plans for any of the Item 4 actions in clauses (a) through (j) of the form.

That combination, a creditor-turned-holder with a board nominee and a stated intent to negotiate agreements with the issuer, is the pattern that makes an activist campaign possible without a proxy contest. The filing also says the group may monetize its position through derivatives or a pledge of the shares for liquidity.

Cross Ocean arrived at a 21.3% stake through a note exchange, not a market purchase, and the board seat came with it by contract.

Room for disagreement

The 13D language is permissive, not predictive. The reporting persons state that they acquired the securities for investment purposes and that there is no guarantee any proposal will be made or accepted. A contractual board designee is a negotiated feature of the financing, and a lender-turned-shareholder can sit quietly after the deal.

There is also a case that a 21% holder with a board seat and the capacity to hold derivatives or pledge shares is not a passive investor. How much weight to give the language about consensual transactions is a judgment call, and the filing leaves it open.

What to watch

• A KLX 8-K disclosing the independent director appointed by Cross Ocean under the backstop agreement.
• Amendments to this Schedule 13D if the group enters agreements with KLX, pledges shares or uses derivatives.
• KLX’s own reporting on how the $125 million rights offering and the note exchange changed its debt balance.