UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported):

July 28, 2015 (July 27, 2015)

 

 

MAGNUM HUNTER RESOURCES CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

909 Lake Carolyn Parkway, Suite 600

Irving, Texas 75039

(Address of principal executive offices, including zip code)

 

(832) 369-6986

(Registrant’s telephone number, including area code)

 

Not applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 1.01                                           Entry into a Material Definitive Agreement.

 

As previously disclosed by Magnum Hunter Resources Corporation (“Magnum Hunter” or the “Company”) in its public filings with the Securities and Exchange Commission (the “SEC”), including the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 filed with the SEC on May 11, 2015, on March 30, 2015 the Company entered into a letter agreement (the “March 2015 Letter Agreement”) with Eureka Hunter Holdings, LLC (“Eureka Hunter Holdings”) and MSIP II Buffalo Holdings, LLC (“MSIP II BH”), an affiliate of Morgan Stanley Infrastructure II Inc.  Pursuant to the March 2015 Letter Agreement, the parties agreed, among other things, that MSIP II BH would make a capital contribution in cash to Eureka Hunter Holdings of approximately $37.8 million (the “Additional Contribution”) by no later than March 31, 2015 (and it subsequently did make such capital contribution), in exchange for additional Series A-2 Units in Eureka Hunter Holdings, which Additional Contribution was used to fund certain additional capital expenditures of Eureka Hunter Pipeline and for certain other uses.

 

Pursuant to the March 2015 Letter Agreement, the parties further agreed that the Company has the right, in its discretion, to fund as a capital contribution to Eureka Hunter Holdings, all or a portion (in specified minimum amounts) of its pro rata share of the Additional Contribution, which pro rata share equals approximately $18.7 million (the “MHR Additional Contribution Component”), in exchange for additional Series A-1 Units in Eureka Hunter Holdings at a specified price per unit.  The March 2015 Letter Agreement specified that the Company’s deadline for funding the MHR Additional Contribution Component was June 30, 2015 (the “MHR Contribution Deadline).

 

On July 27, 2015, the Company entered into an additional letter agreement (the “July 2015 Letter Agreement”) with Eureka Hunter Holdings and MSIP II BH, effective as of June 30, 2015, pursuant to which the parties agreed, subject to certain conditions, to extend the MHR Contribution Deadline to the earlier of (i) September 30, 2015 or (ii) the day immediately preceding the date on which the Company disposes, in a sale transaction or otherwise, its equity ownership interest in Eureka Hunter Holdings.  See Item 8.01 of this Current Report on Form 8-K for a discussion regarding the Company’s decision to sell 100% of its current equity ownership interest in Eureka Hunter Holdings.

 

The foregoing description of the July 2015 Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text thereof, a copy of which is attached hereto as Exhibit 2.1. A copy of the March 2015 Letter Agreement was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2015.

 

Item 8.01                                           Other Events.

 

As previously disclosed by the Company in its public filings with the SEC, Magnum Hunter continues to actively pursue certain potential liquidity enhancing transactions.  One of the potential liquidity enhancing transactions previously disclosed as being actively pursued by Magnum Hunter is the sale by the Company of 100% of its current equity ownership interest in Eureka Hunter Holdings. The Company currently owns approximately 45.53% of the equity in Eureka Hunter Holdings. This potential transaction would allow Magnum Hunter to restructure its balance sheet and dramatically improve its current liquidity position.

 

While Magnum Hunter is in active discussions with certain interested parties regarding a potential sale (the “Sale”) by the Company of 100% of its current equity ownership interest in Eureka Hunter Holdings, the Company cannot provide assurance as to whether or when it will be able to consummate the Sale or any of the other liquidity enhancing transactions that the Company is currently pursuing, or, if the Sale or other liquidity enhancing transactions are consummated, whether they will be

 

2

 

on the terms contemplated or will provide Magnum Hunter with sufficient liquidity to meet its cash flow needs or maintain compliance with the financial and other covenants in Magnum Hunter’s debt agreements.

 

Item 9.01                                           Financial Statements and Exhibits.

 

Exhibit Number		Description
2.1		Letter Agreement, dated July 27, 2015, by and among Eureka Hunter Holdings, LLC, Magnum Hunter Resources Corporation and MSIP II Buffalo Holdings, LLC.

 

3

 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	MAGNUM HUNTER RESOURCES CORPORATION
Date: July 28, 2015	/s/ Gary C. Evans
	Gary C. Evans,
	Chairman and Chief Executive Officer

 

4

 

EXHIBIT INDEX

 

Exhibit Number		Description
2.1		Letter Agreement, dated July 27, 2015, by and among Eureka Hunter Holdings, LLC, Magnum Hunter Resources Corporation and MSIP II Buffalo Holdings, LLC.

 

5

Exhibit 2.1

 

Eureka Hunter Holdings, LLC

777 Post Oak Boulevard, Suite 650

Houston, Texas 77056

 

July 27, 2015
(as of June 30, 2015)

 

MSIP II Buffalo Holdings, LLC

c/o Morgan Stanley Infrastructure

1585 Broadway, 39th Floor

New York, NY 10036

Attn.:  John V. Veech

 

Magnum Hunter Resources Corporation

909 Lake Carolyn Parkway, Suite 600

Irving, TX 75039

Attn.:  Gary C. Evans

 

Re:          Certain Matters Relating to Eureka Hunter Holdings, LLC

 

Reference is hereby made to (a) that certain Second Amended and Restated Limited Liability Company Agreement of Eureka Hunter Holdings, LLC dated as of October 3, 2014, by and among (i) Eureka Hunter Holdings, LLC, a Delaware limited liability company (the “Company”), (ii) MSIP II Buffalo Holdings, LLC, a Delaware limited liability company (“MSI”), (iii) Magnum Hunter Resources Corporation, a Delaware corporation (“MHR”), and (iv) the other Members party thereto (the “LLC Agreement”); (b) that certain Transaction Agreement dated September 15, 2014, by and among (i) the Company, (ii) MSI, (iii) MHR and (iv) Magnum Hunter Services, LLC, a Delaware limited liability company (the “Transaction Agreement”); (c) that certain letter agreement dated November 18, 2014, by and among (i) MHR, (ii) the Company and (iii) MSI (the “November 2014 Letter Agreement”); and (d) that certain letter agreement dated March 30, 2015, by and among (i) MHR, (ii) the Company and (iii) MSI (the “March 2015 Letter Agreement”). Unless the context otherwise requires, capitalized terms used but not otherwise defined herein and defined in the LLC Agreement shall have the respective meanings ascribed to them in the LLC Agreement. For $10.00 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, MHR and MSI hereby agree as follows:

 

Section 1.  Amendment of the March 2015 Letter Agreement.

 

A.            Subject in all cases to Section 1.D of this letter agreement, Section 3.E. of the March 2015 Letter Agreement is hereby amended by replacing the date “June 30, 2015” where it appears in that section with the date “September 30, 2015.”

 

B.            Subject in all cases to Section 1.D of this letter agreement, Section 3.G.(6) of the March 2015 Letter Agreement is hereby amended by replacing the date “July 1, 2015” where it appears in that section with the date “October 1, 2015.”

 

C.            Section 4 of the March 2015 Letter Agreement is hereby amended by replacing the date “May 31, 2015” where it appears in that section with the date “August 31, 2015.”

 

D.            Notwithstanding anything to the contrary in this letter agreement or otherwise (but subject to Section 1.E of this letter agreement):

 

 

(1)           If an MHR Sale Event (as defined below in Section 1.F of this letter agreement) occurs on or prior to September 30, 2015, then the reference in Section 1.A of this letter agreement to “September 30, 2015” shall instead for all purposes hereunder be deemed to be the day immediately preceding the date on which such MHR Sale Event occurred and the reference in Section 1.B of this letter agreement to “October 1, 2015” shall instead for all purposes hereunder be deemed to be the date on which such MHR Sale Event occurred.

 

(2)           MHR, on behalf of itself and its Affiliates, successors and assigns, hereby agrees that neither MHR nor any of its Affiliates shall make any MHR 2015 Make-up Contribution using (directly or indirectly) any proceeds received by MHR or any Affiliate thereof in connection with any MHR Sale Event.

 

(3)           MHR shall not have the right to make any MHR 2015 Make-up Contribution unless, at the time it would otherwise make such contribution, MHR (including any relevant Affiliate) is current in respect of all of its payment obligations under all gathering agreements (including the Gas Gathering Agreement, as amended) to which MHR (or any Affiliate thereof), on the one hand, and the Company (or any Subsidiary thereof), on the other hand, are party to or are otherwise subject to.

 

E.            If an MHR Sale Event does not occur prior to 11:59 p.m., Houston, Texas time, on September 30, 2015, then at 12:00 a.m.. Houston, Texas time, on October 1, 2015, Section 1.D. of this letter agreement will terminate for all purposes and be of no further force or effect, and thereafter neither MHR nor any of its successors or assigns shall have the right to make any MHR 2015 Make-up Contribution. For the avoidance of doubt, any disposition or indirect transfer of Series A-1 Units that occurs after the first MHR Sale Event shall not also be an MHR Sale Event.

 

F.            “MHR Sale Event” means the first occasion on which MHR or any of its Affiliates Dispose of (or purport to Dispose of) all or any portion of its Series A-1 Units (or otherwise indirectly transfer or purport to transfer any or all of such Units).

 

Section 2.  Miscellaneous.

 

A.            Except as expressly modified by this letter agreement, the terms and provisions of the LLC Agreement, the Transaction Agreement, the November 2014 Letter Agreement and the March 2015 Letter Agreement shall remain in full force and effect in accordance with their respective terms. Any provision of this letter agreement may be amended, modified or terminated if, but only if, such amendment, modification or termination is in writing and is approved in writing by each of the Company, MHR and MSI. The provisions of the LLC Agreement set forth in Article XIII thereof shall apply mutatis mutandis to this letter agreement. For the avoidance of doubt, this letter agreement shall be deemed to be Confidential Information and a “Related Document” under the LLC Agreement for all purposes and shall be governed by the confidentiality obligations set forth in Section 10.4 of the LLC Agreement; provided, that MHR acknowledges that it is solely responsible for any such filings or other public disclosures (including the determination of whether to make any filing or other public disclosure and the content thereof).

 

B.            As a material inducement for the Company and MHR to enter into this letter agreement, MSI hereby represents, warrants and covenants as follows: (a) the execution and delivery of this letter agreement by MSI, and the performance by MSI of its obligations under this letter agreement, have been duly authorized by all necessary action on the part of MSI and do not and will not conflict with, breach, cause a default or event of default under, or otherwise result in or permit the acceleration or early termination of any material agreement to which MSI or its subsidiaries is party to or bound by; and (b) this letter agreement has been duly executed and delivered by MSI and, assuming valid execution and delivery by each other party hereto, will constitute the valid and binding obligation of MSI, enforceable

 

2

 

against MSI in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws relating to or affecting the enforcement of creditors’ rights generally or by general principles of equity.

 

C.            As a material inducement for the Company and MSI to enter into this letter agreement, MHR hereby represents, warrants and covenants as follows: (a) the execution and delivery of this letter agreement by MHR, and the performance by MHR of its obligations under this letter agreement, have been duly authorized by all necessary action on the part of MHR and do not and will not conflict with, breach, cause a default or event of default under, or otherwise result in or permit the acceleration or early termination of any material agreement to which MHR or its subsidiaries is party to or bound by; and (b) this letter agreement has been duly executed and delivered by MHR and, assuming valid execution and delivery by each other party hereto, will constitute the valid and binding obligation of MHR, enforceable against MHR in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws relating to or affecting the enforcement of creditors’ rights generally or by general principles of equity.

 

D.            As a material inducement for MSI and MHR to enter into this letter agreement, the Company hereby represents, warrants and covenants as follows: (a) the execution and delivery of this letter agreement by the Company, and the performance by the Company of its obligations under this letter agreement, have been duly authorized by all necessary action on the part of the Company and do not and will not conflict with, breach, cause a default or event of default under, or otherwise result in or permit the acceleration or early termination of any material agreement to which the Company or its subsidiaries is party to or bound by; and (b) this letter agreement has been duly executed and delivered by the Company and, assuming valid execution and delivery by each other party hereto, will constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws relating to or affecting the enforcement of creditors’ rights generally or by general principles of equity.

 

*              *              *              *              *

 

3

 

	Sincerely,
	EUREKA HUNTER HOLDINGS, LLC
	By:	/s/ Gary C. Evans
	Name:	Gary C. Evans
	Title:	President and Chief Executive Officer

 

 

Acknowledged and agreed:
MSIP II BUFFALO HOLDINGS, LLC
By:	Morgan Stanley Infrastructure II, Inc., its Manager
By:	/s/ John Veech
Name:	John Veech
Title:	President
MAGNUM HUNTER RESOURCES CORPORATION
By:	/s/ Gary C. Evans
Name:	Gary C. Evans
Title:	Chairman and Chief Executive Officer

 

4