Item 1.01
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Entry into a Material Definitive Agreement.
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Delaware Basin Acquisition Purchase and Sale Agreement
On October 4, 2016, Resolute Energy Corporation (the “Company”) and Resolute Natural Resources Southwest, LLC, a wholly-owned subsidiary of the Company (“Buyer”), entered into a Purchase and Sale Agreement (the “Firewheel Purchase Agreement”) with Firewheel Energy, LLC (“Seller”) pursuant to which Buyer agreed to acquire certain oil and gas interests in the Delaware Basin in Reeves County, Texas (the “Firewheel Properties”), for an aggregate consideration to Seller of $135 million, consisting of $90 million in cash and $45 million in shares of common stock of the Company, par value $0.0001 per share (“Common Stock”), priced based on a 10% discount to the volume weighted average price during the 15 trading days ending on October 4, 2016, subject to certain adjustments. Based on such formula, it is expected that 2,114,523 shares of Common Stock will be issued to Seller upon the closing of the purchase of the Firewheel Properties (the “Delaware Basin Acquisition”). The closing of the Delaware Basin Acquisition (the “Closing”) is expected to occur on October 7, 2016, effective as of September 1, 2016.
In connection with the Firewheel Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Seller, dated October 4, 2016, which will become effective as of the Closing and provide the holder(s) of the shares of Common Stock issued to Seller pursuant to the Firewheel Purchase Agreement with certain rights relating to the registration of such shares of Common Stock under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Rights Agreement requires that the Company file a registration statement with the Securities and Exchange Commission to permit the public resale of such shares of Common Stock no later than twenty days after the Closing and use its reasonable best efforts to cause such registration statement to become effective no later than one hundred twenty days after the Closing, subject to extension under certain circumstances.
Each of the Firewheel Purchase Agreement and the Registration Rights Agreement contains various representations, warranties, covenants and indemnification obligations of the Company and Seller, and in the case of the Firewheel Purchase Agreement, of Buyer, that are customary in transactions of this type.
Preferred Stock Purchase Agreement
On October 4, 2016, the Company entered into a Purchase Agreement (the “Preferred Stock Purchase Agreement”) with BMO Capital Markets Corp. (“Initial Purchaser”), pursuant to which the Company agreed to issue and sell to Initial Purchaser 55,000 shares (the “Firm Securities”) of the Company’s 8⅛% Series B Cumulative Perpetual Convertible Preferred Stock, par value $0.0001 per share (the “Convertible Preferred Stock”). The Preferred Stock Purchase Agreement also provides Initial Purchaser an option to purchase up to 7,500 additional shares (together with the Firm Securities, collectively, the “Securities”) of the Convertible Preferred Stock within 30 days of the date of the Preferred Stock Purchase Agreement.
The offering of the Securities has been and will be made only to persons
reasonably believed to be
qualified institutional buyers in accordance with Rule 144A under the Securities Act. The Securities were not registered under the Securities Act or the securities laws of any other jurisdiction. The closing and settlement of the sale of the Firm Securities is expected to occur on October 7, 2016.
The Preferred Stock Purchase Agreement contains customary representations, warranties, indemnification and other obligations of and agreements by the Company and Initial Purchaser, including for liabilities under the Securities Act.
Amendment to Revolving Credit Facility
On September 30, 2016, the Company and the agent and lenders under its Revolving Credit Facility (as defined below) entered into the thirteenth amendment to the facility to amend the restricted payment covenant to permit the Company to pay up to $5 million annually and $20 million in aggregate in dividends on preferred stock, in addition to the existing restricted payment basket that provided for other restricted payments of up to $5 million
2
annually and $20 million in aggregate (which two baskets may be aggregated). In addition the Company made other administrative amendments to the Revolving Credit Facility.
The “Revolving Credit Facility” is defined as the Second Amended and Restated Credit Agreement, dated as of March 30, 2010, among the Company (and certain of its subsidiaries as guarantors), Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, as amended by the First Amendment to Second Amended and Restated Credit Agreement (the “First Amendment”) dated April 18, 2011, the Second Amendment to Second Amended and Restated Credit Agreement (“Second Amendment”) dated April 25, 2011, the Third Amendment to Second Amended and Restated Credit Agreement (“Third Amendment”) dated April 13, 2012, the Fourth Amendment to Second Amended and Restated Credit Agreement (“Fourth Amendment”) dated December 7, 2012, the Fifth Amendment to Second Amended and Restated Credit Agreement (“Fifth Amendment”) dated December 27, 2012, the Sixth Amendment to Second Amended and Restated Credit Agreement (“Sixth Amendment”) dated March 22, 2013, the Seventh Amendment to Second Amended and Restated Credit Agreement (“Seventh Amendment”) dated April 15, 2013, the Eighth Amendment to Second Amended and Restated Credit Agreement (“Eighth Amendment”) dated December 13, 2013, the Ninth Amendment to Second Amended and Restated Credit Agreement (“Ninth Amendment”) dated March 7, 2014, the Tenth Amendment to Second Amended and Restated Credit Agreement (“Tenth Amendment”) dated March 14, 2014, the Eleventh Amendment to Second Amended and Restated Credit Agreement (“Eleventh Amendment”) dated December 30, 2014, and the Twelfth Amendment to Second Amended and Restated Credit Agreement dated April 15, 2015 (“Twelfth Amendment”).
The Second Amended and Restated Credit Agreement, dated as of March 30, 2010, is filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K filed on March 30, 2010. Copies of the First Amendment, Second Amendment and Third Amendment are filed as Exhibits 10.1, 10.2 and 10.3 with the Company’s Current Report on Form 8-K filed April 16, 2012, the Fourth Amendment is filed as Exhibit 10.3 with the Company’s Current Report on Form 8-K filed December 11, 2012, the Fifth Amendment is filed as Exhibit 10.1 with the Company’s Current Report on Form 8-K filed December 31, 2012, the Sixth Amendment is filed as Exhibit 10.1 with the Company’s Current Report on Form 8-K filed March 25, 2013, the Seventh Amendment is filed as Exhibit 10.1 with the Company’s Current Report on Form 8-K filed April 15, 2013, the Eighth Amendment is filed as Exhibit 10.1 with the Company’s Current Report on Form 8-K filed December 19, 2013, the Ninth Amendment is filed as Exhibit 10.1.9 with the Company’s Annual Report on Form 10-K filed March 10, 2014, the Tenth Amendment is filed as Exhibit 10.1 with the Company’s Current Report on Form 8-K filed March 19, 2014, the Eleventh Amendment is filed as Exhibit 10.2 with the Company’s Current Report on Form 8-K filed December 31, 2014 and the Twelfth Amendment is filed as Exhibit 10.1 with the Company’s Current Report on Form 8-K filed April 17, 2015.