Item 2.01
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Completion of Acquisition or Disposition of Assets.
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Closing of Sale of Interests in Venezuela
On October 7, 2016, Harvest Natural Resources, Inc., a Delaware corporation (the
Company
), and its wholly owned subsidiary,
HNR Energia BV, a Curacao company (
HNR Energia
), completed the sale of all of HNR Energias 51% interest in Harvest-Vinccler Dutch Holding B.V., a Netherlands company (
Harvest Holding
), to Delta Petroleum
N.V., a limited liability company organized under the laws of Curacao (
Delta Petroleum
), pursuant to a share purchase agreement, dated June 29, 2016 (the
Share Purchase Agreement
). Harvest Holding owns,
indirectly through wholly owned subsidiaries, a 40% interest in Petrodelta, S.A., a mixed company organized under Venezuelan law (
Petrodelta
), through which all of the Companys interests in Venezuela were owned. Thus, under
the Share Purchase Agreement, the Company sold all of its interests in Venezuela to Delta Petroleum.
Delta Petroleum is an affiliate of CT Energy Holding
SRL, a Barbados Society with Restricted Liability (
CT Energy
). CT Energy assigned all of its rights and obligations under the Share Purchase Agreement to Delta Petroleum on September 26, 2016, as permitted under the Share
Purchase Agreement.
At the closing, the Company received consideration consisting of:
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$69.4 million in cash paid by Delta Petroleum after various closing adjustments;
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an 11% non-convertible senior promissory note payable by Delta Petroleum to HNR Energia six months from the closing date in the principal amount of $12,000,000, guaranteed by the sole member and sole equity-holder of
Delta Petroleum (the
11% Note
);
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the relinquishment of all of the Companys common stock owned by CT Energy, consisting of 8,667,597 shares (approximately 16.8% of all outstanding shares pre-closing), to be held by the Company as treasury shares;
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the cancellation of all $32.2 million in outstanding principal and accrued interest under the Companys 15% senior secured promissory note due 2020 held by CT Energy, dated June 19, 2015 (the
15%
Note
);
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the cancellation of all $8.2 million in outstanding principal and accrued interest under the Companys 15% additional draw senior secured promissory note due 2020 held by CT Energy, dated June 19, 2015 (the
Additional Draw Note
); and
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the cancellation of the Companys warrant held by CT Energy, dated June 19, 2015, under which CT Energy could have acquired up to 34,070,820 shares of the Companys common stock, subject to conditions set
forth in the warrant (the
CT Warrant
).
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In accordance with the Share Purchase Agreement, Oswaldo Cisneros and Alberto
Sosa resigned as members of the Companys board of directors effective upon the closing of the transaction. Messrs. Cisneros and Sosa had been designated by CT Energy to serve as non-independent directors of the Company. Edgard Leal, an
independent director of the Company previously designated by CT Energy, continues to serve as a director of the Company. Mr. Cisneros is the sole equity-holder of CT Energy and Delta Petroleum.
The above description of the Share Purchase Agreement is qualified in its entirety by reference to the complete
Share Purchase Agreement, a copy of which is attached as Exhibit 2.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission (the
SEC
) on June 30, 2016 and which is incorporated by
reference herein. The above description of the 11% Note is qualified in its entirety by reference to the complete 11% Note, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and which is incorporated by reference herein.
The above descriptions of the 15% Note, the Additional Draw Note and the CT Warrant are qualified in their entirety by reference to the complete documents, copies of which are attached as Exhibits 10.1, 10.3 and 10.4, respectively, to the
Companys Current Report on Form 8-K filed with the SEC on June 22, 2015 and which are incorporated by reference herein. For additional information regarding the terms of the transaction, please see the Companys definitive proxy
statement filed with the SEC on August 2, 2016.
Termination of Material Agreements
The pre-closing relationship between the Company and CT Energy and its affiliates effectively terminated upon the closing of the sale of the Companys
interests in Venezuela to Delta Petroleum on October 7, 2016. In addition to the relinquishment of the Companys common stock owned by CT Energy and the cancellation of the 15% Note, the Additional Draw Note and the CT Warrant, as
discussed above, the following agreements were terminated upon the closing:
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the Securities Purchase Agreement, dated June 19, 2015, among the Company, certain subsidiaries of the Company and CT Energy, under which the Company sold to CT Energy the 15% Note, the Additional Draw Note, the CT
Warrant and certain other securities, among other transactions (the
Securities Purchase Agreement
);
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the Security Agreement, dated June 19, 2015, among the Company and certain subsidiaries of the Company, under which the Company and such subsidiaries pledged substantially all of their assets to secure the notes
sold to CT Energy under the Securities Purchase Agreement (the
Security Agreement
);
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the Guaranty Agreement, dated June 19, 2015, by and among the Company and certain subsidiaries of the Company, under which such subsidiaries guaranteed the Companys obligations under the Securities Purchase
Agreement and the notes sold to CT Energy under the Securities Purchase Agreement (the
Guaranty Agreement
);
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the Registration Rights Agreement, dated June 19, 2015, between the Company and CT Energy, under which CT Energy was given certain registration rights with respect to the securities sold under the Securities
Purchase Agreement (the
Registration Rights Agreement
);
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the Investor Voting Agreement, dated June 19, 2015, between the Company and CT Energy, under which CT Energy agreed to vote for directors nominated by the Companys board of directors, and against those not so
nominated, under specified circumstances (the
Investor Voting Agreement
); and
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the Management Agreement, dated June 19, 2015, between the Company, HNR Finance B.V., and CT Energia Holding Ltd., under which CT Energia Holding Ltd. provided management services with respect to the operations of
Petrodelta (the
Management Agreement
).
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The above descriptions of the Securities Purchase Agreement, the Registration
Rights Agreement, the Management Agreement and the Investor Voting Agreement are qualified in their entirety by reference to the complete documents, copies of which are attached as Exhibits 2.1, 10.5, 10.6 and 10.7, respectively, to the
Companys Current Report on Form 8-K filed with the SEC on June 22, 2015 and which are incorporated by reference herein. The above descriptions of the Security Agreement and Guaranty Agreement are qualified in their entirety by reference
to the complete documents, copies of which are attached as Exhibits 10.10 and 10.11, respectively, to the Companys Quarterly Report on Form 10-Q filed with the SEC on August 7, 2015 and which are incorporated by reference herein.
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