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Item 1.01
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Entry into a Material Definitive Agreement.
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Tellurian Preferred Stock Purchase Agreement and Merger
Agreement Amendment
On November 23, 2016, Tellurian Investments Inc., a Delaware corporation (“
Tellurian
”),
entered into a preferred stock purchase agreement (the “
Preferred SPA
”) with GE Oil & Gas, Inc., a Delaware corporation and subsidiary of General Electric Company (“
GE
”), pursuant to which GE purchased, and
Tellurian sold and issued to GE, 5,467,851 shares of Tellurian Series A convertible preferred stock (the “
Tellurian Preferred Shares
”) for an aggregate purchase price of $25,000,000. The number of Tellurian Preferred
Shares GE purchased was calculated by dividing the $25,000,000 purchase price by the volume weighted average trading price of common stock of Magellan Petroleum Corporation, a Delaware corporation (“
Magellan
”), for the ten (10)
trading days prior to November 22, 2016, multiplied by 90%. In connection with the Preferred SPA, Tellurian, Magellan, and River Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Magellan, entered into an
amendment (the “
Merger Agreement Amendment
”) to the previously announced Agreement and Plan of Merger, dated as of August 2, 2016, among those parties (the “
Merger Agreement
”). Among other things, the Merger
Agreement Amendment (i) permits Tellurian to enter into the Preferred SPA and to issue the Tellurian Preferred Shares to GE and (ii) extends the “Outside Date” (as defined in the Merger Agreement) from December 31, 2016 to
January 31, 2017.
If the merger contemplated by the Merger Agreement (the “
Merger
”) is completed, the Tellurian
Preferred Shares will remain outstanding as preferred stock of the surviving corporation in the Merger, which will be a subsidiary of Magellan. However, in that case, each Tellurian Preferred Share will become convertible or exchangeable at any
time into either (i) one share of Magellan common stock or (ii) one share of a new class of Magellan Series B convertible preferred stock, which will have terms substantially similar to those of the Tellurian Preferred Shares as
summarized below (the “
Magellan Preferred Shares
,” and together with the Tellurian Preferred Shares, the “
Preferred Shares
”).
Terms of the Preferred Shares
The
general terms of the Preferred Shares are as follows:
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Voting rights
. Holders of the Preferred Shares will generally be entitled to one vote for each Preferred Share held by it, except that GE will not be entitled to vote on the approval of the Merger or any
other matter directly related to the Merger.
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Conversion
. Following the Merger, holders of the Tellurian Preferred Shares may convert all (but not less than all) of such shares for shares of Magellan common stock on a one-for-one
basis. Alternatively, following the Merger, holders of the Tellurian Preferred Shares may convert or exchange all (but not less than all) of such shares for Magellan Preferred Shares on a one-for-one basis. If the holders of the Tellurian
Preferred Shares (or, following a conversion, holders of the Magellan Preferred Shares) have not converted such shares for Magellan common stock on or before November 23, 2022, such shares will automatically be converted into Magellan common
stock on a one-for-one basis. Each conversion ratio will be subject to customary anti-dilution adjustments.
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Dividends
. The Preferred Shares do not have dividend rights. If the Merger is consummated, Magellan will be prohibited from paying dividends on its common stock so long as the Preferred Shares remain
outstanding.
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Liquidation
. In the event of any liquidation, dissolution or winding up of the affairs of Tellurian or Magellan, as applicable, after payment or provision for payment of the debts and other liabilities of
the relevant company, holders of the Preferred Shares will be entitled to receive an amount in cash equal to $4.57218 for each Preferred Share held by it before any distribution is made to holders of shares of common stock.
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Other
In connection with the Preferred
SPA, Tellurian and Magellan also agreed (i) to provide GE, as holder of the Preferred Shares, with certain registration rights relating to the Magellan common stock GE may receive upon conversion or exchange of Preferred Shares and
(ii) that Tellurian or Magellan, as applicable, will consider purchasing certain equipment from GE for use in the development of Tellurian’s Driftwood LNG Terminal.
Also on November 23, 2016, Magellan and GE entered into a Guaranty and Support Agreement pursuant to which Magellan will, contingent on
the closing of the Merger, guarantee to GE the performance of all of the obligations of Tellurian in connection with the Preferred SPA.
The foregoing description of the Preferred SPA, the Merger Agreement Amendment, the Guaranty and Support Agreement, and the terms of the
Magellan Preferred Shares is not complete and is qualified in its entirety by the terms of the documents attached hereto as Exhibits 99.1, 2.1, 10.1 and 3.1, respectively. Such documents are incorporated herein by reference.
Important Information for Investors and Stockholders
This report does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any
vote or approval. This report relates to the Merger between Magellan and Tellurian.
In connection with the Merger, Magellan filed
with the SEC a registration statement on Form S-4 that includes a preliminary joint proxy statement of Magellan and Tellurian that also constitutes a prospectus of Magellan. Each of Magellan and Tellurian also plans to file other relevant
documents with the SEC regarding the Merger. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended (the “
Securities
Act
”). Any definitive joint proxy statement(s)/prospectus(es) for Magellan and/or Tellurian (if and when available) will be mailed to stockholders of Magellan or Tellurian, as applicable. INVESTORS AND SECURITY HOLDERS OF MAGELLAN
AND TELLURIAN ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION
2
STATEMENT(S), PROXY STATEMENT(S)/PROSPECTUS(ES) AND OTHER DOCUMENTS THAT HAVE BEEN AND MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY DO AND WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED MERGER.
Investors and security holders may obtain free copies of these documents and other documents
containing important information about Magellan and Tellurian once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Magellan are available free
of charge on Magellan’s internet website at www.magellanpetroleum.com or by contacting Magellan using the contact information below.
Participants
in Solicitation
Magellan and Tellurian and their respective directors, executive officers and other members of their management and
employees may be deemed to be participants in the solicitation of proxies from the companies’ stockholders in connection with the Merger. Stockholders are urged to carefully read the proxy statement regarding the Merger because it contains
important information. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the companies’ stockholders in connection with the Merger is set forth in the preliminary joint proxy
statement/prospectus of Magellan and Tellurian filed with the SEC on October 3, 2016, as amended on November 8, 2016. You can find information about Magellan’s executive officers and directors in its Annual Report on Form 10-K/A
filed with the SEC on October 27, 2016. You can obtain free copies of these and other documents containing relevant information at the SEC’s website at www.sec.gov or by contacting Magellan by mail at 1775 Sherman Street, Suite 1950,
Denver, Colorado 80203, or by telephone at (720) 484-2400.