Item 1.01
Entry into Material Definitive Agreement.
Purchase Agreement
On February 9, 2017, Halcón Resources Corporation (the Company) and its wholly owned subsidiaries (the Guarantors) entered into a Purchase Agreement (the Purchase Agreement) with J.P. Morgan Securities LLC, as representative of the initial purchasers named therein (the Initial Purchasers), relating to the issuance and sale of $850,000,000 aggregate principal amount of the Companys 6.75% senior unsecured notes due 2025 (the Notes), in accordance with exemptions from the registration requirements of the Securities Act of 1933, as amended (the Securities Act) afforded by Rule 144A and Regulation S under the Securities Act. The Company estimates that the net proceeds from this offering will be approximately $835.1 million after deducting the Initial Purchasers discounts and commissions and estimated offering expenses and excluding accrued interest. The Company intends to use the net proceeds from the offering, which is expected to close on February 16, 2017, to fund the purchase and redemption of the Companys outstanding 8.625% Senior Secured Notes due 2020 and for general corporate purposes.
The Purchase Agreement contains customary representations and warranties of the parties, conditions to closing, including the execution and delivery of a registration rights agreement, pursuant to which the Company and the Guarantors will agree to file a registration statement with the Securities and Exchange Commission with respect to an exchange offer for the Notes and the guarantees thereon and, under specified circumstances, a shelf registration with respect to the resale of the Notes and the guarantees thereon, on the terms and conditions set forth therein, and indemnification and contribution provisions under which the Company and the Guarantors, on one hand, and the Initial Purchasers, on the other, have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.
When issued, the Notes will not have been registered under the Securities Act, or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Notes may be resold by the Initial Purchasers pursuant to Rule 144A and Regulation S under the Securities Act.
The foregoing description of the Purchase Agreement is qualified by reference to the full text of the Purchase Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Relationships
Certain of the Initial Purchasers and their respective affiliates have provided, and may in the future provide, other investment banking, commercial banking and financial advisory services to the Company and its affiliates in the ordinary course of business with the Company, for which they received or will receive customary fees and commissions. Affiliates of certain of the Initial Purchasers are lenders and/or agents under the Companys senior revolving credit facility. Accordingly, they will also receive a portion of the net proceeds from the offering.