Item 1.01. Entry into a Material Definitive Agreement.
Purchase Agreement
On April 23, 2020, EQT Corporation
(EQT) entered into a purchase agreement (the Purchase Agreement) with J.P. Morgan Securities LLC, Barclays Capital Inc. and Credit
Suisse Securities (USA) LLC, as representatives of the several purchasers named therein (collectively, the Initial Purchasers),
to issue and sell $440.0 million aggregate principal amount of EQT’s 1.75% Convertible Senior Notes due 2026 (the Notes)
in a private offering (the Offering) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933,
as amended (the Securities Act). In addition, EQT granted the Initial Purchasers a 13-day option to purchase up to an additional
$60.0 million aggregate principal amount of Notes on the same terms and conditions, which option was exercised in full on
April 24, 2020.
The Purchase Agreement includes customary
representations, warranties and covenants by EQT and the Initial Purchasers and customary closing conditions. Pursuant to the Purchase
Agreement, the parties have agreed to indemnify each other against certain liabilities, including certain liabilities under the
Securities Act.
On April 28, 2020, EQT completed its
sale of $500.0 million aggregate principal amount of the Notes to the Initial Purchasers. The proceeds from the Offering were approximately
$486.3 million, after deducting the Initial Purchaser’s discounts and commissions, and the net proceeds from the Offering
were approximately $483.2 million, after deducting such discounts and commissions and other estimated offering expenses payable
by EQT in connection with the Offering. EQT used $32.5 million of the net proceeds from the Offering to pay the cost of the Capped
Call Transactions (as defined below) and $450.0 million of the net proceeds to repay a portion of its term loan facility borrowings.
EQT intends to use the remainder of the net proceeds to repay or redeem other outstanding indebtedness and/or for general corporate
purposes.
The Initial Purchasers and their respective
affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial
and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage
and other financial and non-financial activities and services. Certain of the Initial Purchasers and their respective affiliates
have engaged, and may in the future engage, in investment banking, commercial banking, and other financial advisory and commercial
dealings with EQT and its affiliates. Certain of the Initial Purchasers or their respective affiliates may be holders of the indebtedness
repaid or redeemed with the net proceeds of the Offering and, accordingly, may receive a portion of the net proceeds of the Offering
upon repayment or redemption of such debt. In addition, certain of the Initial Purchasers and/or their respective affiliates are
parties to the Capped Call Transactions and, accordingly, received a portion of the net proceeds of the Offering which were used
to pay the cost of the Capped Call Transactions.
The foregoing description of the Purchase
Agreement is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed
herewith as Exhibit 10.1 and incorporated into this Item 1.01 by reference.
The Purchase Agreement and the above description
have been included to provide investors and security holders with information regarding the terms of the Purchase Agreement. They
are not intended to provide any other factual information about EQT or its subsidiaries or affiliates or equity holders. The representations,
warranties and covenants contained in the Purchase Agreement were made only for purposes of that agreement and as of specific dates;
were solely for the benefit of the parties to the Purchase Agreement; and may be subject to limitations agreed upon by the parties,
including being qualified by confidential disclosures made by each contracting party to the other as a way of allocating contractual
risk between them that differ from those applicable to investors. Moreover, the subject matter of the representations and warranties
are subject to more recent developments. Accordingly, investors should be aware that these representations, warranties and covenants
or any description thereof alone may not describe the actual state of affairs of EQT or its subsidiaries, affiliates, businesses
or equity holders as of the date they were made or at any other time.
Indenture
On April 28, 2020, the Notes were issued
pursuant to an indenture (the Indenture), by and between EQT and The Bank of New York Mellon, as trustee. The Notes are senior
unsecured obligations of EQT and will mature on May 1, 2026, unless earlier redeemed, repurchased or converted. The Notes bear
interest from April 28, 2020 at a rate of 1.75% per year payable semiannually in arrears on May 1 and November 1 of each year,
beginning on November 1, 2020.
The Notes are convertible at the option
of the holders of the Notes at any time prior to the close of business on the business day immediately preceding February 1, 2026,
only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30,
2020 (and only during such calendar quarter), if the last reported sale price of EQT’s common stock, no par value (the Common
Stock), for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the
last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each
applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement
period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was
less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate for the Notes on each
such trading day; (3) if EQT calls any or all of the Notes for redemption, at any time prior to the close of business on the second
scheduled trading day immediately preceding the redemption date; and (4) upon the occurrence of specified corporate events as set
forth in the Indenture. On or after February 1, 2026, holders of the Notes may convert their Notes at their option at any time
until the close of business on the second scheduled trading date immediately preceding the maturity date. Upon conversion of a
Note, EQT may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of Common Stock or
a combination of cash and shares of Common Stock, at EQT’s election, in the manner and subject to the terms and conditions
provided in the Indenture. The conversion rate for the Notes is initially 66.6667 shares of Common Stock per $1,000 principal amount
of Notes, which is equivalent to an initial conversion price of $15.00 per share of Common Stock. The initial conversion price
of the Notes represents a premium of 20% to the $12.50 per share closing price of the Common Stock on April 23, 2020. The conversion
rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture. In addition, following
certain corporate events that occur prior to the maturity date or if EQT delivers a notice of redemption, EQT will, in certain
circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event
or notice of redemption, as the case may be.
EQT may not redeem the Notes prior to May
5, 2023. On or after May 5, 2023 and prior to February 1, 2026, EQT may redeem for cash all or any portion of the Notes, at its
option, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest
to, but excluding, the redemption date, if the last reported sale price per share of Common Stock has been at least 130% of the
conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately
preceding the date on which EQT provides notice of redemption, during any 30 consecutive trading day period ending on, and including,
the trading day immediately preceding the date on which EQT provides notice of redemption. No sinking fund is provided for the
Notes.
If EQT undergoes a Fundamental Change (as
defined in the Indenture), holders of the Notes may require EQT to repurchase for cash all or part of their Notes at purchase price
equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but not including,
the repurchase date.
The Indenture includes customary covenants
and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain
types of bankruptcy or insolvency events of default involving EQT after which the Notes become automatically due and payable.
The foregoing descriptions of the Indenture
and the Notes are not complete and are qualified in their entirety by reference to the full text of the Indenture and the form
of Note, copies of which are filed herewith as Exhibits 4.1 and 4.2, respectively, and are incorporated into this Item 1.01 by
reference.
Capped Call Transactions
On April 23, 2020, in connection with the
pricing of the Notes, and on April 24, 2020, in connection with the Initial Purchasers’ exercise in full of their option
to purchase additional Notes, EQT entered into privately negotiated capped call transactions (the Capped Call Transactions) with
certain of the Initial Purchasers and/or their respective affiliates (the Option Counterparties). The Capped Call Transactions
cover, subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes, the
number of shares of Common Stock initially underlying the Notes. The Capped Call Transactions are expected generally to reduce
potential dilution to the Common Stock upon any conversion of Notes at maturity and/or offset any potential cash payments EQT is
required to make in excess of the principal amount of such converted Notes, as the case may be, with such reduction and/or offset
subject to a cap. The cap price of the Capped Call Transactions will initially be $18.75 per share of Common Stock, which represents
a premium of 50% over the last reported sale price of the Common Stock of $12.50 per share on April 23, 2020, and is subject to
certain customary adjustments under the terms of the Capped Call Transactions.
The Capped Call Transactions are separate
transactions entered into by EQT with each Option Counterparty, and are not part of the terms of the Notes and will not affect
any holder’s rights under the Notes. Holders of the Notes will not have any rights with respect to the Capped Call Transactions.
The Option Counterparties and their respective
affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial
and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage
and other financial and non-financial activities and services. Certain of the Option Counterparties and their respective affiliates
have provided certain commercial banking, financial advisory, investment banking and other services for EQT and its affiliates
in the ordinary course of their business in the past and may do so in the future, for which they have received and may continue
to receive customary fees and commissions. The Option Counterparties or their respective affiliates are parties to the Purchase
Agreement.
The foregoing description of the Capped
Call Transactions is not complete and is qualified in its entirety by reference to the full text of the Form of Capped Call Confirmation,
which is filed herewith as Exhibit 10.2 and is incorporated into this Item 1.01 by reference.