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TABLE OF CONTENTS
TABLE OF CONTENTS
Table of Contents
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-209887
Calculation of Registration Fee
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Title of Each Class of Securities
to be Registered
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Amount to be
Registered(1)
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Proposed Maximum
Offering Price Per
Share(2)
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Proposed Maximum
Aggregate Offering
Price
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Amount of
Registration Fee(3)
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Common Stock, par value $0.01 per share
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10,925,000
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$11.09
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$121,158,250
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$12,201
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(1)
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Includes
1,425,000 shares of common stock that may be issued on exercise of a 30-day option granted to the underwriters to cover over-allotments, if any.
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(2)
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Estimated
solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as
amended (the "Securities Act"). The price per share and aggregate offering price are based on the average of the high and low sale prices reported on the New York Stock Exchange for shares of Laredo
Petroleum, Inc. on May 11, 2016.
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(3)
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This
filing fee is calculated and being paid pursuant to Rule 457(r) of the Securities Act and relates to the registration statement on
Form S-3 (File No. 333-209887) filed by Laredo Petroleum, Inc. on March 2, 2016.
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PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MARCH 2, 2016
9,500,000 Shares
Common Stock
We are offering 9,500,000 shares of our common stock.
Our
common stock is listed on the New York Stock Exchange under the symbol "LPI." On May 9, 2016, the last reported sale price of our common stock on the New York
Stock Exchange was $11.38 per share.
Investing in our common stock involves risks. Please read "Risk Factors" beginning on page S-4 of this prospectus supplement and in the documents
incorporated by reference into this prospectus supplement.
The underwriters have agreed to purchase the shares of common stock from us at a price of $10.9548750 per share, which will result in approximately
$103.7 million of net proceeds to us after offering expenses. The underwriters propose to offer the shares of common stock from time to time for sale in one or more transactions on the New York
Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at
negotiated prices, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part.
We
have granted the underwriters a 30-day option to purchase up to an additional 1,425,000 shares of our common stock at the price set forth above.
We
expect that delivery of the shares will be made to investors on or about May 16, 2016.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying base prospectus are truthful or complete. Any representation to the contrary is a criminal offense.
Joint Book-Running Managers
Credit Suisse
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BMO Capital Markets
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Wells Fargo Securities
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The
date of this prospectus supplement is May 10, 2016.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PROSPECTUS
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ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus supplement and the documents incorporated by reference herein, which
describes the specific terms of this offering of our common stock. The second part is the accompanying base prospectus, which gives more general information, some of which may not apply to our common
stock or this offering. If the information relating to the offering varies between this prospectus supplement and the accompanying base prospectus, you should rely on the information in this
prospectus supplement.
You
should rely only on the information contained in or incorporated by reference into this prospectus supplement, the accompanying base prospectus and any related freewriting
prospectus. We and the underwriters have not authorized anyone to provide you with additional or different information. If anyone provides you with different or inconsistent information, you should
not rely on it.
This
prospectus supplement and the accompanying base prospectus are not an offer to sell or the solicitation of an offer to buy any securities other than the securities to which they
relate and are not an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction.
You should not assume that the information contained in this prospectus supplement, the accompanying base prospectus or any related freewriting prospectus is accurate as of any date other than the
respective date on the front cover of those documents, or that the information contained in any document incorporated by reference is accurate as of any date other than the date of the document
incorporated by reference, regardless of the time of delivery of this prospectus supplement or any sale of a security.
In
this prospectus supplement, "Laredo," "we," "us," "our" or "ours" refer to Laredo Petroleum, Inc. and its subsidiaries, unless we state otherwise or the context indicates
otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission
("SEC"). You may read and copy any document that we file at the SEC's public reference room at 100 F Street, N.E., Washington D.C. 20549. You can call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. You can also find our public filings with the SEC on the internet at a website maintained by the SEC located at www.sec.gov. We also make
available on our internet website our annual, quarterly and current reports and amendments as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the
SEC. Our Internet address is www.laredopetro.com. The information on our website is not incorporated by reference into this prospectus supplement and does not constitute a part of this prospectus
supplement.
We
are "incorporating by reference" specified documents that we file with the SEC, which means:
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incorporated documents are considered part of this prospectus supplement;
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we are disclosing important information to you by referring you to those documents; and
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information we file later with the SEC will automatically update and supersede information contained in this prospectus supplement.
We
incorporate by reference the documents listed below, which we filed with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (excluding information
deemed to be furnished and not filed with the SEC):
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our Annual Report on Form 10-K for the year ended December 31, 2015 filed on February 17, 2016;
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our Quarterly Report on Form 10-Q for the period ended March 31, 2016 filed on May 5, 2016;
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our Current Report on Form 8-K filed on January 19, 2016;
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the information specifically incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended
December 31, 2015 from our Definitive Proxy Statement on Schedule 14A filed on April 4, 2016; and
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the description of our common stock contained in our Form 8-A12B/A filed on January 7, 2014, including any amendment to
that form that we may file in the future for the purpose of updating the description of our common stock.
In
addition, we incorporate by reference in this prospectus supplement any future filings made by Laredo with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act
(excluding any information furnished and not filed with the SEC) prior to the termination of the offering under this prospectus supplement.
Any
statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for all purposes to the extent that a statement contained in this
prospectus supplement or in any other subsequently filed document which is also incorporated or deemed to be incorporated by reference, modifies or supersedes such statement. Any statement so modified
or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement. You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing) at no cost by writing or telephoning us at the following address and telephone number:
Laredo
Petroleum, Inc.
Attention: Investor Relations
15 W. Sixth Street, Suite 900
Tulsa, Oklahoma 74119
(918) 513-4570
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information in this prospectus supplement includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act. Such statements can generally be identified by the use of forward-looking terminology such as
"estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "could," "may," "will," "foresee," "plan," "goal," "should," "intend," "pursue," "target," "continue," "suggest" or
the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. Investors are cautioned that any such forward-looking statements are not guarantees of future
performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. These
statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as
other factors we believe are appropriate under
the circumstances. Among the factors that significantly impact our business and could impact our business in the future are:
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the volatility of, and substantial decline in, oil, natural gas liquids ("NGL") and natural gas prices, which remain at low levels;
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revisions to our reserve estimates as a result of changes in commodity prices and uncertainties;
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impacts to our financial statements as a result of impairment write-downs;
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our ability to discover, estimate, develop and replace oil, NGL and natural gas reserves;
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uncertainties about the estimates of our oil, NGL and natural gas reserves;
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changes in domestic and global production, supply and demand for oil, NGL and natural gas;
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the ongoing instability and uncertainty in the U.S. and international financial and consumer markets that could adversely affect the
liquidity available to us and our customers and the demand for commodities, including oil, NGL and natural gas;
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capital requirements for our operations and projects;
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our ability to maintain the borrowing capacity under our senior secured credit facility or access other means of obtaining capital and
liquidity, especially during periods of sustained low commodity prices;
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restrictions contained in our debt agreements, including our senior secured credit facility and the indentures governing our senior
unsecured notes, as well as debt that could be incurred in the future;
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our ability to generate sufficient cash to service our indebtedness, fund our capital requirements and generate future profits;
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the potentially insufficient refining capacity in the U.S. Gulf Coast to refine all of the light sweet crude oil being produced in the
United States, which could result in widening price discounts to world crude prices and potential shut-in of production due to lack of sufficient markets;
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regulations that prohibit or restrict our ability to apply hydraulic fracturing to our oil and natural gas wells and to access and
dispose of water used in these operations;
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legislation or regulations that prohibit or restrict our ability to drill new allocation wells;
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our ability to execute our strategies, including but not limited to our hedging strategies;
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competition in the oil and natural gas industry;
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changes in the regulatory environment and changes in international, legal, political, administrative or economic conditions;
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drilling and operating risks, including risks related to hydraulic fracturing activities;
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risks related to the geographic concentration of our assets;
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the availability and costs of drilling and production equipment, labor and oil and natural gas processing and other services;
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the availability of sufficient pipeline and transportation facilities and gathering and processing capacity;
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our ability to comply with federal, state and local regulatory requirements; and
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our ability to recruit and retain the qualified personnel necessary to operate our business.
These
forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.
Forward-looking statements should, therefore, be considered in light of various factors, including those set forth in "Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2015, this prospectus supplement and in other filings made by us from time to time with the SEC or in materials incorporated herein or therein. In light of such risks and
uncertainties, we caution you not to place undue reliance on these forward-looking statements.
Reserve
engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on
the quality
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of
available data, the interpretation of such data and price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing and production activities may justify
revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ
significantly from the quantities of oil or natural gas that are ultimately recovered.
All
forward-looking statements contained in this prospectus supplement speak only as of the date of this prospectus supplement and all forward-looking statements incorporated by
reference into this prospectus supplement speak only as of the dates such statements were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements
regarding new information, future events or otherwise, except as required by applicable securities laws.
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SUMMARY
This summary highlights information contained elsewhere in this prospectus supplement, the accompanying base
prospectus and the documents we incorporate by reference. It does not contain all the information that may be important to you or that you may wish to consider before investing
in our common stock. You should read carefully the entire prospectus supplement, the accompanying base prospectus, the documents incorporated by reference and the other documents to which we refer for
a more complete understanding of our business and the terms of this offering. Please read "Risk Factors" beginning on page S-4 of this prospectus supplement and additional information contained
in our Annual Report on Form 10-K for the year ended December 31, 2015 and our Quarterly Report on Form 10-Q for the period ended March 31, 2016, which are incorporated by
reference into this prospectus supplement, for more information about known material factors you should consider before investing in our common stock in this offering.
The estimates of our proved reserves as of December 31, 2015 included in this prospectus supplement are based on the reserve report
prepared by Ryder Scott Company, L.P. ("Ryder Scott"), our independent reserve engineers, which report is filed as an exhibit to our Annual Report on Form 10-K for the year ended
December 31, 2015 and is incorporated herein by reference.
Laredo Petroleum, Inc.
Overview
We are an independent energy company focused on the acquisition, exploration and development of oil and natural gas properties, and the
transportation of oil and natural gas from such properties, primarily in the Permian Basin in West Texas. The oil and liquids-rich Permian Basin is characterized by multiple target horizons, extensive
production histories, long-lived reserves, high drilling success rates and high initial production rates. As of March 31, 2016, we had assembled 132,676 net acres in the Permian Basin and, as
of December 31, 2015, we had total proved reserves, presented on a three-stream basis, of 125,698 MBOE, of which 80% are classified as proved developed reserves and 42% are attributed to oil
reserves. Since our inception in 2006, we have established and realized our reserves, production and cash flow primarily through our drilling program coupled with select strategic acquisitions.
Our
primary development and production fairway in the Permian Basin is located on the east side of the Midland Basin, 35 miles east of Midland, Texas. Our acreage is largely contiguous
in the neighboring counties of Howard, Glasscock, Reagan, Sterling and Irion, Texas. We refer to this acreage block in this prospectus supplement as our "Permian-Garden City" area. As of
March 31, 2016, we held 129,673 net acres in 244 sections in the Permian-Garden City area, with an average working interest of 95% in all Laredo-operated producing wells.
Through
our wholly-owned subsidiary, Laredo Midstream Services, LLC, and our joint venture entity, Medallion Gathering & Processing, LLC ("Medallion"), we have built
or contributed to the building of an extensive oil gathering and pipeline infrastructure system, which, after completion of current projects, will include more than 500 miles of pipeline in the
Permian Basin. This network enables us to avoid costs associated with trucking or other transportation options while maintaining our flexibility to sell oil in multiple markets.
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Our Business Strategy
Our goal is to enhance stockholder value by protecting and potentially growing our reserves, production and cash flow by executing the
following strategies with respect to our exploration and production segment and midstream and marketing segment, respectively:
Exploration and Production
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proactively manage risk to limit downside;
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develop our acreage in the most cost-efficient manner possible and target our wells with the highest rate of return potential;
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deploy our capital in a conservative and strategic manner and review opportunities to bolster our liquidity;
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continue to hedge our production to protect cash flows and diminish the effects of commodity price fluctuations;
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maintain our operational flexibility;
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evaluate and pursue value-enhancing acquisitions, mergers, joint ventures and divestitures; and
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capitalize on technical expertise and database.
Midstream and Marketing Segment
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expand the use of our previously built infrastructure and look for opportunities for strategic expansion; and
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participate in the growth and expansion of Medallion.
Recent Developments
Borrowing Base Redetermination
Effective May 2, 2016, in connection with the regular semi-annual redetermination of the borrowing base under our senior secured
credit facility, we received a Memorandum of Borrowing Base Reduction from Wells Fargo Bank, N.A., the administrative agent under our senior secured credit facility, providing that the borrowing base
and aggregate elected commitment amounts were each reduced to $815.0 million. This redetermined borrowing base shall remain in effect until the earlier of (i) the next scheduled
semi-annual redetermination date or (ii) the date the borrowing base is otherwise adjusted pursuant to the terms of the senior secured credit facility. The other terms of the senior secured
credit facility remained unchanged. As of May 6, 2016, the outstanding balance under our senior secured credit facility was $230.0 million.
Increased Capital Budget
On May 6, 2016, our board of directors approved an increased capital budget for 2016 of $420 million (excluding
investments in the Medallion pipeline system), including $405 million allocated to our exploration and production segment and $15 million allocated to our midstream and marketing
segment. With this increased budget, we plan to retain a third horizontal drilling rig for the remainder of 2016 and continue enhanced completions utilizing additional sand and,
as a result, we expect our anticipated production for full-year 2016 to range from 16.1 to 16.4 million BOE, which is above our previously disclosed estimate of 15.8 to 16.1 million BOE.
Our Offices
Our executive offices are located at 15 W. Sixth Street, Suite 900, Tulsa, Oklahoma 74119, and the phone number at this address
is (918) 513-4570. Our website address is www.laredopetro.com. We make our periodic reports and other information filed with or furnished to the SEC available free of charge through our website
as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated
by reference into, and does not constitute a part of, this prospectus supplement.
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THE OFFERING
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Common stock offered by us
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9,500,000 shares.
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Underwriters' option to purchase additional common stock
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1,425,000 shares.
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Common stock outstanding after this offering(1)
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222,906,700 shares (224,331,700 shares if the underwriters exercise their option to acquire additional shares of
common stock in full).
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Use of proceeds
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We expect to receive net proceeds from this offering of approximately $103.7 million after deducting offering expenses
(or approximately $119.3 million if the underwriters exercise their option to acquire additional shares of common stock in full). We intend to use the net proceeds from this offering to repay borrowings under our senior secured credit facility.
See "Use of Proceeds."
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Conflicts of Interest
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Because a repayment of the outstanding borrowings under our senior secured credit facility could result in at least 5% of
the net proceeds of this offering being paid to affiliates of certain of the underwriters who are lenders under our senior secured credit facility, this offering is being made in compliance with the requirements of Rule 5121 of the Financial
Industry Regulatory Authority ("FINRA"). In accordance with that rule, no "qualified independent underwriter" is required, because a bona fide public market exists in our shares as that term is defined in the rule. For more information, please read
"Underwriting (Conflicts of Interest)Conflicts of Interest."
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Dividend policy
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We do not anticipate paying any cash dividends on our common stock. In addition, our senior secured credit facility and the
indentures governing our senior unsecured notes prohibit us from paying cash dividends.
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New York Stock Exchange symbol
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LPI.
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Risk factors
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Investing in our common stock involves risks. These risks are discussed more fully in "Risk Factors" beginning on
page S-4 of this prospectus supplement, the accompanying base prospectus and in the documents incorporated by reference in this prospectus supplement.
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The
shares to be outstanding after this offering are based on 213,406,700 shares of common stock outstanding as of May 2, 2016 and exclude
(i) 1,632,478 shares issuable upon the exercise of stock options outstanding as of May 2, 2016, with a weighted average exercise price of $17.83 per share, and
(ii) 1,507,612 maximum shares issuable upon achievement of certain performance criteria, if met, associated with performance share awards outstanding.
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RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and
uncertainties described below and all of the information described in this prospectus supplement and the accompanying base prospectus before purchasing our common stock. In addition, you should
carefully consider, among other things, the matters discussed under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015 and in the documents that we
subsequently file with the SEC, all of which are incorporated by reference into this prospectus supplement. Additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also impair our business operations. If any of the following risks actually occur, our business, financial condition, operating results or cash flow could be materially and adversely
affected. Additional risks and uncertainties not presently known to us or not believed by us to be material may also negatively impact us.
The market price of our common stock may be volatile, and your investment in our stock could suffer
a decline in value.
The prices we receive for our oil, NGL and natural gas production heavily influence our revenue, profitability, access to capital and
future rate of growth, and thus affect the market price of our common stock. Oil, NGL and natural gas are commodities, and therefore their prices are subject to wide fluctuations in response to
relatively minor changes in supply and demand. Historically, the market for oil, NGL and natural gas has been volatile. In the recent past, benchmark oil prices have fallen from highs of over $100 per
barrel to lows below $30 per barrel, and NGL and natural gas prices have experienced declines of comparable magnitude. Oil, NGL and natural gas prices will likely continue to be volatile in the future
and will depend on numerous factors beyond our control. In addition to these commodity prices, the market price of our common stock could fluctuate significantly due to a number of factors, including,
but not limited to:
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our quarterly or annual earnings, or those of other companies in our industry;
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actual or anticipated fluctuations in our operating results;
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changes in accounting standards, policies, guidance, interpretations or principles;
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public reaction to our press releases, our other public announcements and our filings with the SEC;
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announcements by us or our competitors of significant acquisitions, dispositions, innovations, or new programs and services;
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changes in financial estimates and recommendations by securities analysts following our stock, or the failure of securities analysts
to cover our common stock after this offering;
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changes in earnings estimates by securities analysts or our ability to meet those estimates;
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the failure of securities analysts to publish research about us after this offering or to make changes in their financial estimates;
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the operating and stock price performance of other comparable companies;
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general economic conditions and overall market fluctuations;
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the trading volume of our common stock;
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changes in business, legal or regulatory conditions, or other developments affecting participants in, and publicity regarding our
business or any of our significant customers or competitors;
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results of operations that vary from the expectations of securities analysts and investors or those of our competitors;
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future sales of our common stock by us, directors, executives and significant stockholders; and
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changes in economic and political conditions in our markets.
In
particular, the realization of any of the risks described in these "Risk Factors" and the documents incorporated by reference herein could have a material and adverse impact on the
market price of our common stock in the future and cause the value of your investment to decline. In addition, the stock market in general has experienced extreme volatility in recent years that has
often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock over the short, medium or long
term, regardless of our actual performance. If the market price of our common stock reaches an elevated level following this offering, it may materially and rapidly decline. In the past, following
periods of volatility in the market price of a company's securities, stockholders have often instituted securities class action litigation. If we were to be involved in a class action lawsuit, it
could divert the attention of senior management and, if adversely determined, have a material adverse effect on our business, results of operations and financial condition.
Future sales or the possibility of future sales of a substantial amount of our common stock may
depress the price of shares of our common stock, and investors in this offering may experience future dilution.
Future sales or the availability for sale of substantial amounts of our common stock in the public market could adversely affect the
prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities. Our amended and restated certificate of incorporation authorizes us
to issue 450,000,000 shares of common
stock, of which 224,331,700 shares will be outstanding upon consummation of this offering (assuming the underwriters exercise their option to acquire additional shares in full). This number
includes 20,125,000 shares registered and sold in our initial public offering, 13,000,000 shares registered and sold in our public offering that closed on August 19, 2013,
69,000,000 shares registered and sold in our public offering that closed on March 5, 2015 and up to 10,925,000 shares that we are selling in this offering (assuming the
underwriters exercise their option to acquire additional shares in full), which will be freely transferable without restriction or further registration under the Securities Act. Of the remaining
shares, 3,068,161 shares of common stock owned by our directors and executive officers will be restricted from immediate resale under the federal securities laws and in some cases by the
lock-up agreements between certain affiliates of Warburg Pincus that are our current stockholders, our directors and executive officers, and the underwriters, which generally provide for a lock-up
period of 60 days following the date of this prospectus supplement (unless the representative of the underwriters waives such lock-up period), but may be sold in the near future. See
"Underwriting (Conflicts of Interest)." Following the expiration of the applicable lock-up period, all these shares of our common stock will be eligible for resale under Rule 144 of the
Securities Act, subject to volume limitations and applicable holding period requirements. In addition, certain affiliates of Warburg Pincus LLC ("Warburg Pincus") have the ability to cause us to
register the resale of their shares.
We
may issue shares of our common stock or other securities from time to time as consideration for future acquisitions and investments and pursuant to compensation and incentive plans.
If any such acquisition or investment is significant, the number of shares of our common stock, or the number or aggregate principal amount, as the case may be, of other securities that we may issue
may in turn be substantial. We may also grant registration rights covering those shares of our common stock or other securities issued in connection with any such acquisitions and investments.
We
cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of our common stock will have on the market price of our common
stock. Sales of substantial amounts of our common stock (including shares of our common stock issued in connection with an acquisition or compensation or incentive plan), or the perception that such
sales
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could
occur, may adversely affect prevailing market prices for our common stock. If the price per share at which we sell additional shares of our common stock or related securities in future
transactions is less than the price per share in this offering, then investors who purchase our common stock in this offering will suffer a dilution of their investment.
If we were to experience an ownership change, we could be limited in our ability to use net
operating losses arising prior to the ownership change to offset future taxable income. In addition, our ability to use net operating loss carry forwards to reduce future tax payments may be limited
if our taxable income does not reach sufficient levels.
As of March 31, 2016, we had a net operating loss ("NOL") carryforward for U.S. federal income tax purposes of approximately
$1.4 billion. If we were to experience an "ownership change," as determined under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), our ability to offset taxable
income arising after the ownership change with NOL arising prior to the ownership change would be limited, possibly substantially. An ownership change would establish an annual limitation on the
amount of our pre-change NOL we could utilize to offset our taxable income in any future taxable year to an amount generally equal to the value of our stock immediately prior to the ownership change
multiplied by the long-term tax-exempt rate. In general, an ownership change will occur if there is a cumulative increase in our ownership of more than 50 percentage points by one or more "5%
shareholders" (as defined in the Code) at any time during a rolling three-year period. In addition, under the Code, NOL can generally be carried forward to offset future taxable income for a period of
20 years. Our ability to use our NOL during this period will be dependent on our ability to generate future taxable income, and the NOL could expire before we generate sufficient taxable
income. As of March 31, 2016, based on evidence available to us, including projected future cash flows from our oil and natural gas reserves and the timing of those cash flows, we believe a
portion of our NOL is not fully realizable.
The concentration of our capital stock ownership among our largest stockholder will limit your
ability to influence corporate matters.
As of March 31, 2016, affiliates of Warburg Pincus owned 41.1% of our outstanding common stock. Following consummation of this
offering, Warburg Pincus will own 39.3% of our outstanding common stock, or 39.1% if the underwriters exercise their option to acquire additional shares in full. Consequently, Warburg Pincus has
significant influence over all matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. This concentration of
ownership limits the ability of other stockholders to influence corporate matters.
Because we have no plans to pay, and are currently restricted from paying, dividends on our common
stock, investors must look solely to stock appreciation for a return on their investment in us.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future
earnings to fund the development and
growth of our business. Any payment of future dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital
requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our board of directors deems relevant. Covenants
contained in our senior secured credit facility and the indentures governing our senior unsecured notes restrict the payment of dividends. Investors must rely on sales of their common stock after
price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common stock.
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Table of Contents
Our amended and restated certificate of incorporation, second amended and restated bylaws, and
Delaware state law contain provisions that may have the effect of delaying or preventing a change in control and may adversely affect the market price of our capital stock.
Our amended and restated certificate of incorporation authorizes our board of directors to issue preferred stock without any further
vote or action by the stockholders. The rights of the holders of our common stock will be subject to the rights of the holders of any preferred stock that may be issued in the future. The issuance of
preferred stock could delay, deter or prevent a change in control and could adversely affect the voting power or economic value of our shares.
In
addition, some provisions of our amended and restated certificate of incorporation and second amended and restated bylaws could make it more difficult for a third party to acquire
control of us, even if the change of control would be beneficial to our stockholders, including:
-
-
limitations on the ability of our stockholders to call special meetings;
-
-
a separate vote of 75% of the voting power of the outstanding shares of capital stock in order for stockholders to amend the bylaws in
certain circumstances;
-
-
our board of directors is divided into three classes with each class serving staggered three-year terms;
-
-
stockholders do not have the right to take any action by written consent; and
-
-
advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at
meetings of stockholders.
Delaware
law prohibits us from engaging in any business combination with any "interested stockholder," meaning generally that a stockholder who owns 15% of our stock cannot acquire us
for a period of three years from the date such stockholder became an interested stockholder, unless various conditions are met, such as the approval of the transaction by our board of directors.
Warburg Pincus, however, is not subject to this restriction.
Our business requires significant capital expenditures and we may be unable to obtain needed capital
or financing on satisfactory terms or at all.
Our exploration, development, marketing, transportation and acquisition activities require substantial capital expenditures.
Historically, we have funded our capital expenditures through a combination of cash flows from operations, borrowings on our senior secured credit facility, equity offerings and proceeds from the sale
of our senior unsecured notes. We do not have commitments from anyone to contribute capital to us. Future cash flows are subject to a number of variables, including the level of production from
existing wells, prices of oil, NGL and natural gas and our success in developing and producing new reserves. Our cash flow from operations is not expected to be sufficient to fund our capital
expenditure budget for 2016. As such, we may need to fund part of our 2016 capital expenditures from borrowings under our senior secured credit facility and proceeds received from debt or equity
financing. However, we may have limited ability to obtain the additional capital necessary to sustain our operations at current levels. We may not be able to obtain debt or equity financing on terms
favorable to us or at all. The failure to obtain additional capital could result in a curtailment of our operations relating to exploration and development of our prospects, which in turn could lead
to a decline in our oil, NGL and natural gas production or reserves and, in some areas, a loss of properties.
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USE OF PROCEEDS
We expect to receive net proceeds from this offering of approximately $103.7 million after deducting offering expenses (or
approximately $119.3 million if the underwriters exercise their option to acquire additional shares of common stock in full).
We
intend to use the net proceeds from this offering to repay borrowings under our senior secured credit facility. As of May 6, 2016, after applying the approximately
$103.7 million of net proceeds from this offering (excluding the approximately $15.6 million of net proceeds if the underwriters exercise their option to acquire additional shares of
common stock in full), we would have had a cash balance of approximately $24.5 million and approximately $126.3 million in outstanding indebtedness under our senior secured credit
facility.
Our
senior secured credit facility matures in 2018 and bears interest at a variable rate, which was approximately 2.2% per annum as of May 9, 2016. All of the outstanding
borrowings under our senior secured credit facility were incurred for working capital purposes. Affiliates of certain of the underwriters are lenders under our senior secured credit facility and,
accordingly, will receive a portion of the net proceeds of this offering. See "Underwriting (Conflicts of Interest)Conflicts of Interest."
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CAPITALIZATION
The following table sets forth our consolidated cash position and our consolidated capitalization as of March 31,
2016:
-
-
on an actual basis; and
-
-
on an as adjusted basis giving effect to the completion of this offering and the application of the estimated net proceeds from this
offering of $103.7 million, after deducting offering expenses, in the manner described in "Use of Proceeds," as if the transaction had occurred on March 31, 2016.
You
should read the following table in conjunction with "Use of Proceeds" in this prospectus supplement and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 and Quarterly Report on
Form 10-Q for the period ended March 31, 2016, each of which are incorporated by reference into this prospectus supplement.
|
|
|
|
|
|
|
|
|
|
As of March 31, 2016
|
|
(in thousands)
|
|
Actual
|
|
As adjusted
|
|
Cash and cash equivalents(1)
|
|
$
|
12,095
|
|
$
|
12,095
|
|
Long-term debt, including current maturities:
|
|
|
|
|
|
|
|
Senior secured credit facility(1)
|
|
$
|
195,000
|
|
$
|
91,300
|
|
Senior unsecured notes due 2022
|
|
|
450,000
|
|
|
450,000
|
|
Senior unsecured notes due 2022
|
|
|
500,000
|
|
|
500,000
|
|
Senior unsecured notes due 2023
|
|
|
350,000
|
|
|
350,000
|
|
Stockholders' (deficit) equity
|
|
|
(45,716
|
)
|
|
57,984
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
1,449,284
|
|
$
|
1,449,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
As
of May 6, 2016, we had a cash balance of $24.5 million and $230.0 million outstanding under our senior secured credit facility.
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PRICE RANGE OF COMMON STOCK
Our common stock is listed on the New York Stock Exchange (the "NYSE") under the symbol "LPI". The following table sets forth the range
of high and low sales prices of our common stock as reported by the NYSE:
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|
|
|
|
|
|
|
|
|
Price per share
|
|
|
|
High
|
|
Low
|
|
2016
|
|
|
|
|
|
|
|
Second Quarter (through May 9, 2016)
|
|
$
|
13.73
|
|
$
|
7.26
|
|
First Quarter
|
|
$
|
9.80
|
|
$
|
3.90
|
|
2015
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
14.19
|
|
$
|
7.01
|
|
Third Quarter
|
|
$
|
12.66
|
|
$
|
6.35
|
|
Second Quarter
|
|
$
|
16.18
|
|
$
|
12.34
|
|
First Quarter
|
|
$
|
14.84
|
|
$
|
8.02
|
|
2014
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
23.50
|
|
$
|
7.00
|
|
Third Quarter
|
|
$
|
31.23
|
|
$
|
21.06
|
|
Second Quarter
|
|
$
|
31.18
|
|
$
|
25.18
|
|
First Quarter
|
|
$
|
28.41
|
|
$
|
22.82
|
|
On
May 9, 2016, the last sale price of our common stock, as reported on the NYSE, was $11.38 per share.
As
of May 2, 2016, there were approximately 53 holders of record of our common stock. The number of record holders does not include holders of shares in "street name" or
persons, partnerships, associations, corporations or other entities identified in security position listings maintained by depositories.
DIVIDEND POLICY
We have not declared or paid cash dividends to holders of our common stock and do not anticipate declaring or paying any cash dividends
in the foreseeable future. We currently intend to retain our future earnings, if any, to support the growth and development of our business. The payment of future cash dividends, if any, will be at
the discretion of our board of directors and will depend upon, among other things, our financial condition, results of operations, capital requirements and development expenditures, future business
prospects and any restrictions
imposed by future debt instruments. In addition, our senior secured credit facility and the indentures governing our senior unsecured notes prohibit us from paying cash dividends.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF SHARES OF OUR COMMON STOCK
Introduction
The following is a discussion of certain U.S. federal income tax considerations applicable to Non-U.S. Holders (as defined below)
arising from the acquisition, ownership and disposition of shares of our common stock. This summary is for general information purposes only and does not purport to be a complete analysis or listing
of all potential U.S. federal income tax considerations that may apply to a Non-U.S. Holder as a result of the acquisition,
ownership and disposition of shares of our common stock. In addition, this summary does not take into account the individual facts and circumstances of any particular Non-U.S. Holder that may affect
the U.S. federal income tax considerations applicable to such holder. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with
respect to any Non-U.S. Holder. Moreover, this summary is not binding on the Internal Revenue Service (the "IRS") or the U.S. courts, and no assurance can be provided that the conclusions reached in
this summary will not be challenged by the IRS or will be sustained by a U.S. court if so challenged. We have not requested, and we do not intend to request, a ruling from the IRS or an opinion from
U.S. legal counsel regarding any of the U.S. federal income or other tax considerations of the acquisition, ownership and disposition of shares of our common stock. Each Non-U.S. Holder should consult
its own tax advisor regarding the acquisition, ownership and disposition of shares of our common stock.
Scope of This Disclosure
Authorities
This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations (final, temporary, and
proposed), U.S. court decisions, published IRS rulings and published administrative positions of the IRS, that are applicable and, in each case, as in effect and available, as of the date of this
prospectus supplement. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis
and could affect the U.S. federal income tax considerations described in this summary.
Non-U.S. Holders
For purposes of this summary, a "Non-U.S. Holder" is a beneficial owner of shares of our common stock that is not a partnership or
other entity classified as a partnership for U.S. federal income tax purposes and that is not: (a) an individual who is a citizen or resident of the U.S., (b) a corporation, or other
entity classified as a corporation for U.S. federal income tax purposes, that is created or organized in or under the laws of the U.S. or any state in the U.S., including the District of Columbia,
(c) an estate if the income of such estate is subject to U.S. federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to
be treated as
a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the
authority to control all substantial decisions of such trust.
Non-U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
This summary does not address the U.S. federal income tax considerations of the acquisition, ownership and disposition of shares of our
common stock by Non-U.S. Holders that are subject to special provisions under the Code, including the following Non-U.S. Holders: (a) Non-U.S. Holders that are tax-exempt organizations,
qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) Non-U.S. Holders that are financial institutions, insurance companies, real estate investment
trusts, or regulated investment companies or that are broker-dealers, dealers, or
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traders
in securities or currencies that elect to apply a mark-to-market accounting method; (c) Non-U.S. Holders that have a "functional currency" other than the U.S. dollar;
(d) Non-U.S. Holders that own shares of our common stock as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one
position; (e) Non-U.S. Holders that acquire shares of our common stock in connection with the exercise of employee stock options or otherwise as compensation for services; (f) Non-U.S.
Holders that hold shares of our common stock other than as a capital asset within the meaning of Section 1221 of the Code; (g) Non-U.S. Holders who are U.S. expatriates or former long
term residents of the United States; and (h) Non-U.S. Holders that own, directly, indirectly, or by attribution, 5% or more, by voting power or value, of the outstanding shares of our common
stock. Non-U.S. Holders that are subject to special provisions under the Code, including but not limited to Non-U.S. Holders described immediately above, should consult their own tax advisors
regarding the U.S. federal, U.S. state and local, and foreign tax and other tax considerations of the acquisition, ownership and disposition of shares of our common stock.
If
a partnership or other entity that is classified as partnership for U.S. federal income tax purposes holds shares of our common stock, the U.S. federal income tax considerations to
such partnership and the partners of such partnership generally will depend on the activities of the partnership and the status of such partners (or owners). Partnerships or other entities that are
classified as partnerships for U.S. federal income tax purposes and their owners should consult their own tax advisors regarding the U.S. federal income tax considerations of the acquisition,
ownership and disposition of shares of our common stock.
Tax Considerations Other Than U.S. Federal Income Tax Considerations Not Addressed
This summary does not address any state, local, alternative minimum, estate and gift, foreign, or other tax considerations other than
U.S. federal income tax considerations that may be relevant to Non-U.S. Holders in connection with the acquisition, ownership and disposition of shares of our common stock. Each Non-U.S. Holder should
consult its own tax advisors regarding any state, local, estate and gift, foreign, and any other tax considerations that may be relevant to such holder in connection with the acquisition, ownership
and disposition of shares of our common stock.
Dividends
We do not plan to make any distributions on our common stock for the foreseeable future. However, if distributions with respect to
shares of our common stock are made, such distributions will be treated as dividends to the extent of our current or accumulated earnings and profits as determined under the Code. Any portion of a
distribution that exceeds our current or accumulated earnings and profits will first be applied to reduce the Non-U.S. Holder's basis in shares of our common stock, and, to the extent such portion
exceeds the Non-U.S. Holder's basis, the excess will be treated as gain from the disposition of shares of our common stock, the tax treatment of which is discussed below under the heading "Gain on
Sale or Other Disposition of Shares of Our Common Stock."
Generally,
dividends paid in respect of shares of our common stock to a Non-U.S. Holder will be subject to U.S. withholding tax at a 30% rate, subject to the two following
exceptions:
-
-
Dividends effectively connected with a trade or business of a Non-U.S. Holder within the U.S. generally will not be subject to
withholding if the Non-U.S. Holder complies with applicable IRS certification and disclosure requirements and generally will be subject to U.S. federal income tax on a net income basis at regular U.S.
federal income tax rates (in the same manner as a U.S. person) on its U.S. trade or business income. In the case of a Non-U.S. Holder that is a corporation, such effectively connected income also may
be subject to the branch profits tax at a 30% rate (or such lower rate as may be prescribed by an applicable tax treaty).
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-
-
The withholding tax may not apply, or may apply at a reduced rate, under the terms of an applicable tax treaty. Under Treasury
Regulations, to obtain a reduced rate of withholding under a tax treaty, a Non-U.S. Holder generally will be required to satisfy applicable certification and other requirements. A Non-U.S. Holder of
shares of our common stock eligible for a reduced rate of U.S. withholding tax may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for refund with the IRS.
Gain on Sale or Other Disposition of Shares of Our Common Stock
Except as described in the discussion below under the headings "FATCA Withholding" and "Information Reporting and Backup Withholding
Tax," a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale, exchange, or other taxable disposition of shares of our common stock,
unless:
-
-
the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States and, if subject
to an applicable tax treaty, is attributable to a permanent establishment or fixed base maintained by the Non-U.S. Holder in the United States;
-
-
in the case of an individual, the Non-U.S. Holder has been present in the United States for at least 183 days or more in the
taxable year of disposition (and certain other conditions are satisfied); or
-
-
we are or have been a "U.S. real property holding corporation" ("USRPHC"), for U.S. federal income tax purposes (that is, a domestic
corporation whose trade or business and real property assets consist primarily of "U.S. real property interests") at any time during the shorter of the five-year period ending on the date of
disposition and the Non-U.S. Holder's holding period for its shares of our common stock and, if shares of our common stock are "regularly traded on an established securities market," the Non-U.S.
Holder held, directly or indirectly, at any time during such period, more than 5% of the issued and outstanding common stock.
Income
that is effectively connected with the conduct of a U.S. trade or business by a Non-U.S. Holder generally will be subject to regular U.S. federal income tax in the same manner as
if it were realized by a U.S. Holder. In addition, if such Non-U.S. Holder is a corporation, such gain may be subject to a branch profits tax at a rate of 30% (or such lower rate as is provided by an
applicable income tax treaty).
If
an individual Non-U.S. Holder is present in the U.S. for at least 183 days during the taxable year of disposition, the Non-U.S. Holder may be subject to a flat 30% tax on any
U.S.-source gain derived from the sale, exchange, or other taxable disposition of shares of our common stock (other than gain effectively connected with a U.S. trade or business), which may be offset
by U.S.-source capital losses.
It
is likely that we are a USRPHC. As a result, any gain recognized by a Non-U.S. Holder on the sale, exchange, or other taxable disposition of our common stock may be subject to U.S.
federal income tax in the same manner as gain recognized by a U.S. Holder ("FIRPTA Tax"). In addition, a Non-US. Holder may under certain circumstances be subject to withholding in an amount equal to
15% of the gross proceeds on the sale or disposition. If the Non-U.S. Holder files a U.S. federal income tax return, any amounts so withheld will generally be credited against, and refunded to the
extent in excess of, any FIRPTA Tax such Non-U.S. Holder owes.
However,
so long as our common stock is considered to be "regularly traded on an established securities market" ("regularly traded") at any time during the calendar year, a Non-U.S.
Holder generally will not be subject to FIRPTA Tax on any gain recognized on the sale or other disposition of our common stock unless the Non-U.S. Holder owned (actually or constructively) shares of
our common stock with a fair market value of more than 5% of the total fair market value of our common
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stock
at any time during the applicable period described in the third bullet point above. No withholding is required under these rules upon a sale or other taxable disposition of our common stock if
it is considered to be regularly traded. If, on the other hand, our common stock is not considered to be regularly traded, a Non-U.S. Holder would be subject to FIRPTA Tax on any gain recognized on
the
sale or other taxable disposition of our common stock, and withholding on the gross proceeds thereof, regardless of the Non-U.S. Holder's percentage ownership of our common stock.
FATCA Withholding
Sections 1471 to 1474 of the Code (commonly referred to as the Foreign Account Tax Compliance Act, or "FATCA") currently
requires withholding at a rate of 30% on dividends and will require withholding on gross proceeds from the sale of shares of our common stock paid on or after January 1, 2019 to certain foreign
financial institutions (including investment funds), unless such institution enters into an agreement with the Secretary of the Treasury to, among other things, report, on an annual basis, information
with respect to accounts with or shares in the institution held by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by United States persons, and to withhold on
payments made to certain account holders. Accordingly, the entity through which shares of our common stock is held will affect the determination of whether such withholding is required. Similarly,
dividends in respect of, and gross proceeds from the sale of, shares of our common stock held by an investor that is a non-financial foreign entity will be subject to withholding at a rate of 30% if
such entity or another non-financial foreign entity is the beneficial owner of the payment, unless, among other things, the beneficial owner or the payee either (i) certifies to us that such
entity does not have any "substantial United States owners" or (ii) provides certain information regarding the entity's "substantial United States owners," which we will in turn provide to the
Secretary of the Treasury. Non-U.S. Holders are encouraged to consult with their tax advisors regarding the possible implications of FATCA on their investment in shares of our common stock.
Information Reporting and Backup Withholding Tax
A Non-U.S. Holder generally will not be subject to information reporting or backup withholding with respect to payments of dividends
on, or gross proceeds from the disposition of, shares of our common stock that are made within the United States or through certain U.S.-related financial intermediaries, provided that the Non-U.S.
Holder certifies as to its foreign status or otherwise establishes an exemption.
Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a Non-U.S. Holder's U.S. federal income tax liability, and a Non-U.S. Holder
may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information. Non-U.S.
Holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them in their particular circumstances.
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CERTAIN ERISA CONSIDERATIONS
An investment in our common stock by an employee benefit plan is subject to additional considerations because the investments of these
plans are subject to the fiduciary responsibility and prohibited transaction provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the prohibited transaction
restrictions imposed by Section 4975 of the Code and may be subject to provisions under certain other laws or regulations that are similar to ERISA or the Code ("Similar Laws"). For these
purposes, the term "employee benefit plan" includes, but is not limited to, qualified pension, profit-sharing and stock bonus plans, certain Keogh plans, certain simplified employee pension plans,
certain tax deferred annuities or IRAs and entities whose underlying assets are considered to include "plan assets" of any such plan, account or arrangement.
General Fiduciary Matters
ERISA and the Code impose certain duties on persons who are fiduciaries of an employee benefit plan that is subject to Title I of ERISA
or Section 4975 of the Code (an "ERISA Plan") and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code,
any person who exercises any discretionary authority or control over the administration of an ERISA Plan or the management or disposition of the assets of an ERISA Plan, or who renders investment
advice for a fee or other compensation to an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan. In considering an investment in our common stock, among other things,
consideration should be given to:
-
-
whether the investment is prudent under Section 404(a)(1)(B) of ERISA and any other applicable Similar Laws;
-
-
whether, in making the investment, the employee benefit plan will satisfy the diversification requirements of
Section 404(a)(1)(C) of ERISA and any other applicable Similar Laws;
-
-
whether the investment is permitted under the terms of the applicable documents governing the employee benefit plan;
-
-
whether making the investment will comply with the delegation of control and prohibited transaction provisions under
Section 406 of ERISA, Section 4975 of the Code and any other applicable Similar Laws;
-
-
whether in making the investment, the employee benefit plan will be considered to hold, as plan assets; and
-
-
whether the investment will result in recognition of unrelated business taxable income by the employee benefit plan and, if so, the
potential after-tax investment return.
The
person with investment discretion with respect to the assets of an employee benefit plan, often called a fiduciary, should determine whether an investment in our common stock is
authorized by the appropriate governing instruments and is a proper investment for the employee benefit plan (including certain IRAs).
Prohibited Transaction Issues
Section 406 of ERISA and Section 4975 of the Code prohibit employee benefit plans (including certain IRAs) from engaging
in specified transactions involving "plan assets" with parties that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to the employee benefit plan or IRA,
unless an exemption is applicable. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities
under ERISA and the Code. In addition, the fiduciary of the ERISA Plan that
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engaged
in such a prohibited transaction may be subject to excise taxes, penalties and liabilities under ERISA and the Code.
The
foregoing discussion of issues arising for employee benefit plan investments under ERISA, the Code and applicable Similar Laws is general in nature and is not intended to be all
inclusive, nor should it be construed as legal advice. Plan fiduciaries contemplating a purchase of our common stock should consult with their own counsel regarding the consequences of such purchase
under ERISA, the Code and Similar Laws in light of the serious penalties, excise taxes and liabilities imposed on persons who engage in prohibited transactions or other violations.
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Table of Contents
UNDERWRITING (CONFLICTS OF INTEREST)
Under the terms and subject to the conditions contained in an underwriting agreement, we have agreed to sell to the underwriters named
below, for whom Credit Suisse Securities (USA) LLC is acting as representative, and such underwriters have agreed to purchase from us, the following respective numbers of shares of common stock at a
price of $10.9548750 per share, which will result in approximately $103.7 million of net proceeds to us (after offering expenses).
|
|
|
|
|
Underwriter
|
|
Number of
Shares
|
|
Credit Suisse Securities (USA) LLC
|
|
|
7,125,000
|
|
BMO Capital Markets Corp.
|
|
|
1,187,500
|
|
Wells Fargo Securities, LLC
|
|
|
1,187,500
|
|
|
|
|
|
|
Total
|
|
|
9,500,000
|
|
The
underwriting agreement provides that the underwriters are obligated to purchase all the shares of common stock in the offering if any are purchased, other than those shares covered
by the option described below.
We
have granted the underwriters a 30-day option to purchase up to an aggregate of 1,425,000 additional shares at the offering price set forth on the cover page of this prospectus
supplement.
The
underwriters propose to offer the shares of common stock from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market,
through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices, subject to receipt and acceptance
by them and subject to their right to reject any order in whole or in part. In connection with the sale of the shares of common stock offered hereby, the underwriters may be deemed to have received
compensation in the form of underwriting discounts. The underwriters may effect such transactions by selling shares of common stock to or through dealers and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or purchasers of shares of common stock for whom they may act as agent or to whom they may sell as principal.
We
estimate that our out-of-pocket expenses for this offering will be approximately $400,000. We have also agreed to reimburse the underwriters for certain of their expenses in an amount
up to $15,000 as set forth in the underwriting agreement.
In
connection with this offering, we agreed that, subject to certain exceptions, we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or
file with the SEC a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our
common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Credit Suisse Securities (USA) LLC for a period of
60 days after the date of this prospectus supplement.
Each
of our officers and directors and certain affiliates of Warburg Pincus have agreed in connection with this offering that they will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction
that would have the same effect or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any
of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or
to enter into any transaction, swap,
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hedge
or other arrangement, without, in each case, the prior written consent of Credit Suisse Securities (USA) LLC for a period of 60 days after the date of this prospectus supplement.
These
lock-up restrictions are subject to certain specific exceptions, including transfers of common stock as a bona fide gift or by will or intestate succession and transfers to such
person's immediate family or to a trust or to an entity controlled by such holder (or in the case of corporations or other
entities, transfers to affiliates), provided that the recipient of the shares agrees to be bound by the same restrictions on sales.
Credit
Suisse Securities (USA) LLC, in its sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any
time. When determining whether or not to release the common stock and other securities from lock-up agreements, Credit Suisse Securities (USA) LLC will consider, among other factors, the holder's
reasons for requesting the release and the number of shares of common stock or other securities for which the release is being requested.
We
have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.
Our
common stock is listed on the NYSE under the symbol "LPI." On May 9, 2016, the closing price of our common stock was $11.38.
The
underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment research, principal investment hedging, financing and brokerage activities. The underwriters and their respective affiliates have from
time to time performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for us and for our affiliates in the ordinary course of business
for which they have received and would receive customary compensation.
In
the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and
equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investments and securities
activities may involve securities and/or instruments of the issuer. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent
research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
In
connection with the offering, the underwriters may engage in stabilizing transactions, over-allotment transactions and passive market making in accordance with Regulation M
under the Exchange Act.
-
-
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
maximum.
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-
Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to
purchase, which creates a short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the
underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares
in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market.
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In passive market making, market makers in the common stock who are underwriters or prospective underwriters may, subject to
limitations, make bids for or purchases of our common stock until the time, if any, at which a stabilizing bid is made.
These
stabilizing transactions may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common
stock. As a result the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise and, if
commenced, may be discontinued at any time.
A
prospectus supplement and the accompanying prospectus in electronic format may be made available on websites maintained by the underwriters participating in this offering and the
underwriters participating in this offering may distribute prospectuses electronically. The underwriters may agree to allocate a number of shares to selling group members for sale to their online
brokerage account holders. Internet distributions will be allocated by the underwriters that will make internet distributions on the same basis as other allocations.
Conflicts of Interest
We intend to use the net proceeds from this offering to repay borrowings under our senior secured credit facility. As a result,
affiliates of certain of the underwriters could receive at least 5% of the net proceeds of this offering, not including underwriting compensation, and in that case, such underwriters would be deemed
to have a conflict of interest under FINRA Rule 5121. In accordance with FINRA Rule 5121, no "qualified independent underwriter" is required for this offering, because a bona fide public
market exists in our shares, as that term is defined in FINRA Rule 5121. In addition, in accordance with FINRA Rule 5121, such underwriters would not be permitted to confirm a sale to
any account over which it exercises discretionary authority without first receiving specific written approval from the account holder.
Selling Restrictions
EEA restriction
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member
State") an offer to the public of any shares which are the subject of the offering contemplated by this prospectus (the "Shares") may not be made in that Relevant Member State except that an offer to
the public in that Relevant Member State of any Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member
State:
(a) to
legal entities which are qualified investors as defined under the Prospectus Directive;
(b) by
the underwriters to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus
Directive; or
(c) in
any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Shares shall result in a requirement for the
Company or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For
the purposes of this provision, the expression an "offer to the public" in relation to any Shares in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase any Shares, as the same may be varied in that Member State by any
measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive"
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means
Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive), and includes any relevant implementing measure in each Relevant Member State and the expression
"2010 PD Amending Directive" means Directive 2010/73/EU.
United Kingdom
The underwriters have represented and agreed that:
(a) they
have only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received by it in connection with the issue or sale of the shares in circumstances in
which Section 21(1) of the FSMA does not apply to the Company; and
(b) they
have complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise
involving the United Kingdom.
Notice to United Kingdom Investors
This prospectus is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or
(ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth
companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons").
The Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Shares will be engaged in only with, relevant persons. Any person who is not a
relevant person should not act or rely on this document or any of its contents.
Hong Kong
The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer
to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance
(Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies
Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in
each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws
of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities
and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any
other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold,
or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under
Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or
the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in
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Section 275
of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where
the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of
which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an
accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the
beneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except:
(1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified
in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.
Japan
The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan, or the Financial
Instruments and Exchange Law, and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which
term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in
Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other
applicable laws, regulations and ministerial guidelines of Japan.
Notice to Canadian Residents
The distribution of the shares in Canada is being made only in the provinces of Ontario, Quebec, Manitoba, Alberta and British Columbia
on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of these securities are made.
Any resale of the shares in Canada must be made under applicable securities laws which may vary depending on the relevant jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the
securities.
By purchasing the shares in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer
from whom the purchase confirmation is received that:
-
-
the purchaser is entitled under applicable provincial securities laws to purchase the shares without the benefit of a prospectus
qualified under those securities laws as it is an "accredited investor" as defined under National Instrument 45-106
Prospectus
Exemptions
and, if resident in Ontario, subsection 73.3(1) of the
Securities Act
(Ontario),
-
-
the purchaser is a "permitted client" as defined in National
Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant Obligations
,
-
-
where required by law, the purchaser is purchasing as principal and not as agent, and
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-
the purchaser has reviewed the text above under Resale Restrictions.
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Canadian purchasers are hereby notified that the underwriters are relying on the exemption set out in section 3A.3 or 3A.4, if
applicable, of National Instrument 33-105
Underwriting Conflicts
from having to provide certain conflict of interest
disclosure in this document.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if
the offering memorandum (including any amendment thereto) such as this document contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within
the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser of these securities in
Canada should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.
All of our directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside
of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside
of Canada.
Canadian purchasers of the shares should consult their own legal and tax advisors with respect to the tax consequences of an investment
in the shares in their particular circumstances and about the eligibility of the shares for investment by the purchaser under relevant Canadian legislation.
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LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon for us by Kenneth E. Dornblaser, our Senior Vice
President and General Counsel. Mr. Dornblaser beneficially owns 86,200 shares of common stock. The validity of our common stock offered by this prospectus supplement will be passed upon
for us by Akin Gump Strauss Hauer & Feld, LLP, Houston,
Texas. Certain legal matters in connection with this offering will be passed upon for the underwriters by Andrews Kurth LLP, Houston, Texas.
EXPERTS
The consolidated financial statements of Laredo Petroleum, Inc. and subsidiaries as of December 31, 2015 and 2014 for each of
the three years in the period ended December 31, 2015 and management's assessment of the effectiveness of internal control over financial reporting included in Laredo's Annual Report on
Form 10-K which is incorporated by reference in this prospectus supplement and elsewhere in the registration statement have been so incorporated by reference in reliance upon the reports of
Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.
The
estimates of our proved reserves included in or incorporated into this prospectus supplement by reference are based on a reserve report prepared by Ryder Scott Company, L.P.,
independent petroleum engineers. These estimates are so included or incorporated by reference in reliance upon the authority of the firm as experts in these matters.
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PROSPECTUS
LAREDO PETROLEUM, INC.
Senior Debt Securities
Subordinated Debt Securities
Guarantees of Debt Securities
Common Stock
Preferred Stock
Depositary Shares
Warrants
We may, from time to time, offer and sell debt securities, which may be senior or subordinated, and which may be guaranteed by one or more of our
existing and future subsidiaries, common stock, preferred stock, depositary shares and warrants. We may offer and sell these securities from time to time in amounts, at prices and on terms that will
be determined at the time of the applicable offering.
This
prospectus describes some of the general terms that may apply to these securities. We will provide the specific terms of any securities to be offered in a supplement to this
prospectus. Any prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and any supplement carefully before you invest.
Our
common stock is listed on the New York Stock Exchange under the symbol "LPI."
We
may offer and sell these securities to or through one or more underwriters, dealers or agents, or directly to purchasers, on a continuous or delayed basis. The prospectus supplement
for each offering of securities will describe in detail the plan of distribution.
This
prospectus may not be used to sell securities unless accompanied by a prospectus supplement.
Investing in our securities involves risk. You should carefully read the information under the heading "Risk Factors" on page 5 of this
prospectus and the risk factors contained in any applicable prospectus supplement before making a decision to purchase our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is March 2, 2016.
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You
should rely only on the information contained or incorporated by reference in this prospectus and any prospectus supplement. We have not authorized anyone to provide you with
additional or different information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus and any prospectus supplement are not an offer to
sell or the solicitation of an offer to buy any securities other than the securities to which they relate and are not an offer to sell or the solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. You should not assume that the information contained in this prospectus is accurate as of any
date other than the date on the front cover of the prospectus, or that the information incorporated by reference is accurate as of any date other than the date of the document incorporated by
reference, regardless of the time and delivery of this prospectus or any sale of any security.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Various statements contained in or incorporated by reference into this prospectus are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
forward-looking statements include statements, projections and estimates concerning our operations, performance, business strategy, oil and natural gas reserves, drilling program capital expenditures,
liquidity and capital resources, the timing and success of specific projects, outcomes and effects of litigation or other claims and disputes, derivative activities and potential financing.
Forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "could," "may," "will," "foresee," "plan,"
"goal," "should," "intend," "pursue," "target," "continue," "suggest" or the negative thereof or other variations thereof or other words that convey the uncertainty of future events or outcomes.
Forward-looking statements are not guarantees of performance. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical
trends, current conditions and expected future developments as well as other factors we
believe are appropriate under the circumstances. Among the factors that significantly impact our business and could impact our business in the future
are:
-
-
the volatility of, and substantial and continued decline in, oil, natural gas liquids ("NGL") and natural gas prices;
-
-
revisions to our reserve estimates as a result of changes in commodity prices and uncertainties;
-
-
impacts to our financial statements as a result of impairment write-downs;
-
-
our ability to discover, estimate, develop and replace oil, NGL and natural gas reserves;
-
-
uncertainties about the estimates of our oil, NGL and natural gas reserves;
-
-
changes in domestic and global production, supply and demand for oil, NGL and natural gas;
-
-
the potentially insufficient refining capacity in the U.S. Gulf Coast to refine all of the light sweet crude oil being produced in the
United States, which could result in widening price discounts to world crude prices and potential shut in of production due to lack of sufficient markets;
-
-
the ongoing instability and uncertainty in the U.S. and international financial and consumer markets that could adversely affect the
liquidity available to us and our customers and the demand for commodities, including oil, NGL and natural gas;
-
-
capital requirements for our operations and projects;
-
-
our ability to maintain the borrowing capacity under our senior secured credit facility or access other means of obtaining capital and
liquidity, especially during periods of sustained low commodity prices;
-
-
restrictions contained in our debt agreements, including our senior secured credit facility and the indentures governing our senior
unsecured notes, as well as debt that could be incurred in the future;
-
-
our ability to generate sufficient cash to service our indebtedness, fund our capital requirements and generate future profits;
-
-
regulations that prohibit or restrict our ability to apply hydraulic fracturing to our oil and natural gas wells and to access and
dispose of water used in these operations;
-
-
legislation or regulations that prohibit or restrict our ability to drill new allocation wells;
-
-
our ability to execute our strategies, including but not limited to our hedging strategies;
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competition in the oil and natural gas industry;
-
-
changes in the regulatory environment and changes in international, legal, political, administrative or economic conditions;
-
-
drilling and operating risks, including risks related to hydraulic fracturing activities;
-
-
risks related to the geographic concentration of our assets;
-
-
the availability and costs of drilling and production equipment, labor and oil and natural gas processing and other services;
-
-
the availability of sufficient pipeline and transportation facilities and gathering and processing capacity;
-
-
our ability to comply with federal, state and local regulatory requirements; and
-
-
our ability to recruit and retain the qualified personnel necessary to operate our business.
These
forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.
Forward-looking statements should therefore be considered in light of various factors, including those set forth in "Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2015, in any accompanying prospectus supplement and in other filings made by us from time to time with the Securities and Exchange Commission ("SEC") or in materials incorporated
herein or therein. In light of such risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements.
Reserve
engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on
the quality of available data, the interpretation of such data and price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing and production activities may
justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates
may differ significantly from the quantities of natural gas that are ultimately recovered.
These
forward-looking statements speak only as of the date of this prospectus, or if earlier, as of the date they were made. We do not intend to, and disclaim any obligation to, update
or revise any forward-looking statements unless required by securities law.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the SEC utilizing a "shelf" registration process. Under this
shelf process, we may, from time to time, sell the securities or combinations of the securities described in this prospectus in one or more offerings. This prospectus provides you with a general
description of the securities that we may offer. Each time we offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The
prospectus supplement also may add, update or change information contained in this prospectus. Any statement that we make in this prospectus will be modified or superseded by any inconsistent
statement made by us in a prospectus supplement. You should read both this prospectus and any prospectus supplement together with additional information described under the heading "Where You Can Find
More Information."
You
should rely only on the information contained or incorporated by reference in this prospectus and in any prospectus supplement. We have not authorized any other person to provide you
with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making offers to sell or solicitations to buy the securities in any
jurisdiction in which an offer or solicitation is not authorized or in which the person making that offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an offer
or solicitation. You should not assume that the information in this prospectus or any prospectus supplement, as well as the information we previously filed with the SEC that we incorporate by
reference in this prospectus or any prospectus supplement, is accurate as of any date other than its respective date. Our business, financial condition, results of operations and prospects may have
changed since those dates.
In
this prospectus, the "Company," "Laredo," "we," "us," "our" and similar terms refer to Laredo Petroleum, Inc. and its subsidiaries, unless we state otherwise or the context
indicates otherwise.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. We also filed a registration
statement on Form S-3, including exhibits, under the Securities Act with respect to the securities offered by this prospectus. This prospectus is a part of the registration statement, but does
not contain all of the information included in the registration statement or the exhibits. You may read and copy the registration statement and any other document that we file at the SEC's public
reference room at 100 F Street, N.E., Washington D.C. 20549. You can call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. You can also find our
public filings with the SEC on the internet at a web site maintained by the SEC located at http://www.sec.gov. We also make available on our internet website our annual, quarterly and current reports
and amendments as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC. Our Internet address is www.laredopetro.com. The information on our
website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.
We
are "incorporating by reference" specified documents that we file with the SEC, which means:
-
-
incorporated documents are considered part of this prospectus;
-
-
we are disclosing important information to you by referring you to those documents; and
-
-
information we file later with the SEC will automatically update and supersede information contained in this prospectus.
We
incorporate by reference the documents listed below, which we filed with the SEC under the Exchange Act:
-
-
our Annual Report on Form 10-K for the year ended December 31, 2015;
-
-
our Current Report on Form 8-K filed on January 19, 2016; and
-
-
the description of our common stock contained in our Form 8-A/A filed on January 7, 2014, including any amendment to that form that we
may file in the future for the purpose of updating the description of our common stock.
In
addition, we incorporate by reference in this prospectus any future filings made by the Company with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act
(excluding any information furnished and not filed with the SEC) after the date on which the registration statement that includes this prospectus was initially filed with the SEC and until all
offerings under this shelf registration statement are terminated.
Any
statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for all purposes to the extent that a statement contained in this
prospectus or in any other subsequently filed document which is also incorporated or deemed to be incorporated by reference, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. You may request a copy of these filings (other than an exhibit to a filing unless that
exhibit is specifically incorporated by reference into that filing) at no cost by writing or telephoning us at the following address and telephone number:
Laredo
Petroleum, Inc.
Attention: Investor Relations
15 W. Sixth Street, Suite 900
Tulsa, Oklahoma 74119
(918) 513-4570
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LAREDO PETROLEUM, INC.
We are an independent energy company focused on the acquisition, exploration and development of oil and natural gas properties, and the
transportation of oil and natural gas from such properties, primarily in the Permian Basin in West Texas. Since our inception, we have grown primarily through our drilling program coupled with select
strategic acquisitions and joint ventures. We completed our initial public offering of common stock on December 19, 2011. Our common stock is listed on the New York Stock Exchange ("NYSE")
under the symbol "LPI."
Our
executive offices are located at 15 W. Sixth Street, Suite 900, Tulsa, Oklahoma 74119, and our telephone number is (918) 513-4570. Our website is www.laredopetro.com.
Information on our website is not part of this prospectus.
ABOUT THE SUBSIDIARY GUARANTORS
Our subsidiaries may jointly and severally, fully and unconditionally, guarantee our payment obligations under any series of debt
securities offered by this prospectus. Financial information concerning our guarantor subsidiaries and non-guarantor subsidiaries, if any, is included in our consolidated financial statements filed as
a part of our periodic reports filed pursuant to the Exchange Act to the extent required by the rules and regulations of the SEC.
Additional
information concerning our subsidiaries and us is included in reports and other documents incorporated by reference in this prospectus. See "Where You Can Find More
Information."
RISK FACTORS
An investment in our securities involves a high degree of risk. You should carefully consider the risk factors and all of the other
information included in, or incorporated by reference into, this prospectus, including those included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on
Form 10-Q and any subsequently filed Current Reports on Form 8-K, which are incorporated herein by reference, and those risk factors that may be included in any applicable prospectus
supplement, together with all the other information included in this prospectus, any prospectus supplement and the documents we incorporate by reference, in evaluating an investment in our securities.
If any of these risks were to occur, our business, financial condition or results of operations could be adversely affected.
USE OF PROCEEDS
Unless we otherwise specify in the applicable prospectus supplement, we expect to use the net proceeds from the sale of the securities
covered by this prospectus for general corporate purposes, which may include repayment or refinancing of borrowings, working capital, capital expenditures, investments and acquisitions. Any specific
allocation of the net proceeds of an offering of securities to a specific purpose will be determined at the time of the offering and will be described in an accompanying prospectus supplement. Until
we use the net proceeds from the sale of the securities for these purposes, we may place the net proceeds in temporary investments.
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RATIOS OF EARNINGS TO FIXED CHARGES
The following table presents our ratios of earnings to fixed charges for the periods presented.
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For the years ended December 31,
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2015
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2014
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2013
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2012
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2011
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Ratio of earnings to fixed charges(1)
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(2)
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4.5x
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2.9x
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2.1x
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4.3x
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(1)
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For
purposes of computing the ratio of earnings to fixed charges, "earnings" consists of pre-tax income (loss) plus fixed charges less interest capitalized
and "fixed charges" represents interest incurred, amortization of deferred debt offering costs and that portion of rental expense on operating leases deemed to be the equivalent of interest. We have
not included a ratio of earnings to combined fixed charges and preferred stock dividends because we have no preferred stock outstanding as of the date of this prospectus.
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(2)
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Due
to our net operating loss for the year ended December 31, 2015, the ratio of coverage was less than 1:1. To achieve the ratio coverage of 1:1, we would
have needed additional earnings of approximately $2.4 billion.
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DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
General
We may issue debt securities in one or more series. When used in this Description of Debt Securities and Guarantees section, unless we
state otherwise or the context clearly indicates otherwise, references to "the Company," "Laredo," "we," "us" and "our" refer to Laredo Petroleum, Inc.
We
may issue senior or subordinated debt securities. Neither the senior debt securities nor the subordinated debt securities will be secured by any of our property or assets. Thus, by
owning a debt security, you will be one of our unsecured creditors.
The
senior debt securities will constitute part of our senior debt, will be issued under our senior debt indenture described below and will rank equally with all of our other unsecured
and unsubordinated debt.
The
subordinated debt securities will constitute part of our subordinated debt, will be issued under our subordinated debt indenture described below and will be subordinate in right of
payment to all of our "senior debt," as defined in the indenture with respect to such subordinated debt securities. The prospectus supplement for any series of subordinated debt securities or the
information incorporated in this prospectus by reference will indicate the approximate amount of senior debt outstanding as of the end of the then most recent fiscal quarter. Neither indenture limits
our ability to incur additional senior debt or other indebtedness.
When
we refer to "debt securities" in this prospectus, we mean both the senior debt securities and the subordinated debt securities.
The
debt securities may have the benefit of guarantees (each, a "guarantee") by one or more of our existing or future subsidiaries (each, a "guarantor") specified in the prospectus
supplement for the series of such debt securities. If a guarantor issues guarantees, the guarantees will be unsecured and, if guaranteeing senior debt securities, unsubordinated or, if guaranteeing
subordinated debt securities, subordinated obligations of the respective guarantors. Unless otherwise expressly stated or the context otherwise requires, as used in this section, the term "guaranteed
debt securities" means debt securities that, as described in the prospectus supplement relating thereto, are guaranteed by one or more guarantors pursuant to the applicable indenture.
The
debt indentures and their associated documents, including your debt security, contain the full legal text of the matters described in this section and your prospectus supplement. We
have filed forms of the indentures with the SEC as exhibits to our registration statement, of which this prospectus is a part. See "Where You Can Find More Information" in this prospectus for
information on how to obtain copies of them.
This
section and your prospectus supplement summarize material terms of the indentures and your debt security. They do not, however, describe every aspect of the indentures and your debt
security. For example, in this section and your prospectus supplement, we use terms that have been given special meaning in the indentures, but we describe the meaning for only the more important of
those terms. Your prospectus supplement will have a more detailed description of the specific terms of your debt security and any applicable guarantees.
Indentures
The senior debt securities and subordinated debt securities are each governed by a document called an indenture. Each indenture is a
contract between us and a trustee to be named prior to the issuance of debt securities thereunder. The indentures are substantially identical, except for certain provisions including those relating to
subordination, which are included only in the indenture related to subordinated debt securities.
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The
trustee under each indenture has two main roles:
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First, the trustee can enforce your rights against us if we default. There are some limitations on the extent to which the trustee
acts on your behalf, which we describe later under "Default, Remedies and Waiver of Default."
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Second, the trustee performs administrative duties for us, such as sending you interest payments and notices.
When
we refer to "the indenture" or "the trustee" with respect to any debt securities, we mean the indenture under which those debt securities are issued and the trustee under that
indenture.
Series of Debt Securities
We may issue as many distinct debt securities or series of debt securities under either indenture as we wish. This section summarizes
terms of the securities that apply generally to all debt securities and series of debt securities. The provisions of each indenture allow us not only to issue debt securities with terms different from
those of debt securities previously issued under that indenture, but also to "reopen" a previously issued series of debt securities and issue additional debt securities of that series. We will
describe most of the financial and other specific terms of your series, whether it is a series of the senior debt securities or the subordinated debt securities, in the prospectus supplement for that
series. Those terms may vary from the terms described here.
As
you read this section, please remember that the specific terms of your debt security as described in your prospectus supplement will supplement and, if applicable, modify or replace
the general terms described in this section. If there are any differences between your prospectus supplement and this prospectus with respect to your debt security, your prospectus supplement will
control. Thus, the statements we make in this section may not apply to your debt security.
When
we refer to "debt securities" or a "series of debt securities," we mean, respectively, debt securities or a series of debt securities issued under the applicable indenture. When we
refer to "your prospectus supplement," we mean the prospectus supplement describing the specific terms of the debt security you purchase. The terms used in your prospectus supplement will have the
meanings described in this prospectus, unless otherwise specified.
Amounts of Issuances
Neither indenture limits the aggregate amount of debt securities that we may issue or the number of series or the aggregate amount of
any particular series. We may issue debt securities and other securities at any time without your consent and without notifying you.
The
indentures and the debt securities do not limit our ability to incur other indebtedness or to issue other securities. Also, unless otherwise specified below or in your prospectus
supplement, we are not subject to financial or similar restrictions by the terms of the debt securities.
Principal Amount, Stated Maturity and Maturity
Unless otherwise stated, the principal amount of a debt security means the principal amount payable at its stated maturity, unless that
amount is not determinable, in which case the principal amount of a debt security is its face amount.
The
term "stated maturity" with respect to any debt security means the day on which the principal amount of your debt security is scheduled to become due. The principal may become due
sooner, by reason of redemption, acceleration after a default or otherwise in accordance with the terms of the debt security. The day on which the principal actually becomes due, whether at the stated
maturity or earlier, is called the "maturity" of the principal.
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We
also use the terms "stated maturity" and "maturity" to refer to the days when other payments become due. For example, we may refer to a regular interest payment date when an
installment of interest is scheduled to become due as the "stated maturity" of that installment. When we refer to the "stated maturity" or the "maturity" of a debt security without specifying a
particular payment, we mean the stated maturity or maturity, as the case may be, of the principal.
Specific Terms of Debt Securities
Your prospectus supplement will describe the specific terms of your debt security, which will include some or all of the
following:
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the title of the series of your debt security and whether it is a senior debt security or a subordinated debt security;
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any limit on the total principal amount of the debt securities of the same series;
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the stated maturity;
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the currency or currencies for principal and interest, if not U.S. dollars;
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the price at which we originally issue your debt security, expressed as a percentage of the principal amount, and the original issue
date;
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whether your debt security is a fixed rate debt security, a floating rate debt security or an indexed debt security;
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if your debt security is a fixed rate debt security, the yearly rate at which your debt security will bear interest, if any, and the
interest payment dates;
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if your debt security is a floating rate debt security, the interest rate basis; any applicable index currency or index maturity,
spread or spread multiplier or initial base rate, maximum rate or minimum rate; the interest reset, determination, calculation and payment dates; the day count convention used to calculate interest
payments for any period; the business day convention; and the calculation agent;
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if your debt security is an indexed debt security, the principal amount, if any, we will pay you at maturity, interest payment dates,
the amount of interest, if any, we will pay you on an interest payment date or the formula we will use to calculate these amounts, if any, and the terms on which your debt security will be
exchangeable for or payable in cash, securities or other property;
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if your debt security may be converted into or exercised or exchanged for common or preferred stock or other securities of the Company
or debt or equity securities of one or more third parties, the terms on which conversion, exercise or exchange may occur, including whether conversion, exercise or exchange is mandatory, at the option
of the holder or at our option, the period during which conversion, exercise or exchange may occur, the initial conversion, exercise or exchange price or rate and the circumstances or manner in which
the amount of common or preferred stock or other securities issuable upon conversion, exercise or exchange may be adjusted;
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if your debt security is also an original issue discount debt security, the yield to maturity;
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if applicable, the circumstances under which your debt security may be redeemed at our option or repaid at the holder's option before
the stated maturity, including any redemption commencement date, repayment date(s), redemption price(s) and redemption period(s);
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the authorized denominations, if other than $2,000 and integral multiples of $1,000;
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the depositary for your debt security, if other than The Depository Trust Company ("DTC"), and any circumstances under which the
holder may request securities in non-global form, if we choose not to issue your debt security in book-entry form only;
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if applicable, the circumstances under which we will pay additional amounts on any debt securities held by a person who is not a
United States person for tax purposes and under which we can redeem the debt securities if we have to pay additional amounts;
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whether your debt security will be guaranteed by any guarantors and, if so, the identity of the guarantors and, to the extent the
terms thereof differ from those described in this prospectus, a description of the terms of the guarantees;
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the names and duties of any co-trustees, depositaries, authenticating agents, paying agents, transfer agents or registrars for your
debt security, as applicable; and
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any other terms of your debt security and any guarantees of your debt security, which could be different from those described in this
prospectus.
Governing Law
The indentures and the debt securities (and any guarantees thereof) will be governed by New York law.
Form of Debt Securities
We will issue each debt security only in registered form, without coupons, unless we specify otherwise in the applicable prospectus
supplement. In addition, we will issue each debt security in globali.e., book-entryform only, unless we specify otherwise in the applicable prospectus supplement. Debt
securities in book-entry form will be represented by a global security registered in the name of a depositary, which will be the holder of all the debt securities represented by the global security.
Those who own beneficial interests in a global debt security will do so through participants in the depositary's securities clearance system, and the rights of these indirect owners will be governed
solely by the applicable procedures of the depositary and its participants. References to "holders" in this section mean those who own debt securities registered in their own names, on the books that
we or the trustee maintain for this purpose, and not those who own beneficial interests in debt securities registered in street name or in debt securities issued in book-entry form through one or more
depositaries.
Unless
otherwise indicated in the applicable prospectus supplement, the following is a summary of the depositary arrangements applicable to debt securities issued in global form and for
which DTC acts as depositary.
Each
global debt security will be deposited with, or on behalf of, DTC, as depositary, or its nominee, and registered in the name of a nominee of DTC. Except under the limited
circumstances described below, global debt securities are not exchangeable for definitive certificated debt securities.
Ownership
of beneficial interests in a global debt security is limited to participants that have accounts with DTC or its nominee, or persons that may hold interests through those
participants. In addition, ownership of beneficial interests by participants in a global debt security will be evidenced only by, and the transfer of that ownership interest will be effected only
through, records maintained by DTC or its nominee for a global debt security. Ownership of beneficial interests in a global debt security by persons that hold those interests through participants will
be evidenced only by, and the transfer of that ownership interest within that participant will be effected only through, records maintained by that participant. DTC has no knowledge of the actual
beneficial owners of the debt securities. Beneficial owners will not receive written confirmation from DTC of their purchase, but beneficial owners are expected to receive written confirmations
providing details of the transaction, as
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well
as periodic statements of their holdings, from the participants through which the beneficial owners entered the transaction. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities they purchase in definitive form. These laws may impair your ability to transfer beneficial interests in a global debt security.
We
will make payment of principal of, and interest and premium, if any, on, debt securities represented by a global debt security registered in the name of or held by DTC or its nominee
to DTC or its nominee, as the case may be, as the registered owner and holder of the global debt security representing those debt securities. DTC has advised us that upon receipt of any payment of
principal of, or interest or premium on, a global debt security, DTC will credit accounts of participants on its book-entry registration and transfer system with payments in amounts proportionate to
their respective interests in the principal amount of that global debt security, as shown in the records of DTC. Payments by participants to owners of beneficial interests in a global debt security
held through those participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in
"street name," and will be the sole responsibility of those participants, subject to any statutory or regulatory requirements that may be in effect from time to time.
Neither
we, any guarantor, any trustee nor any of our respective agents will be responsible for any aspect of the records of DTC, any nominee or any participant relating to, or payments
made on account of, beneficial interests in a permanent global debt security or for maintaining, supervising or reviewing any of the records of DTC, any nominee or any participant relating to such
beneficial interests.
A
global debt security is exchangeable for certificated debt securities registered in the name of, and a transfer of a global debt security may be registered to, any person other than
DTC or its nominee, only if:
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DTC notifies us that it is unwilling or unable to continue as depositary for that global security or has ceased to be a registered
clearing agency and we do not appoint another institution to act as depositary within 90 days; or
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we notify the trustee that we wish to terminate that global security.
Any
global debt security that is exchangeable pursuant to the preceding sentence will be exchangeable in whole for certificated debt securities in registered form, of like tenor and of
an equal aggregate principal amount as the global debt security, in denominations specified in the applicable prospectus supplement, if other than $2,000 and multiples of $1,000. The certificated debt
securities will be registered by the registrar in the name or names instructed by DTC. We expect that these instructions may be based upon directions received by DTC from its participants with respect
to ownership of beneficial interests in the global debt security.
Except
as provided above, owners of the beneficial interests in a global debt security will not be entitled to receive physical delivery of debt securities in certificated form and will
not be considered the holders of debt securities for any purpose under the indentures. No global debt security shall be exchangeable except for another global debt security of like denomination and
tenor to be registered in the name of DTC or its nominee. Accordingly, each person owning a beneficial interest in a global debt security must rely on the procedures of DTC and, if that person is not
a participant, on the procedures of the participant through which that person owns its interest, to exercise any rights of a holder under the global debt security or the indentures.
We
understand that, under existing industry practices, in the event that we request any action of holders, or an owner of a beneficial interest in a global debt security desires to give
or take any action that a holder is entitled to give or take under the debt securities or the indentures, DTC would authorize the participants holding the relevant beneficial interests to give or take
that action. Additionally, those participants would authorize beneficial owners owning through those participants to
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give
or take that action or would otherwise act upon the instructions of beneficial owners owning through them.
DTC
has advised us that it is a limited-purpose trust company organized under, and a "banking organization" within the meaning of, the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of transactions among its participants in securities through electronic, computerized
book-entry transfers and pledges in accounts of the participants. By doing so, DTC eliminates the need for physical movement of securities certificates. DTC's participants include both U.S. and
non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of the Depository Trust & Clearing
Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned
by the users of its regulated
subsidiaries. Access to DTC's book-entry system is also available to others, such as both U.S. and non-U.S. securities brokers and dealers, banks, brokers, dealers, and trust companies that clear
through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.
Investors
may hold interests in the debt securities outside the U.S. through the Euroclear System ("Euroclear") or Clearstream Banking ("Clearstream") if they are participants in those
systems, or indirectly through organizations which are participants in those systems. Euroclear and Clearstream will hold interests on behalf of their participants through customers' securities
accounts in Euroclear's and Clearstream's names on the books of their respective depositaries, which in turn will hold such interests in customers' securities accounts in the depositaries' names on
the books of DTC.
Euroclear
advises that it was created in 1968 to hold securities for participants of Euroclear ("Euroclear Participants") and to clear and settle transactions between Euroclear
Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by the
Euroclear S.A./N.V. (the "Euroclear Operator"), under contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
Euroclear on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may
include any agents. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly.
Securities
clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear, the related Operating Procedures of the
Euroclear System, and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities
and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis
without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants and has no
record of or relationship with persons holding through Euroclear Participants.
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Distributions
with respect to debt securities held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Terms and
Conditions, to the extent received by the U.S. depositary for Euroclear.
Clearstream
advises that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations ("Clearstream
Participants") and facilitates the clearance and settlement of securities transactions between Clearstream Participants through electronic book-entry changes in accounts of Clearstream Participants,
thereby eliminating the need for physical movement of certificates. Clearstream provides to Clearstream Participants, among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a professional depositary, Clearstream is
subject to regulation by the Luxembourg Monetary Institute. Clearstream Participants are recognized financial institutions around the world, including agents, securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations and may include any agents. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a Clearstream Participant either directly or indirectly.
Distributions
with respect to debt securities held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and
procedures, to the extent received by the U.S. depositary for Clearstream.
We
have provided the descriptions herein of the operations and procedures of DTC, Euroclear and Clearstream solely as a matter of convenience. These operations and procedures are solely
within the control of DTC, Euroclear and Clearstream and are subject to change by them from time to time. We believe that the sources from which the information in this section and elsewhere in this
prospectus concerning DTC, Euroclear, the Euroclear Operator, the Cooperative, Euroclear's system, Clearstream and Clearstream's system has been obtained are reliable, but neither we, any underwriters
nor the trustee takes any responsibility for the accuracy of the information.
Initial
settlement for the securities will be made in immediately available funds. Secondary market trading between DTC participants will occur in the ordinary way in accordance with
DTC's rules and will be settled in immediately available funds. Secondary market trading between Euroclear Participants and/or Clearstream Participants will occur in the ordinary way in accordance
with the applicable rules and operating procedures of Euroclear and Clearstream, as applicable, and will be settled using the procedures applicable to conventional eurobonds in immediately available
funds.
Cross-market
transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Euroclear Participants or Clearstream Participants,
on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its U.S. depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established
deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear Participants and Clearstream Participants may not deliver instructions directly to their respective U.S.
depositaries.
Because
of time-zone differences, credits of securities received in Euroclear or Clearstream as a result of a transaction with a DTC participant will be made during subsequent securities
settlement processing and dated the business day following the DTC settlement date. Credits or any transactions in securities settled during this processing will be reported to the relevant Euroclear
or Clearstream Participants on that following business day. Cash received in Euroclear or Clearstream as a result of
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sales
of debt securities by or through a Euroclear Participant or a Clearstream Participant to a DTC participant will be received with value on the DTC settlement date but will be available in the
relevant Euroclear or Clearstream cash account only as of the business day following settlement in DTC.
Although
DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of securities among participants of DTC, Euroclear and Clearstream, they are under
no obligation to perform or continue to perform these procedures and these procedures may be discontinued at any time.
Redemption or Repayment
If there are any provisions regarding redemption or repayment applicable to your debt security, we will describe them in your
prospectus supplement.
We
or our affiliates may purchase debt securities from investors who are willing to sell from time to time, either in the open market at prevailing prices or in private transactions at
negotiated prices. Debt securities that we or they purchase may, at our discretion, be held, resold or canceled.
Mergers and Similar Transactions
We are generally permitted under the indenture for the relevant series to merge or consolidate with another corporation or other
entity. We are also permitted under the indenture for the relevant series to sell all or substantially all of our assets to another corporation or other entity. With regard to any series of debt
securities, however, we may not take any of these actions unless all the following conditions, among other things, are met:
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If the successor entity in the transaction is not the Company, the successor entity must be organized as a corporation, limited
liability company, partnership or trust and must expressly assume our obligations under the debt securities of that series and the indenture with respect to that series. The successor entity may be
organized under the laws of the United States, any state thereof or the District of Columbia.
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Immediately after the transaction, no default under the debt securities of that series has occurred and is continuing. For this
purpose, "default under the debt securities of that series" means an event of default with respect to that series or any event that would be an event of default with respect to that series if the
requirements for giving us default notice and for our default having to continue for a specific period of time were disregarded. We describe these matters below under "Default, Remedies
and Waiver of Default."
If
the conditions described above are satisfied with respect to the debt securities of any series, we will not need to obtain the approval of the holders of those debt securities in
order to merge or consolidate or to sell our assets. Also, these conditions will apply only if we wish to merge or consolidate with another entity or sell all or substantially all of our assets to
another entity. We will not need to satisfy these conditions if we enter into other types of transactions, including any transaction in which we acquire the stock or assets of another entity, any
transaction that involves a change of control of the Company but in which we do not merge or consolidate and any transaction in which we sell less than substantially all our assets.
The
successor entity will be substituted for the Company with respect to the debt securities of any series and under the indenture with the same effect as if it had been an original
party to the indenture, and, except in the case of a lease, the Company will be relieved from any further obligations and covenants under the indenture.
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Subordination Provisions
Holders of subordinated debt securities should recognize that contractual provisions in the subordinated debt indenture may prohibit us
from making payments on those securities. Subordinated debt securities are subordinate and junior in right of payment, to the extent and in the manner stated in the subordinated debt indenture, to all
of our senior debt, as defined in the subordinated debt indenture, including all debt securities we have issued and will issue under the senior debt indenture.
The
subordinated debt indenture defines "senior debt" as:
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our indebtedness under or in respect of our credit agreement, whether for principal, interest (including interest accruing after the
filing of a petition initiating any proceeding pursuant to any bankruptcy law, whether or not the claim for such interest is allowed as a claim in such proceeding), reimbursement obligations, fees,
commissions, expenses, indemnities or other amounts; and
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any other indebtedness permitted under the terms of that indenture, unless the instrument under which such indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of payment to the subordinated debt securities.
Notwithstanding
the foregoing, "senior debt" will not include: (i) equity interests; (ii) any liability for taxes; (iii) any indebtedness to any of our subsidiaries
or affiliates; (iv) any trade payables; or (v) any indebtedness incurred in violation of the subordinated debt indenture.
We
may modify the subordination provisions, including the definition of senior debt, with respect to one or more series of subordinated debt securities. Such modifications will be set
forth in the applicable prospectus supplement.
The
subordinated debt indenture provides that, unless all principal of and any premium or interest on the senior debt has been paid in full, no payment or other distribution may be made
in respect of any subordinated debt securities in the following circumstances:
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in the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization, assignment for creditors
or other similar proceedings or events involving us or our assets;
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(a) in the event and during the continuation of any default in the payment of principal of and any premium and interest on any senior
debt beyond any applicable grace period or (b) in the event that any event of default with respect to any senior debt has occurred and is continuing, permitting the holders of that senior debt
(or a trustee) to accelerate the maturity of that senior debt, whether or not the maturity is in fact accelerated (unless, in the case of (a) or (b), the payment default or event of default has
been cured or waived or ceased to exist and any related acceleration has been rescinded) or (c) in the event that any judicial proceeding is pending with respect to a payment default or event
of default described in (a) or (b); or
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in the event that any subordinated debt securities have been declared due and payable before their stated maturity.
If
the trustee under the subordinated debt indenture or any holders of the subordinated debt securities receive any payment or distribution that is prohibited under the subordination
provisions, then the trustee or the holders will have to repay that money to the holders of the senior debt.
Even
if the subordination provisions prevent us from making any payment when due on the subordinated debt securities of any series, we will be in default on our obligations under that
series if we do not make the payment when due. This means that the trustee under the subordinated debt indenture and the holders of that series can take action against us, but they will not receive
any money until the claims of the holders of senior debt have been fully satisfied.
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The subordinated debt indenture allows the holders of senior debt to obtain a court order requiring us and any holder of subordinated debt securities to comply
with the subordination provisions.
Defeasance, Covenant Defeasance and Satisfaction and Discharge
When we use the term defeasance, we mean discharge from some or all of our obligations under the indenture. If we deposit with the
trustee funds or government securities, or if so provided in your prospectus supplement, obligations other than government securities, sufficient to make payments on any series of debt securities on
the dates those payments are due and payable and other specified conditions are satisfied, then, at our option, either of the following will occur:
-
-
we will be discharged from our obligations with respect to the debt securities of such series and all obligations of any guarantors of
such debt securities will also be discharged with respect to the guarantees of such debt securities ("legal defeasance"); or
-
-
we will be discharged from any covenants we make in the applicable indenture for the benefit of such series and the related events of
default will no longer apply to us ("covenant defeasance").
If
we defease any series of debt securities, the holders of such securities will not be entitled to the benefits of the indenture, except for our obligations to register the transfer or
exchange of such securities, replace stolen, lost or mutilated securities or maintain paying agencies and hold moneys for payment in trust. In case of covenant defeasance, our obligation to pay
principal of and any premium and interest on the applicable series of debt securities will also survive.
We
will be required to deliver to the trustee an opinion of counsel that the deposit and related defeasance would not cause the holders of the applicable series of debt securities to
recognize gain or loss for federal income tax purposes. If we elect legal defeasance, that opinion of counsel must be based upon a ruling from the United States Internal Revenue Service or a change in
law to that effect.
Upon
the effectiveness of defeasance with respect to any series of guaranteed debt securities, each guarantor of the debt securities of such series shall be automatically and
unconditionally released and discharged from all of its obligations under its guarantee of the debt securities of such series and all of its other obligations under the applicable indenture in respect
of the debt securities of that series, without any action by us, any guarantor or the trustee and without the consent of the holders of any debt securities.
In
addition, we may satisfy and discharge all our obligations under the indenture with respect to debt securities of any series, other than our obligation to register the transfer of and
exchange debt securities of that series, provided that either:
-
-
we deliver all outstanding debt securities of that series to the trustee for cancellation; or
-
-
all such debt securities not so delivered for cancellation have either become due and payable or will become due and payable at their
stated maturity within one year or are to be called for redemption within one year, and in the case of this bullet point, we have deposited with the trustee in trust an amount of cash sufficient to
pay the entire indebtedness of such debt securities, including interest to the stated maturity or applicable redemption date.
No Personal Liability
No past, present or future director, officer, employee, incorporator, member, manager, partner (whether general or limited), unitholder
or stockholder of the Company or any guarantor, as such, will have any liability for any obligations of us or any guarantor, respectively, under the debt securities or the indentures or for any claim
based on, in respect of, or by reason of, such obligations or their creation. Each holder of debt securities by accepting a debt security waives and releases all such
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liability.
The waiver and release are part of the consideration for issuance of the debt securities and any guarantees. The waiver may not be effective to waive liabilities under the federal
securities laws.
Default, Remedies and Waiver of Default
You will have special rights if an event of default with respect to your series of debt securities occurs and is continuing, as
described in this subsection.
Events of Default
Unless your prospectus supplement says otherwise, when we refer to an event of default with respect to any series of debt securities,
we mean any of the following:
-
-
we do not pay the principal of and any premium on any debt security of that series on the due date;
-
-
we do not pay interest on any debt security of that series within 30 days after the due date;
-
-
we do not deposit a sinking fund payment with regard to any debt security of that series within 60 days after the due date, but
only if the payment is required under provisions described in the applicable prospectus supplement;
-
-
we remain in breach of our covenants regarding mergers or sales of substantially all of our assets or any other covenant we make in
the indenture for the benefit of the relevant series, for 90 days after we receive a notice of default stating that we are in breach and requiring us to remedy the breach, which notice must be
sent by the trustee or the holders of at least 25% in principal amount of the relevant series of debt securities;
-
-
we file for bankruptcy or other events of bankruptcy, insolvency or reorganization relating to the Company occur;
-
-
if the debt securities of that series are guaranteed debt securities, the guarantee of the debt securities of that series by any
guarantor shall for any reason cease to be, or shall for any reason be asserted in writing by such guarantor or the Company, not to be, in full force and effect and enforceable in accordance with its
terms, except to the extent contemplated or permitted by the indenture or the debt securities of that series; or
-
-
if the applicable prospectus supplement states that any additional event of default applies to the series, that event of default
occurs.
We
may change, eliminate, or add to the events of default with respect to any particular series or any particular debt security or debt securities within a series, as indicated in the
applicable prospectus supplement.
Remedies if an Event of Default Occurs
If you are the holder of a subordinated debt security, all the remedies available upon the occurrence of an event of default under the
subordinated debt indenture will be subject to the restrictions on the subordinated debt securities described above under "Subordination Provisions."
Except
as otherwise specified in the applicable prospectus supplement, if an event of default has occurred with respect to any series of debt securities and has not been cured or waived,
the trustee or the holders of not less than 25% in principal amount of all debt securities of that series then outstanding may declare the entire principal amount of the debt securities of that series
to be due immediately. Except as otherwise specified in the applicable prospectus supplement, if the event of default occurs because of events in bankruptcy, insolvency or reorganization relating to
the Company,
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the
entire principal amount of the debt securities of that series will be automatically accelerated, without any action by the trustee or any holder.
Each
of the situations described above is called an acceleration of the stated maturity of the affected series of debt securities. Except as otherwise specified in the applicable
prospectus supplement, if the stated maturity of any series is accelerated and a judgment for payment has not yet been obtained, the holders of a majority in principal amount of the debt securities of
that series may cancel the acceleration for the entire series.
If
an event of default occurs, the trustee will have special duties. In that situation, the trustee will be obligated to use those of its rights and powers under the relevant indenture,
and to use the same degree of care and skill in doing so, that a prudent person would use in that situation in conducting his or her own affairs.
Except
as described in the prior paragraph, the trustee is not required to take any action under the relevant indenture at the request of any holders unless the holders offer the trustee
reasonable protection from costs, expenses and liability. This is called an indemnity. If the trustee is provided with an indemnity reasonably satisfactory to it, the holders of a majority in
principal amount of all debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee
with respect to that series. These majority holders may also direct the trustee in performing any other action under the relevant indenture with respect to the debt securities of that series.
Before
you bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to any debt security,
all of the following must occur:
-
-
the holder of your debt security must give the trustee written notice that an event of default has occurred with respect to the debt
securities of your series, and the event of default must not have been cured or waived;
-
-
the holders of not less than 25% in principal amount of all debt securities of your series must make a written request that the
trustee take action because of the default, and they or other holders must offer to the trustee indemnity reasonably satisfactory to the trustee against the cost, expense and other liabilities of
taking that action;
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-
the trustee must not have taken action for 60 days after the above steps have been taken; and
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-
during those 60 days, the holders of a majority in principal amount of the debt securities of your series must not have given
the trustee directions that are inconsistent with the written request of the holders of not less than 25% in principal amount of the debt securities of your series.
You
are entitled at any time, however, to bring a lawsuit for the payment of money due on your debt security on or after its stated maturity (or, if your debt security is redeemable, on
or after its redemption date).
Book-entry
and other indirect owners should consult their banks or brokers for information on how to give notice or direction to or make a request of the trustee and how to declare or
cancel an acceleration of the maturity.
Waiver of Default
The holders of not less than a majority in principal amount of the debt securities of any series may waive a default for all debt
securities of that series. If this happens, the default will be treated as if it has not occurred. No one can waive a payment default on any debt security, however, without the approval of the
particular holder of that debt security.
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Annual Information about Defaults to the Trustee
We will furnish each trustee every year a written statement of two of our officers certifying that to their knowledge we are in
compliance with the applicable indenture and the debt securities issued under it, or else specifying any default under the applicable indenture.
Modifications and Waivers
There are four types of changes we can make to either indenture and the debt securities or series of debt securities or any guarantees
thereof issued under that indenture.
Changes Requiring Each Holder's Approval
First, there are changes that cannot be made without the approval of each holder of a debt security affected by the change under the
applicable debt indenture, including, among others:
-
-
changing the stated maturity for any principal or interest payment on a debt security;
-
-
reducing the principal amount, the amount payable on acceleration of the maturity after a default, the interest rate or the redemption
price for a debt security;
-
-
permitting redemption of a debt security if not previously permitted;
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-
impairing any right a holder may have to require purchase of its debt security;
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-
impairing any right that a holder of a convertible debt security may have to convert the debt security;
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-
changing the currency of any payment on a debt security;
-
-
changing the place of payment on a debt security;
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-
impairing a holder's right to sue for payment of any amount due on its debt security;
-
-
releasing any guarantor of a debt security from any of its obligations under its guarantee thereof, except in accordance with the
terms of the indenture;
-
-
reducing the percentage in principal amount of the debt securities of any one or more affected series, taken separately or together,
as applicable, and whether comprising the same or different series or less than all of the debt securities of a series, the approval of whose holders is needed to change the indenture or those debt
securities or waive our compliance with the applicable indenture or to waive defaults; and
-
-
changing the provisions of the applicable indenture dealing with modification and waiver in any other respect, except to increase any
required percentage referred to above or to add to the provisions that cannot be changed or waived without approval of the holder of each affected debt security.
Changes Not Requiring Approval
The second type of change does not require any approval by holders of the debt securities affected. These changes are limited to
clarifications and changes that would not adversely affect any debt securities of any series in any material respect. Nor do we need any approval to make changes that affect only debt securities to be
issued under the applicable indenture after the changes take effect. We may also make changes or obtain waivers that do not adversely affect a particular debt security, even if they affect other debt
securities. In those cases, we do not need to obtain the approval of the holder of the unaffected debt security; we need only obtain any required approvals from the holders of the affected debt
securities. We may also make changes to reflect the addition of, succession
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to
or release of any guarantor of guaranteed debt securities otherwise permitted under the indenture. We may also make changes to conform the text of the applicable indenture or any debt securities or
guarantees to any provision of the "Description of Debt Securities and Guarantees" in this prospectus or the comparable section in your prospectus supplement, to the extent such provision was intended
to be a verbatim recitation of a provision of such indenture or debt securities or guarantees.
Modification of Subordination Provisions
We may not amend the indenture related to subordinated debt securities to alter the subordination of any outstanding subordinated debt
securities without the written consent of each holder of senior debt then outstanding who would be adversely affected (or the group or representative thereof authorized or required to consent thereto
pursuant to the instrument creating or evidencing, or pursuant to which there is outstanding, such senior debt). In addition, we may not modify the subordination provisions of the indenture related to
subordinated debt securities in a manner that would adversely affect the subordinated debt securities of any one or more series then outstanding in any material respect, without the consent of the
holders of a majority in aggregate principal amount of all affected series then outstanding, voting together as one class (and also of any affected series that by its terms is entitled to vote
separately as a series, as described below).
Changes Requiring Majority Approval
Any other change to a particular indenture and the debt securities issued under that indenture would require the following
approval:
-
-
if the change affects only particular debt securities within a series issued under the applicable indenture, it must be approved by
the holders of a majority in principal amount of such particular debt securities; or
-
-
if the change affects debt securities of more than one series issued under the applicable indenture, it must be approved by the
holders of a majority in principal amount of all debt securities of all such series affected by the change, with all such affected debt securities voting together as one class for this purpose and
such affected debt securities of any series potentially comprising fewer than all debt securities of such series,
in
each case, except as may otherwise be provided pursuant to such indenture for all or any particular debt securities of any series. This means that modification of terms with respect to certain
securities of
a series could be effectuated without obtaining the consent of the holders of a majority in principal amount of other securities of such series that are not affected by such modification.
The
same majority approval would be required for us to obtain a waiver of any of our covenants in either indenture. Our covenants include the promises we make about merging or selling
substantially all of our assets, which we describe above under "Mergers and Similar Transactions." If the holders approve a waiver of a covenant, we will not have to comply with it. The
holders, however, cannot approve a waiver of any provision in a particular debt security, or in the applicable indenture as it affects that debt security, that we cannot change without the approval of
the holder of that debt security as described above in "Changes Requiring Each Holder's Approval," unless that holder approves the waiver.
We
may issue particular debt securities or a particular series of debt securities, as applicable, that are entitled, by their terms, to separately approve matters (for example,
modification or waiver of provisions in the applicable indenture) that would also, or otherwise, require approval of holders of a majority in principal amount of all affected debt securities of all
affected series issued under such indenture voting together as a single class. Any such affected debt securities or series of debt securities would be entitled to approve such matters
(a) pursuant to such special rights by consent of holders of a
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majority
in principal amount of such affected debt securities or series of debt securities voting separately as a class and (b) in addition, as described above, except as may otherwise be
provided pursuant to the applicable indenture for such debt securities or series of debt securities, by consent of holders of a majority in principal amount of such affected debt securities or series
of debt securities and all other affected debt securities of all series issued under such indenture voting together as one class for this purpose. We may issue series or debt securities of a series
having these or other special voting rights without obtaining the consent of or giving notice to holders of outstanding debt securities or series.
Book-entry
and other indirect owners should consult their banks or brokers for information on how approval may be granted or denied if we seek to change an indenture or any debt
securities or request a waiver.
Special Rules for Action by Holders
Only holders of outstanding debt securities of the applicable series will be eligible to take any action under the applicable
indenture, such as giving a notice of default, declaring an acceleration, approving any change or waiver or giving the trustee an instruction with respect to debt securities of that series. Also, we
will count only outstanding debt securities in determining whether the various percentage requirements for taking action have been met. Any debt securities owned by us or any of our affiliates or
surrendered for cancellation or for payment or redemption, for which money has been set aside in trust, are not deemed to be outstanding. Any required approval or waiver must be given by written
consent.
In
some situations, we may follow special rules in calculating the principal amount of debt securities that are to be treated as outstanding for the purposes described above. This may
happen, for example, if the principal amount is payable in a non-U.S. dollar currency, increases over time or is not to be fixed until maturity.
We
will generally be entitled to set any day as a record date for the purpose of determining the holders that are entitled to take action under either indenture. In certain limited
circumstances, only the trustee will be entitled to set a record date for action by holders. If we or the trustee sets a record date for an approval or other action to be taken by holders, that vote
or action may be taken only by persons or entities who are holders on the record date and must be taken during the period that we specify for this purpose, or that the trustee specifies if it sets the
record date. We or the trustee, as applicable, may shorten or lengthen this period from time to time. This period, however, may not extend beyond the 180th day after the record date for the
action. In addition, record dates for any global debt security may be set in accordance with procedures established by the depositary from time to time. Accordingly, record dates for global debt
securities may differ from those for other debt securities.
Form, Exchange and Transfer
If any debt securities cease to be issued in registered global form, they will be
issued:
-
-
only in fully registered form;
-
-
without interest coupons; and
-
-
unless we indicate otherwise in your prospectus supplement, in denominations of $2,000 and integral multiples of $1,000.
Holders
may exchange their debt securities for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal
amount is not changed. You may not exchange your debt securities for securities of a different series or having different terms, unless your prospectus supplement and the supplemental indenture with
respect to your debt securities provide for such exchange.
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Holders may exchange or transfer their debt securities at the office of the trustee. They may also replace lost, stolen, destroyed or mutilated debt securities at
that office. We have appointed the trustee to act as our agent for registering debt securities in the names of holders and transferring and replacing debt securities. We may appoint another entity to
perform these functions or perform them ourselves.
Holders
will not be required to pay a service charge to transfer or exchange their debt securities, but they may be required to pay for any tax or other governmental charge associated
with the exchange or transfer. The transfer or exchange, and any replacement, will be made only if our transfer agent is satisfied with the holder's proof of legal ownership. The transfer agent may
require an indemnity before replacing any debt securities.
If
we have designated additional transfer agents for your debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the
appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.
If
the debt securities of any series are redeemable and we redeem less than all those debt securities, we may block the transfer or exchange of those debt securities during the period
beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to
register transfers of or exchange any debt security selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any debt security being
partially redeemed.
If
a debt security is issued as a global debt security, only DTC or other depositary will be entitled to transfer and exchange the debt security as described in this subsection because
the depositary will be the sole holder of the debt security.
The
rules for exchange described above apply to exchange of debt securities for other debt securities of the same series and kind. If a debt security is convertible, exercisable or
exchangeable into or for a different kind of security, such as one that we have not yet issued, or for other property, the rules governing that type of conversion, exercise or exchange will be
described in the applicable prospectus supplement.
Payments
We will pay interest, principal and other amounts payable with respect to the debt securities of any series to the holders of record of
those debt securities as of the record dates and otherwise in the manner specified below or in the prospectus supplement for that series.
We
will make payments on a global debt security in accordance with the applicable policies of the depositary as in effect from time to time. Under those policies, we will pay directly to
the depositary, or its nominee, and not to any indirect owners who own beneficial interests in the global debt security. An indirect owner's right to receive those payments will be governed by the
rules and practices of the depositary and its participants.
We
will make payments on a debt security in non-global, registered form as follows. We will pay interest that is due on an interest payment date by check mailed on the interest payment
date to the holder at his or her address shown on the trustee's records as of the close of business on the regular record date. We will make all other payments by check at the paying agent described
below, against surrender of the debt security. All payments by check will be made in next-day fundsi.e., funds that become available on the day after the check is cashed.
Alternatively,
if a non-global debt security has a face amount of at least $1,000,000 and the holder asks us to do so, we will pay any amount that becomes due on the debt security by
wire transfer of immediately available funds to an account at a bank in New York City, on the due date. To request
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wire
payment, the holder must give the paying agent appropriate wire transfer instructions at least five business days before the requested wire payment is due. In the case of any interest payment due
on an interest payment date, the instructions must be given by the person or entity who is the holder on the relevant regular record date. In the case of any other payment, payment will be made only
after the debt security is surrendered to the paying agent. Any wire instructions, once properly given, will remain in effect unless and until new instructions are given in the manner described above.
Book-entry
and other indirect owners should consult their banks or brokers for information on how they will receive payments on their debt securities.
Regardless
of who acts as paying agent, all money paid by us to a paying agent that remains unclaimed at the end of two years after the amount is due to a holder will be repaid to us.
After that two-year period, the holder may look only to us for payment and not to the trustee, any other paying agent or anyone else.
Guarantees
The debt securities of any series may be guaranteed by one or more of our existing or future subsidiaries. However, the applicable
indenture governing the debt securities will not require that any of our existing or future subsidiaries be a guarantor of any series of debt securities and will permit the guarantors of any series of
guaranteed debt securities to differ from the guarantors of any other series of guaranteed debt securities. If we issue a series of guaranteed debt securities, the identity of the specific guarantors
of the debt securities of that series will be identified in the applicable prospectus supplement.
If
we issue a series of guaranteed debt securities, a description of some of the terms of guarantees of those debt securities will be set forth in the applicable prospectus supplement.
Unless otherwise provided in the prospectus supplement relating to a series of guaranteed debt securities, each guarantor of the debt securities of such series will fully and unconditionally
guarantee, on a joint and several basis with each other guarantor, the due and punctual payment of the principal of, and premium, if any, and
interest on each debt security of such series, all in accordance with the terms of such debt securities and the applicable indenture.
Notwithstanding
the foregoing, unless otherwise provided in the prospectus supplement relating to a series of guaranteed debt securities, the applicable indenture will contain provisions
to the effect that the obligations of each guarantor under its guarantees and such indenture shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such guarantor, result in the obligations of such guarantor under such guarantees and such indenture not constituting a fraudulent conveyance or fraudulent transfer under applicable
law. However, there can be no assurance that, notwithstanding such limitation, a court would not determine that a guarantee constituted a fraudulent conveyance or fraudulent transfer under applicable
law. If that were to occur, the court could void the applicable guarantor's obligations under that guarantee, subordinate that guarantee to other debt and other liabilities of that guarantor or take
other action detrimental to holders of the debt securities of the applicable series, including directing the holders to return any payments received from the applicable guarantor.
Unless
otherwise provided in the prospectus supplement relating to a series of guaranteed debt securities, the applicable indenture will (i) provide that, upon the sale or
disposition (by merger or otherwise) of any guarantor, (x) if the transferee is not an affiliate of the Company, such guarantor will automatically be released from all obligations under its
guarantee of such debt securities or (y) otherwise, the transferee (if other than another guarantor) will assume the guarantor's obligations under its guarantee of such debt securities and
(ii) permit us to cause the guarantee of any guarantor of such debt securities to be released at any time if we satisfy such conditions, if any, as are specified in the prospectus supplement
for such debt securities.
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The
applicable prospectus supplement relating to any series of guaranteed debt securities will specify other terms of the applicable guarantees.
If
the applicable prospectus supplement relating to a series of our senior debt securities provides that those senior debt securities will have the benefit of a guarantee by any or all
of our existing or future subsidiaries, unless otherwise provided in the applicable prospectus supplement, each such guarantee will be the unsubordinated and unsecured obligation of the applicable
guarantor and will rank equally in right of payment with all of the unsecured and unsubordinated indebtedness of such guarantor.
Any
guarantee of any debt securities will be effectively subordinated to all existing and future secured indebtedness of the applicable guarantor, including any secured guarantees of
other Company debt, to the extent of the value of the collateral securing that indebtedness. Consequently, in the event of a
bankruptcy, or similar proceeding with respect to any guarantor that has provided a guarantee of any debt securities, the holders of that guarantor's secured indebtedness will be entitled to proceed
directly against the collateral that secures that secured indebtedness and such collateral will not be available for satisfaction of any amount owed by such guarantor under its unsecured indebtedness,
including its guarantees of any debt securities, until that secured debt is satisfied in full. Unless otherwise provided in the applicable prospectus supplement, the indenture will not limit the
ability of any guarantor to incur secured indebtedness.
If
the applicable prospectus supplement relating to a series of our subordinated debt securities provides that those subordinated debt securities will have the benefit of a guarantee by
any or all of our existing or future subsidiaries, unless otherwise provided in the applicable prospectus supplement, each such guarantee will be the subordinated and unsecured obligation of the
applicable guarantor and, in addition to being effectively subordinated to secured debt of such guarantor, will be subordinated in right of payment to all of such guarantor's existing and future
senior indebtedness, including any guarantee of the senior debt securities, to the same extent and in the same manner as the subordinated debt securities are subordinated to our senior debt. See
"Subordination Provisions" above.
Paying Agents
We may appoint one or more financial institutions to act as our paying agents, at whose designated offices debt securities in
non-global entry form may be surrendered for payment at their maturity. We call each of those offices a paying agent. We may add, replace or terminate paying agents from time to time. We may also
choose to act as our own paying agent. We will specify in the prospectus supplement for your debt security the initial location of each paying agent for that debt security. We must notify the trustee
of changes in the paying agents.
Notices
Notices to be given to holders of a global debt security will be given only to the depositary, in accordance with its applicable
policies as in effect from time to time. Notices to be given to holders of debt securities not in global form will be sent by mail to the respective addresses of the holders as they appear in the
trustee's records, and will be deemed given when mailed. Neither the failure to give any notice to a particular holder, nor any defect in a notice given to a particular holder, will affect the
sufficiency of any notice given to another holder.
Book-entry
and other indirect owners should consult their banks or brokers for information on how they will receive notices.
Our Relationship with the Trustee
The prospectus supplement for your debt security will describe any material relationships we may have with the trustee with respect to
that debt security.
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The
same financial institution may initially serve as the trustee for our senior debt securities and subordinated debt securities. Consequently, if an actual or potential event of
default occurs with respect to any of these securities, the trustee may be considered to have a conflicting interest for purposes of the Trust Indenture Act of 1939. In that case, the trustee may be
required to resign under one or more of the indentures, and we would be required to appoint a successor trustee. For this purpose, a "potential" event of default means an event that would be an event
of default if the requirements for giving us default notice or for the default having to exist for a specific period of time were disregarded.
DESCRIPTION OF CAPITAL STOCK
The following discussion is a summary of the terms of our capital stock as contained in our amended and restated certificate of
incorporation and our second amended and restated bylaws and does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law, to our amended and
restated certificate of incorporation and to our second amended and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.
Our
authorized capital stock consists of 450,000,000 shares of common stock, $0.01 par value per share, of which 213,683,548 shares were issued and outstanding as of February 26, 2016,
and 50,000,000 shares of preferred stock, $0.01 par value per share, of which no shares were issued and outstanding as of February 26, 2016.
Common Stock
Except as provided by law or in a preferred stock designation, holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders, have the exclusive right to vote for the election of directors and do not have cumulative voting rights. Except as otherwise required by
law, holders of common stock, as such, are not entitled to vote on any amendment to the amended and restated certificate of incorporation (including any certificate of designations relating to any
series of preferred stock) that relates solely to the terms of any outstanding series of preferred stock if the holders of such affected series are entitled, either separately or together with the
holders of one or more other such series, to vote thereon pursuant to the amended and restated certificate of incorporation (including any certificate of designations relating to any series of
preferred stock) or pursuant to the General Corporation Law of the State of Delaware (the "DGCL"). Subject to preferences that may be applicable to any outstanding shares or series of preferred stock,
holders of common stock are entitled to receive ratably such dividends (payable in cash, stock or otherwise), if any, as may be declared from time to time by our board of directors out of funds
legally available for dividend payments. All outstanding shares of common stock are fully paid and non-assessable. The holders of common stock have no preferences or rights of conversion, exchange,
pre-emption or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. In the event of any liquidation, dissolution or winding-up of our affairs,
holders of common stock will be entitled to share ratably in our assets that are remaining after payment or provision for payment of all of our debts and obligations and after liquidation payments to
holders of outstanding shares of preferred stock, if any.
Preferred Stock
Our amended and restated certificate of incorporation authorizes our board of directors, subject to any limitations prescribed by law,
without further stockholder approval, to establish and to issue from time to time one or more classes or series of preferred stock, par value $0.01 per share, covering up to an aggregate of 50,000,000
shares of preferred stock. Each class or series of preferred stock will cover the number of shares and will have the powers, preferences, rights, qualifications, limitations and restrictions
determined by our board of directors, which may include, among others, dividend rights, liquidation preferences, voting rights, conversion rights, preemptive rights and redemption rights.
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Anti-Takeover Effects of Provisions of our Amended and Restated Certificate of Incorporation, our
Second Amended and Restated Bylaws and Delaware Law
Some provisions of Delaware law, and our amended and restated certificate of incorporation and our second amended and restated bylaws
described below, contain provisions that could make the following transactions more difficult: (i) acquisition of us by means of a tender offer, a proxy contest or otherwise and
(ii) removal of our incumbent officers and directors. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more
difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a
premium over the market price for our shares.
These
provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking
to acquire
control of us to first negotiate with us. We believe that the benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure us outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.
Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws
Among other things, our amended and restated certificate of incorporation and second amended and restated bylaws
provide:
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advance notice procedures with regard to stockholder nomination of candidates for election as directors or proposals of business to be
brought before meetings of our stockholders. These procedures provide that notice of stockholder nominations or proposals must be timely given in writing to our corporate secretary prior to the
meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 45 days nor more than 75 days prior to the
first anniversary date of the date on which we first mailed our proxy materials for the annual meeting for the preceding year. Our second amended and restated bylaws specify the requirements as to
form and content of all stockholders' notices. These requirements may make it more difficult for stockholders to bring matters before the stockholders at an annual or special meeting;
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our board of directors the ability to establish the terms of undesignated preferred stock. This ability makes it possible for our
board of directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and
other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of Laredo;
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that our board of directors is divided into three classes with each class serving staggered three year terms;
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that the authorized number of directors may be changed only by resolution of our board of directors;
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that all vacancies, including newly created directorships, shall, except as otherwise required by law or by resolution of the board of
directors and subject to the rights of the holders of any series of preferred stock, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
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that any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of
stockholders and may not be effected by any consent in
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Delaware Law
We are subject to the provisions of Section 203 of the DGCL, which regulates corporate takeovers. In general, those provisions
prohibit a Delaware corporation, including those whose securities are listed for trading on the NYSE, from engaging in any business combination with any interested stockholder for a period of three
years following the date that the stockholder became an interested stockholder, unless:
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the business combination or transaction in which the person became interested is approved by the board of directors before the date
the interested stockholder attained that status;
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upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced other than, for purposes of determining the voting stock outstanding (but not the
outstanding stock owned by the interested stockholder), shares owned by persons who are directors and also officers of us and by certain employee stock plans; or
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on or after such time the business combination is approved by the board of directors and authorized at a meeting of stockholders by an
affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
In
general, Section 203 defines a "business combination" to include the following:
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certain mergers or consolidations involving the corporation and the interested stockholder;
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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation to or with the interested stockholder;
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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
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subject to certain exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of
the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
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the receipt by the interested stockholder of the benefit of loans, advances, guarantees, pledges or other financial benefits provided
by or through the corporation.
In
general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity
or person affiliated with or controlling or controlled by any of these entities or persons. Affiliates of Warburg Pincus LLC ("Warburg Pincus") owned their equity in us at the time we completed our
corporate reorganization in December 2011 in connection with our initial public offering, and, therefore, Warburg Pincus is not subject to the restrictions of Section 203.
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Limitation of Liability and Indemnification Matters
Our amended and restated certificate of incorporation limits the liability of our directors for monetary damages for breach of their
fiduciary duty as directors, except for the following liabilities that cannot be eliminated under the DGCL:
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for any breach of their duty of loyalty to us or our stockholders;
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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
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for an unlawful payment of dividends or an unlawful stock purchase or redemption, as provided under Section 174 of the DGCL; or
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for any transaction from which the director derived an improper personal benefit.
Any
amendment or repeal of these provisions will be prospective only and would not affect any limitation on liability of a director for acts or omissions that occurred prior to any such
amendment or repeal.
Our
second amended and restated bylaws also provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law; provided that we shall indemnify
any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the board of directors.
Our second amended and restated bylaws also explicitly authorize us to purchase insurance to protect any of our officers, directors, employees or agents or any person who is or was serving at our
request as an officer, director, employee or agent of another enterprise for any expense, liability or loss, regardless of whether Delaware law would permit indemnification.
We
have entered into indemnification agreements with each of our directors and officers. The agreements provide that we will indemnify and hold harmless each indemnitee for certain
expenses to the fullest extent permitted or authorized by law, including the DGCL, in effect on the date of the agreement or as it may be amended to provide more advantageous rights to the indemnitee.
If such indemnification is unavailable as a result of a court decision and if we and the indemnitee are jointly liable in the proceeding, we will contribute funds to the indemnitee for his expenses in
proportion to relative benefit and fault of us and indemnitee in the transaction giving rise to the proceeding. The indemnification agreements also provide that we will indemnify the indemnitee for
monetary damages for actions taken as our director or officer or for serving at our request as a director or officer or another position at another corporation or enterprise, as the case may be. The
indemnification agreements and our second amended and restated bylaws also provide that we must advance payment of certain expenses to the indemnitee, including fees of counsel, subject to receipt of
an undertaking from the indemnitee to return such advance if it is it is ultimately determined that the indemnitee is not entitled to indemnification.
We
believe that the limitation of liability provision in our amended and restated certificate of incorporation, second amended and restated bylaws and the indemnification agreements will
facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers.
Corporate Opportunity
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by applicable law, we renounce any
interest or expectancy in any business opportunity, transaction or other matter in which Warburg Pincus or any private fund that it manages or advises, any of their respective officers, directors,
partners and employees, and any portfolio company in which such entities or persons have an equity interest (other than us and our subsidiaries) (each a "specified party") participates or desires or
seeks to participate in and that involves any aspect of the energy business or
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industry,
unless any such business opportunity, transaction or matter is offered in writing solely to (i) one of our directors or officers who is not also a specified party or (ii) a
specified party who is one of our directors, officers or employees and is offered such opportunity solely in his or her capacity as one of our directors, officers or employees.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
Listing
Our common stock is listed on the NYSE under the symbol "LPI."
DESCRIPTION OF DEPOSITARY SHARES
We may offer fractional interests in shares of preferred stock rather than full shares of preferred stock. In that event, depositary
receipts will be issued to evidence depositary shares, each of which will represent a fraction of a share of a particular series of preferred stock, as described in the prospectus supplement relating
to the particular issue of depositary shares.
The
shares of preferred stock represented by depositary shares will be deposited under a deposit agreement between us and a depositary that is a bank or trust company, as depositary,
that we select as set forth in the prospectus supplement relating to the particular issue of depositary shares. Unless otherwise specified in the prospectus supplement relating to a particular issue
of depositary shares, each owner of a depositary share will be entitled, in proportion to the applicable fraction of a share of preferred stock represented by such depositary share, to all the rights
and preferences of the shares of
preferred stock represented by such depositary share, including dividend and liquidation rights and any right to convert the shares of preferred stock into common stock.
We
will describe the terms of any depositary shares we offer and the related depositary agreement, as well as the terms of the shares of preferred stock represented thereby, in the
prospectus supplement relating to the particular issue of depositary shares.
DESCRIPTION OF WARRANTS
We may issue warrants that entitle the holder to purchase debt securities, preferred stock, common stock or depositary shares. Warrants
may be issued independently or together with debt securities, preferred stock or common stock offered by any prospectus supplement and may be attached to or separate from any such offered securities.
Each series of warrants will be issued under a separate warrant agreement to be entered into between us and a bank or trust company, as warrant agent, all as will be set forth in the prospectus
supplement relating to the particular issue of warrants. The warrant agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency or
trust for or with any holders of warrants or beneficial owners of warrants.
The
following summary of certain provisions of the warrants does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all provisions of the
warrant agreements.
Reference
is made to the prospectus supplement relating to the particular issue of warrants offered pursuant to such prospectus supplement for the terms of and information relating to
such warrants, including, where applicable:
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the designation, aggregate principal amount, currencies, denominations and terms of the series of debt securities purchasable upon
exercise of warrants to purchase debt securities and the price at which such debt securities may be purchased upon such exercise;
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the number of shares of common stock purchasable upon the exercise of warrants to purchase common stock and the price at which such
number of shares of common stock may be purchased upon such exercise;
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the number of shares and series of preferred stock purchasable upon the exercise of warrants to purchase preferred stock and the price
at which such number of shares of such series of preferred stock may be purchased upon such exercise;
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the designation and number of depositary shares purchasable upon the exercise of warrants to purchase other securities and the price
at which such number of depositary shares may be purchased upon such exercise;
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the date on which the right to exercise such warrants shall commence and the date on which such right shall expire;
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United States federal income tax consequences applicable to such warrants;
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the amount of warrants outstanding as of the most recent practicable date; and
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any other terms of such warrants.
Warrants
will be issued in registered form only. The exercise price for warrants will be subject to adjustment in accordance with the applicable prospectus supplement.
Each
warrant will entitle the holder thereof to purchase such principal amount of debt securities or such number of shares of preferred stock, common stock or depositary shares at such
exercise price as shall in each case be set forth in, or calculable from, the prospectus supplement relating to the warrants, which exercise price may be subject to adjustment upon the occurrence of
certain events as set forth in such prospectus supplement. After the close of business on the expiration date, or such later date to which such expiration date may be extended by us, unexercised
warrants will become void. The place or places where, and the manner in which, warrants may be exercised shall be specified in the prospectus supplement relating to such warrants.
Prior
to the exercise of any warrants to purchase debt securities, preferred stock, common stock or depositary shares, holders of such warrants will not have any of the rights of holders
of such debt securities, preferred stock, common stock or depositary shares, as the case may be, purchasable upon such exercise, including the right to receive payments of principal of, premium, if
any, or interest, if any, on the debt securities purchasable upon such exercise or to enforce covenants in the applicable indenture, or to receive payments of dividends, if any, on the preferred
stock, or common stock purchasable upon such exercise, or to exercise any applicable right to vote or to exercise any rights of holders of depositary receipts in respect of the depositary shares
purchasable upon such exercise.
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PLAN OF DISTRIBUTION
We may sell the offered securities in and outside the United States (1) through underwriters or dealers; (2) directly to
purchasers, including our affiliates and shareholders, or in a rights offering; (3) through agents (acting as agent or principal); (4) through a combination of any of these methods; or
(5) through any other method described in a prospectus supplement. The prospectus supplement will include the following information:
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the terms of the offering;
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the names of any underwriters, dealers or agents;
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the name or names of any managing underwriter or underwriters;
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the purchase price of the securities;
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the net proceeds from the sale of the securities;
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any delayed delivery arrangements;
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any underwriting discounts, commissions and other items constituting underwriters' compensation;
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any discounts or concessions allowed or reallowed or paid to dealers; and
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any commissions paid to agents.
We
may engage in at-the-market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act. In addition, we may enter into derivative
transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third
parties may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement
of those derivatives to close out any related open borrowings of stock. The third parties in such sale transactions will be underwriters and, if not identified in this prospectus, will be identified
in the applicable prospectus supplement (or a post-effective amendment). We or one of our affiliates may loan or pledge securities to a financial institution or other third party that in turn may sell
the securities using this prospectus. Such financial institution or third party may transfer its short position to investors in our securities or in connection with a simultaneous offering of other
securities offered by this prospectus or otherwise.
Sale through Underwriters or Dealers
If we use underwriters in the sale, the underwriters will acquire the securities for their own account for resale to the public. The
underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of
sale. Underwriters may offer securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters.
Unless we inform you otherwise in the prospectus supplement, the obligations of the underwriters to purchase the securities will be subject to certain conditions, and the underwriters will be
obligated to purchase all of the offered securities if they purchase any of them. The underwriters may change from time to time any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
Representatives
of the underwriters through whom the offered securities are sold for public offering and sale may engage in over-allotment, stabilizing transactions, syndicate short
covering
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transactions
and penalty bids in accordance with Regulation M under the Exchange Act. Over-allotment involves syndicate sales in excess of the offering size, which creates a syndicate short
position. Stabilizing transactions permit bids to purchase the offered securities so long as the stabilizing bids do not exceed a specified maximum. Syndicate covering transactions involve purchases
of the offered securities in the open market after the distribution has been completed in order to cover syndicate
short positions. Penalty bids permit the representative of the underwriters to reclaim a selling concession from a syndicate member when the offered securities originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short positions. Such stabilizing transactions, syndicate covering transactions and penalty bids may cause the price of the offered
securities to be higher than it would otherwise be in the absence of such transactions. These transactions may be effected on a national securities exchange and, if commenced, may be discontinued at
any time.
Some
or all of the securities that we offer through this prospectus may be new issues of securities with no established trading market. Any underwriters to whom we sell our securities
for public offering and sale may make a market in those securities, but they will not be obligated to do so and they may discontinue any market making at any time without notice. Accordingly, we
cannot assure you of the liquidity of, or continued trading markets for, any securities that we offer.
If
we use dealers in the sale of securities, we will sell the securities to them as principals. They may then resell those securities to the public at varying prices determined by the
dealers at the time of resale. If applicable, we will include in the prospectus supplement the names of the dealers and the terms of the transaction.
Direct Sales and Sales through Agents
We may sell the securities directly. In this case, no underwriters or agents would be involved. We may also sell the securities through
agents designated from time to time. In the prospectus supplement, we will name any agent involved in the offer or sale of the offered securities, and we will describe any commissions payable to the
agent. Unless we inform you otherwise in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We
may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect to any sale of those
securities. We will describe the terms of any such sales in the prospectus supplement.
We
may also make direct sales through subscription rights distributed to our existing stockholders on a pro rata basis that may or may not be transferable. In any distribution of
subscription rights to our stockholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed securities directly to third parties or we may engage the
services of one or more underwriters, dealers or agents, including standby underwriters, to sell the unsubscribed securities to third parties.
Remarketing Arrangements
Offered securities also may be offered and sold, if so indicated in the applicable prospectus supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as principals for their own accounts or as
agents for us. Any remarketing firm will be identified and the terms of its agreements, if any, with us and its compensation will be described in the applicable prospectus supplement. Remarketing
firms may be deemed to be underwriters, as that term is defined in the Securities Act, in connection with the securities remarketed.
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Delayed Delivery Arrangements
If we so indicate in the prospectus supplement, we may authorize agents, underwriters or dealers to solicit offers from certain types
of institutions to purchase securities from us at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future.
The contracts would be subject only to those conditions described in the prospectus supplement. The prospectus supplement will describe the commission payable for solicitation of those contracts.
General Information
We may have agreements with the underwriters, dealers and agents to indemnify them against certain civil liabilities, including
liabilities under the Securities Act, or to contribute with respect to payments that the underwriters, dealers or agents may be required to make.
Underwriters,
dealers and agents may engage in transactions with, or perform services for, us in the ordinary course of our business for which they may receive compensation.
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LEGAL MATTERS
The validity of the securities being offered by this prospectus will be passed upon for us by Akin Gump Strauss Hauer &
Feld LLP, Houston, Texas, our outside legal counsel. Additional legal matters may be passed on for us, or any underwriters, dealers or agents, by counsel we will name in the applicable
prospectus supplement.
EXPERTS
The consolidated financial statements and management's assessment of the effectiveness of internal control over financial reporting of
Laredo Petroleum, Inc. and its subsidiaries incorporated by reference in this prospectus and elsewhere in the registration statement have been so incorporated by reference in reliance upon the
reports of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.
The
estimates of our proved reserves included in or incorporated by reference into this prospectus or any applicable prospectus supplement are based on reserve reports prepared by Ryder
Scott Company, L.P., independent reserve engineers. These estimates are so included or incorporated by reference in reliance upon the authority of such firm as an expert in these matters.
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