Item 1.01 Entry into a Material Definitive Agreement.
Registration Rights Agreement
On November 14, 2017, as previously announced, SRC Energy Inc. (the Company) entered into a Note Purchase Agreement with certain initial purchasers (the Initial Purchasers), for whom J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC are acting as representatives, pursuant to which the Company agreed to issue and sell to the Initial Purchasers $550 million aggregate principal amount of the Companys 6.250% Senior Notes due December 2025 (the Notes) in connection with a private offering of the Notes.
In connection with the offering of the Notes, the Company entered into a Registration Rights Agreement, dated
November 29, 2017
, by and among the Company and the Initial Purchasers (the Registration Rights Agreement), which provides the holders of the Notes certain rights relating to the registration of the Notes under the Securities Act of 1933, as amended (the Securities Act). Pursuant to the Registration Rights Agreement, the Company agreed to conduct a registered exchange offer for the Notes and, in certain circumstances, to file and cause to become effective a shelf registration statement providing for the resale of the Notes. If the Company fails to comply with certain obligations contained in the Registration Rights Agreement, it will be required to pay liquidated damages in the form of additional interest to holders of the Notes.
The description above does not purport to be complete and is qualified in its entirety by the Registration Rights Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Certain of the Initial Purchasers and their respective affiliates have from time to time provided investment banking, commercial banking and financial advisory services to the Company, for which they have received customary compensation. The Initial Purchasers and their respective affiliates may provide similar services in the future. In particular, certain of the Initial Purchasers are parties to the Companys revolving credit facility as agents, lenders or other roles, and receive customary fees in such roles and may receive a portion of the net proceeds of this offering used to repay amounts outstanding under the revolving credit facility.
Indenture
The Notes were issued pursuant to an indenture dated
November 29
, 2017 (the Indenture) between the Company and U.S. Bank National Association, as trustee (the Trustee), providing for the terms and conditions of the Notes.
The Notes will mature on December 1, 2025 unless earlier purchased or redeemed by the Company. The Company may redeem all or part of the Notes prior to December 1, 2020 at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium (as defined in the Indenture) and accrued and unpaid interest, if any, to the date of redemption, subject to rights of holders of the Notes on the relevant record date to receive interest. Thereafter, the Notes may be redeemed as set forth in the Indenture. Additionally, prior to December 1, 2020, the Company may, on one or more occasions, redeem up to 35% of the principal amount of the Notes with all or a portion of the net cash proceeds of certain equity offerings at a redemption price equal to 106.250% of the principal amount thereof, plus accrued and unpaid interest if any, on the Notes redeemed to the redemption date, subject to further conditions.
The Indenture contains covenants that restrict the Companys ability and the ability of certain of its subsidiaries to, among other restrictions and limitations: (i) incur additional indebtedness; (ii) incur liens; (iii) pay dividends; (iv) consolidate, merge or transfer all or substantially all of its or their assets; (v) engage in transactions with affiliates; and (vi) engage in certain restricted business activities. These covenants are subject to a number of exceptions and qualifications.
At any time the Notes are not exempt from the Trust Indenture Act of 1939, the Indenture shall incorporate and be governed by the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act.
The description above does not purport to be complete and is qualified in its entirety by the Indenture, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated by reference herein.
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