UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): June 25,
2020
ABRAXAS PETROLEUM CORPORATION
(Exact name of registrant as specified in charter)
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Nevada
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1-16071
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74-2584033
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(State or other Jurisdiction
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(Commission File Number)
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(I.R.S. Employer
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of incorporation or organization)
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Identification No.)
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18803 Meisner Drive San Antonio, Texas
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78258
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(Address of principal executive offices)
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(ZIP Code)
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(Registrant’s telephone number, including area code) (210)
490-4788
None
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General
Instruction A.2. below):
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Written communication pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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Pre-commencement communication pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communication pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $.01 per share
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AXAS
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The NASDAQ Stock Market, LLC
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
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Item 1.01. Entry into a Material Definitive
Agreement.
Waiver and Amendment No. 10 to Third Amended and Restated
Agreement
On June 25, 2020, Abraxas Petroleum Corporation (“Abraxas”)
(NASDAQ:AXAS) and its subsidiary guarantors entered into the Waiver
and Amendment No. 10 to Credit Agreement (the “1L Amendment”) with
Société Générale, as administrative agent and issuing lender, and
the lenders party thereto, pursuant to which the parties agreed to,
among other things, waive Abraxas’ designated events of default
with respect to its first lien credit facility and amend certain
covenants and payment provisions of the Third Amended and Restated
Credit Agreement, dated June 11, 2014, as amended, (the “1L Credit
Agreement”). A copy of the 1L Amendment is attached to this
report as Exhibit 10.1. The 1L Credit Agreement, as amended,
including as amended by the 1L Amendment, is referred to herein as
the “First Lien Credit Agreement”.
Due to the unprecedented conditions surrounding the outbreak and
spread of the COVID-19 coronavirus pandemic, the recent decline in
oil prices, and related geopolitical developments, Abraxas failed
to file its Annual Report on Form 10-K for the period ended
December 31, 2019 no later than 90 days after the end of such
fiscal year, which resulted in violations of certain covenants
under the 1L Credit Agreement (as in effect prior to the 1L
Amendment). Subject to the terms and conditions of the 1L
Amendment, Société Générale and each of the other lenders
permanently waived such events of default and agreed not to charge
default interest with respect to such defaults.
The 1L Amendment modifies certain provisions of the 1L Credit
Agreement, including (i) the addition of monthly mandatory
prepayments from excess cash (defined as available cash minus
certain cash set-asides and a $3 million working capital reserve)
with corresponding reductions to the borrowing base; (ii) the
replacement of total debt leverage ratio and minimum asset ratio
covenants with first lien debt leverage ratio and minimum first
lien asset coverage ratio covenants; (iii) the elimination of
current ratio and interest coverage ratio covenants; (iv)
additional restrictions on capital expenditures, outstanding
accounts payable and general and administrative expenses; and (v)
permission for up to an additional $25 million in structurally
subordinated debt to finance capital expenditures. Abraxas,
Société Générale, and the lenders also agreed that concurrently
with the effectiveness of the Amendment, the borrowing base would
be adjusted from $135.0 million to $102 million and the semi-annual
borrowing base mechanism removed, with the new borrowing base
amount to remain in effect until the next adjustment of the
borrowing base pursuant to the First Lien Credit Agreement.
The foregoing summary of the First Lien Credit Agreement does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the First Lien Credit Agreement filed
as Exhibit 10.1 to this Current Report on Form 8-K and incorporated
herein by reference.
Waiver and Second Amendment to Term Loan Credit
Agreement
On June 25, 2020, Abraxas and its subsidiary guarantors entered
into the Waiver and Second Amendment to Term Loan Credit Agreement
(the “2L Amendment”) with Angelo Gordon Energy Servicer, LLC
(“Angelo Gordon”), as administrative agent and issuing lender, and
the lenders party thereto, pursuant to which the parties agreed to,
among other things, waive Abraxas’ designated events of default
with respect to its second lien credit facility and amend certain
covenants and payment provisions of the Term Loan Credit Agreement,
dated as of November 13, 2019, as amended, (the “2L Credit
Agreement”). A copy of the 2L Amendment is attached to this
report as Exhibit 10.2. The 2L Credit Agreement, as amended,
including as amended by the 2L Amendment, is referred to herein as
the “Second Lien Credit Agreement”.
Due to the unprecedented conditions surrounding the outbreak and
spread of the COVID-19 coronavirus pandemic, the recent decline in
oil prices, and related geopolitical developments, Abraxas failed
to file its Annual Report on Form 10-K for the period ended
December 31, 2019 no later than 90 days after the end of such
fiscal year, which resulted in violations of certain covenants
under the 2L Credit Agreement (as in effect prior to the 2L
Amendment). Additionally, Abraxas failed to maintain the
required hedges under the 2L Credit Agreement with respect to the
fiscal quarter ending March 31, 2020, which resulted in a violation
of certain covenants under the 2L Credit Agreement (as in effect
prior to the 2L Amendment). Subject to the terms and
conditions of the 2L Amendment, Angelo Gordon and each of the other
lenders permanently waived such events of default and agreed not to
charge default interest with respect to such defaults.
The 2L Amendment modifies certain provisions of the 2L Credit
Agreement, including (i) a requirement that, while the obligations
under the First Lien Credit Agreement are outstanding, scheduled
payments of accrued interest under the Second Lien Credit Agreement
will be paid in the form of capitalized interest or in shares of
equity of Abraxas; (ii) an increase in the interest rate by 200bps
for interest payable in cash and 400-500bps for interest payable in
kind; and (iii) modifications to financial covenants to conform to
the Second Lien Credit Agreement.
The foregoing summary of the Second Lien Credit Agreement does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Second Lien Credit Agreement
filed as Exhibit 10.2 to this Current Report on Form 8-K and
incorporated herein by reference.
Fee Letter
On June 25, 2020, Abraxas, in connection with the 2L Amendment and
to induce Angelo Gordon and the lenders to enter into the 2L
Amendment, entered into the Fee Letter (the “Fee Letter”) with
Angelo Gordon, pursuant to which Abraxas will (i) pay $10,000,000
exit fee to Angelo Gordon and the lenders upon maturity of the
obligations under the Second Lien Credit Agreement or the earlier
acceleration or payment in full; (ii) grant warrants having an
exercise price of $0.01 in an amount equal to 19.9% of the fully
diluted common equity of Abraxas to Angelo Gordon and the lenders;
(iii) negotiate and provide an alternative financial arrangement
that would afford Angelo Gordon and the lenders an economic benefit
equivalent in value to the warrants if the warrants cannot be
issued on terms satisfactory to Angelo Gordon; and (iv) protect the
lenders by taking such reasonable steps as necessary to grant the
lenders either (a) the right to appoint one member to Abraxas'
Board of Directors or (b) Board observation rights reasonably
satisfactory to the administrative agent. A copy of the Fee
Letter is attached to this report as Exhibit 10.3.
The foregoing summary of the Fee Letter does not purport to be
complete and is subject to, and qualified in its entirety by, the
full text of the Fee Letter filed as Exhibit 10.3 to this Current
Report on Form 8-K and incorporated herein by reference.
Non-Reliance on Representations and Warranties of
Agreements
The First Lien Credit Agreement, the Second Lien Credit Agreement,
and the Fee Letter contain representations and warranties that
Abraxas made as of specific dates. Except for their status as
contractual documents that establish and govern the legal relations
among the parties, none of the First Lien Credit Agreement, the
Second Lien Credit Agreement, and the Fee Letter is intended to be
a source of factual, business, or operational information about any
of the parties thereto. The representations and warranties
were made as of specific dates, only for purposes of the proposed
transactions, and solely for the respective benefit of the parties
to the First Lien Credit Agreement, the Second Lien Credit
Agreement, and the Fee Letter. These representations and
warranties may be subject to limitations agreed between the
parties, including being qualified by disclosures between the
parties. The representations and warranties may have been
made to allocate risks among the parties, including where the
parties do not have complete knowledge of all facts, instead of
establishing matters as facts. Furthermore, those
representations and warranties may be subject to standards of
materiality applicable to the contracting parties that differ from
those applicable to investors. Accordingly, investors and
security holders should not rely on such representations and
warranties as characterizations of the actual state of facts or
circumstances, since they were only made as of the date of the
First Lien Credit Agreement, the Second Lien Credit Agreement, and
the Fee Letter. Moreover, information concerning the subject
matter of such representations and warranties may change after the
date of these representations and warranties, which may or may not
be fully reflected in the parties’ public disclosures.
Item 2.03. Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant.
To the extent required by Item 2.03 of Form 8-K, the information
set forth under Item 1.01 above hereby is incorporated into this
Item 2.03 by reference.
Item 9.01. Financial Statements and
Exhibits.
Exhibit 10.1
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Waiver and Amendment No. 10 to Third Amended and Restated
Agreement.
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Exhibit 10.2
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Waiver and Second Amendment to Term Loan Credit Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
ABRAXAS PETROLEUM CORPORATION
By: /s/ Steven P. Harris
Steven P. Harris
Vice President, Chief Financial Officer
Dated: June 25, 2020
Abraxas Petroleum (NASDAQ:AXAS)
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