Current Report Filing (8-k)
May 04 2018 - 2:50PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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):
May 4, 2018
CARBON NATURAL GAS COMPANY
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(Exact name of registrant as specified in charter)
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Delaware
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000-02040
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26-0818050
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(State or Other Jurisdiction
of Incorporation)
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(Commission File
Number)
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(IRS Employer
Identification No.)
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1700 Broadway, Suite 1170, Denver, Colorado
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80290
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(Address of principal executive offices)
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(Zip code)
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(720) 407-7043
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(Registrant's telephone number including area code)
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(Former Name or former address, if changed since last report)
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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 communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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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 13a of the Exchange Act.
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Item 1.01. Entry into a Material Definitive
Agreement
On May 4, 2018, Carbon
Natural Gas Company, a Delaware corporation (“
Carbon
” or the “
Company
”), entered
into a Membership Interest Purchase Agreement (the “
Purchase Agreement
”) by and among the Company, Old
Ironsides Energy Fund II-A, LLC, a Delaware limited liability company (“
OIE II-A
”), and Old Ironsides
Energy Fund II-B, LLC, a Delaware limited liability company (“
OIE II-B
” and collectively with OIE II-A,
the “
Sellers
”). The Sellers own 73.5%, and Carbon owns the remaining 26.5%, of the issued and outstanding
Class A Units of Carbon Appalachian Company, LLC, a Delaware limited liability company (“
Carbon
Appalachia
”). Carbon also owns all of the Class B and Class C Units of Carbon Appalachia. Pursuant to the
Purchase Agreement, Carbon will acquire all of the Sellers’ membership interests (the “
Subject Class A Units
”)
of Carbon Appalachia (the “
Transaction
”).
Following the closing
of the Transaction, Carbon will own 100% of the issued and outstanding ownership interests in Carbon Appalachia, and Carbon Appalachia
will become a wholly-owned subsidiary of Carbon.
Subject to the terms and
conditions of the Purchase Agreement, the Company will pay to the Sellers at closing cash in the approximate amount of $57 million,
subject to adjustment in accordance with the Purchase Agreement for changes in financial matters such as working capital, outstanding
indebtedness and the amount of undistributed preferred return on capital invested by the Sellers in Carbon Appalachia attributable
to the Subject Class A Units.
Each party’s obligation
to consummate the Transaction is subject to certain closing conditions, including (i) the accuracy of the other party’s
representations and warranties contained in the Purchase Agreement (subject to certain materiality qualifiers) and (ii) the
other party’s compliance in all material respects with its covenants and agreements contained in the Purchase Agreement.
The parties’ obligations to consummate the Transaction are further conditioned upon Carbon obtaining financing in an amount
sufficient to pay the adjusted purchase price.
The Purchase Agreement
contains customary representations, warranties and covenants by each party that are subject, in some cases, to specified exceptions
and qualifications contained in the Purchase Agreement.
The Purchase Agreement
contains termination rights for each of Carbon and the Sellers, including, among others, if the closing of the Transaction has
not occurred on or before September 1, 2018 (a date that is 120 days after execution of the Purchase Agreement). The Purchase Agreement
may also be terminated by mutual written consent of Carbon and the Sellers.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned,
hereunto duly authorized.
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CARBON NATURAL GAS COMPANY
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May 4, 2018
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/s/ Patrick R. McDonald
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Patrick R. McDonald,
Chief Executive Officer
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Carbon Energy (CE) (USOTC:CRBO)
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