EXTRACTION OIL & GAS, INC. Item 1.01 Entry into a Material Definitive Agreement.
Reserve-Based Revolving Credit Facility
On the Effective Date, pursuant to the terms of the Plan, the Company, as borrower, entered into a reserve-based revolving credit agreement (the "RBL Credit Agreement") with the lenders party thereto (the "RBL Lenders"),Wells Fargo Bank, National Association , as administrative agent (in such capacity, the "Administrative Agent"), andWells Fargo Securities, LLC , as lead arranger and bookrunner, providing for a reserve-based revolving credit facility (the "RBL Credit Facility") with a facility size of$1,000.0 million . The initial borrowing base is$500.0 million until the next scheduled redetermination. The borrowing base will be redetermined semiannually on or aroundMay 1 andNovember 1 of each year, with one interim "wildcard" redetermination available to each of the Company and the Administrative Agent between scheduled redeterminations during any 12-month period. The next scheduled redetermination will be on or aroundMay 1, 2021 . The initial elected amount under the RBL Credit Facility is$500.0 million on the Effective Date before giving effect to any outstanding letters of credit on such date. The RBL Credit Facility provides for a$50.0 million sublimit of the aggregate commitments that is available for the issuance of letters of credit. The RBL Credit Facility bears interest either at a rate equal to (a) LIBOR plus an applicable margin that varies from 3.00% to 4.00% per annum or (b) a base rate plus an applicable margin that varies from 2.00% to 3.00% per annum. The RBL Credit Facility matures onJuly 20, 2024 . The RBL Credit Agreement requires the Company to maintain (i) a consolidated net leverage ratio of less than or equal to 3.00 to 1.00 and (ii) a consolidated current ratio of greater than or equal to 1.00 to 1.00. The Company is required to pay a commitment fee of 0.50% per annum on the actual daily unused portion of the current aggregate commitments under the RBL Credit Facility. The Company is also required to pay customary letter of credit and fronting fees. The RBL Credit Agreement also contains customary affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental laws and anti-corruption laws), delivery of quarterly and annual financial statements and borrowing base certificates, conduct of business, maintenance of property, maintenance of insurance, restrictions on the incurrence of liens, indebtedness, asset dispositions, restricted payments, and other customary covenants. Additionally, the RBL Credit Agreement contains customary events of default and remedies for credit facilities of this nature. If the Company does not comply with the financial and other covenants in the RBL Credit Agreement, the RBL Lenders may, subject to customary cure rights, require immediate payment of all amounts outstanding under the RBL Credit Agreement and any outstanding unfunded commitments may be terminated. This summary of the RBL Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the RBL Credit Agreement, which is filed as Exhibit 10.1 to this Current Report and incorporated herein by reference. 1 --------------------------------------------------------------------------------
Guarantee and Security of the RBL Credit Facility
The obligations under the RBL Credit Facility are guaranteed by the Company and the Company's subsidiaries (collectively, the "Guarantors" and together with the Company, the "Loan Parties") and secured by substantially all of the Loan Parties' assets (subject to customary exceptions). On the Effective Date, the Guarantors entered into (i) a guaranty agreement in favor of the Administrative Agent, for the benefit of the secured parties thereunder, pursuant to which the Guarantors guaranteed the payment and performance of all indebtedness and liabilities arising pursuant to, or in connection with, the RBL Credit Agreement and (ii) a pledge and security agreement in favor of the Administrative Agent, for the benefit of the secured parties thereunder, pursuant to which the Loan Parties granted a first lien security interest in all of the collateral described therein.
Registration Rights Agreement
Pursuant to the Plan, on the Effective Date, the Company entered into a Registration Rights Agreement (the "Registration Rights Agreement") with certain stockholders (the "Holders"). The Registration Rights Agreement provides resale registration rights for theHolders' Registrable Securities (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, upon a request of Holders holding at least 10% of the common stock of the Company, as reorganized pursuant to and under the Plan (the "New Common Stock"), the Company is required to file a Shelf Registration Statement (as defined in the Registration Rights Agreement) with respect to theRegistrable Securities within 60 days of the Effective Date. The Company is required to maintain the effectiveness of any such registration statement until theRegistrable Securities covered by the registration statement are no longerRegistrable Securities . Additionally, the Holders have customary demand, underwritten offering and piggyback registration rights, subject to the limitations set forth in the Registration Rights Agreement. These registration rights are subject to certain conditions and limitations, including the right of underwriters to limit the number of shares to be included in a registration statement and the Company's right to delay or withdraw a registration statement under certain circumstances. The Company will generally pay all registration expenses in connection with its obligations under the Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective. The registration rights granted in the Registration Rights Agreement are subject to customary indemnification and contribution provisions, as well as customary restrictions such as blackout periods and, if an underwritten offering is contemplated, limitations on the number of shares to be included in the underwritten offering that may be imposed by the underwriters. The obligations to register shares under the Registration Rights Agreement will terminate with respect to the Company and each Holder on the first date upon which the Holder no longer owns anyRegistrable Securities .
The description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement, which is filed as Exhibit 10.2 to this Current Report and incorporated herein by reference.
Warrant Agreements
On the Effective Date and pursuant to the Plan, the Company entered into (i) a Warrant Agreement (the "Tranche A Warrant Agreement") withAmerican Stock Transfer & Trust Company, LLC , aNew York limited liability trust company, as warrant agent (the "Warrant Agent"), which provides for the Company's issuance of up to an aggregate of 2,909,686 Tranche A warrants (the "Tranche A Warrants") to purchase New Common Stock to former holders of the Company's Existing Common Stock and Existing Preferred Stock (each as defined below) on the Effective Date in accordance with the terms of the Plan, the Confirmation Order and the Tranche A Warrant Agreement and (ii) a Warrant Agreement (the "Tranche B Warrant Agreement" and, together with the Tranche A Warrant Agreement, the "Warrant Agreements") with the Warrant Agent, which provides for the Company's issuance of up to an aggregate of 1,454,863 Tranche B warrants (the "Tranche B Warrants" and, together with the Tranche A Warrants, the "Warrants") to purchase New Common Stock to former holders of the Company's Existing Common Stock and Existing Preferred Stock on the Effective Date in accordance with the terms of the Plan, the Confirmation Order and the Tranche B Warrant Agreement. The Tranche A Warrants are exercisable from the date of issuance until the fourth anniversary of the Effective Date, at which time all unexercised Tranche A Warrants will expire, and the rights of the holders of such expired Tranche A Warrants to purchase New Common Stock will terminate. The Tranche B Warrants are exercisable from the date of issuance until the fifth anniversary of the Effective Date, at which time all unexercised Tranche B 2 -------------------------------------------------------------------------------- Warrants will expire, and the rights of the holders of such expired Tranche B Warrants to purchase New Common Stock will terminate. The Tranche A Warrants are initially exercisable for one share of New Common Stock per Tranche A Warrant at an initial exercise price of$107.64 per Tranche A Warrant (the "Tranche A Exercise Price"), and the Tranche B Warrants are initially exercisable for one share of New Common Stock per Tranche B Warrant at an initial exercise price of$122.32 per Tranche B Warrant (the "Tranche B Exercise Price" and, together with the Tranche A Exercise Price, the "Exercise Prices"), in each case subject to the cashless exercise provisions contained in the Warrant Agreements and subject to adjustment in certain circumstances. Pursuant to the Warrant Agreements, no holder of a Warrant, by virtue of holding or having a beneficial interest in a Warrant, will have the right to vote, receive dividends, receive notice as stockholders with respect to any meeting of stockholders for the election of the Company's directors or any other matter, or . . . Item 1.02 Termination of a Material Definitive Agreement.
Equity Interests
In accordance with the Plan, all agreements, instruments and other documents evidencing, relating to or otherwise connected with any of the Company's equity interests outstanding prior to the Effective Date were cancelled and all such equity interests have no further force or effect after the Effective Date. Pursuant to the Plan, the holders of the Company's existing common stock, par value$0.01 (the "Existing Common Stock"), outstanding prior to the Effective Date and the holders of the Company's Series A Convertible Preferred Stock, par value$0.01 (the "Existing Preferred Stock"), outstanding prior to the Effective Date received (i) their proportionate distribution of the New Common Stock of the Company, (ii) the right to participate in the Equity Rights Offering (as defined in the Plan) and (iii) the issuance of the Tranche A Warrants and Tranche B Warrants.
In accordance with the Plan, on the Effective Date, all outstanding obligations under the following notes issued by the Company and the related registration rights were cancelled and the indentures governing such obligations were cancelled, except to the limited extent expressly set forth in the Plan:
•7.375% Senior Notes due 2024 (the "2024 Notes") issued pursuant to the
indenture dated
•5.625% Senior Notes due 2026 (the "2026 Notes" and, together with the 2024 Notes, the "Senior Notes") issued pursuant to the indenture datedJanuary 25, 2018 , by and among the Company, the subsidiary guarantors party thereto andWilmington Savings Fund Society , FSB, as trustee.
In accordance with the Plan, the holders of the Senior Notes received (i) their proportionate distribution of the New Common Stock and (ii) the right to participate in the Equity Rights Offering.
General Unsecured Interests
In accordance with the Plan, all agreements, instruments and other documents evidencing, relating to or otherwise connected with any General Unsecured Claim (as defined in the Plan) outstanding prior to the Effective Date were cancelled and all such interests have no further force or effect after the Effective Date. Pursuant to the Plan, the holders of General Unsecured Claims prior to the Effective Date, other than anyMidstream Party that executes a Midstream Settlement Transaction Term Sheet, received (i) their proportionate distribution of the New Common Stock 3 --------------------------------------------------------------------------------
of the Company and (ii) the right to participate in the GUC Equity Rights Offering or make the GUC Cash Out Election (each as defined in the Plan).
Prepetition RBL Facility Pursuant to the Plan, on the Effective Date, the Amended and Restated Credit Agreement, dated as ofAugust 16, 2017 (as amended prior to the date hereof, the "Prepetition RBL Facility"), by and among the Company, as borrower, the lenders party thereto, andWells Fargo Bank, National Association , as administrative agent, was terminated and the holders of claims under the Prepetition RBL Facility each received its ratable portion of the RBL Credit Agreement for its allowed claims. On the Effective Date, all liens and security interests granted to secure such obligations were automatically terminated and are of no further force and effect. Debtor-in-Possession Facility Pursuant to the Plan, on the Effective Date, the debtor-in-possession credit agreement, dated as ofJune 16, 2020 , among the Company, as borrower, certain other debtors,Wells Fargo Bank, National Association , as administrative agent, and the lenders party thereto (the "DIP Facility"), was terminated and the holders of claims under the DIP Facility received payment in full, in cash, for allowed claims. On the Effective Date, all liens and security interests granted to secure such obligations were automatically terminated and are of no further force and effect.
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The description of the RBL Credit Agreement set forth in Item 1.01 of this Current Report are incorporated herein by reference.
3.02. Unregistered Sales of
On the Effective Date, pursuant to the Plan:
• 2,832,833 shares of New Common Stock were issued pro rata to holders of the 2024 Notes;
• 4,854,017 shares of New Common Stock were issued pro rata to holders of the 2026 Notes;
• 179,472 shares of New Common Stock, 1,454,832 Tranche A Warrants to purchase 1,454,832 shares of New Common Stock and 727,420 Tranche B Warrants to purchase 727,420 shares of New Common Stock were issued pro rata to holders of the Existing Preferred Stock; • 179,496 shares of New Common Stock, 1,454,854 Tranche A Warrants to purchase 1,454,854 shares of New Common Stock and 727,443 Tranche B Warrants to purchase 727,443 shares of New Common Stock were issued pro rata to holders of the Existing Common Stock;
• 1,169,322 shares of New Common Stock were issued to commitment parties under the Backstop Commitment Agreement in respect of the commitment premium due thereunder;
• 844,760 shares of New Common Stock were issued to the commitment parties under the Backstop Commitment Agreement in connection with their backstop obligation thereunder to purchase unsubscribed shares of New Common Stock; and • 11,478,670 shares of New Common Stock were issued to participants in the Equity Rights Offering extended by the Company to the applicable classes under the Plan (including to the commitment parties party to the Backstop Commitment Agreement). • 13,392 shares of New Common Stock were issued to participants in the GUC Equity Rights Offering extended by the Company to holders of General Unsecured Claims.
As of the Effective Date, there were 24,927,219 shares of New Common Stock issued and outstanding.
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With the exception of shares of New Common Stock issued on account of the
Backstop Obligations and the Settlement Shares (each as defined in the Plan),
shares of New Common Stock and Warrants issued pursuant to the Plan were issued
pursuant to the exemption from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act"), under Section 1145 of the
Bankruptcy Code. Shares of New Common Stock issued on account of the Backstop
Obligations and the Settlement Shares were issued under the exemption from
registration requirements of the Securities Act provided by Section 4(a)(2)
thereunder.
3.03. Material Modifications to Rights of Security Holders.
As provided in the Plan, all notes, equity, agreements, instruments, certificates and other documents evidencing any claim against or interest in the Debtors were cancelled on the Effective Date and the obligations of the Debtors thereunder or in any way related thereto were fully released. The securities to be cancelled on the Effective Date include all of the Existing Common Stock, the Existing Preferred Stock and the Senior Notes. For further information, see the Explanatory Note and Items 1.02 and 5.03 of this Current Report, which are incorporated herein by reference.
5.01. Changes in Control of Registrant.
As previously disclosed, on the Effective Date, all of the Existing Common Stock, the Existing Preferred Stock and the Senior Notes were cancelled, and the Company issued approximately 0.7% of the New Common Stock to holders of the Existing Common Stock, approximately 0.7% of the New Common Stock to the holders of the Existing Preferred Stock, approximately 13.5% of the New Common Stock to the holders of the General Unsecured Claims and approximately 30.8% of the New Common Stock to holders of the Senior Notes pursuant to the Plan. For further information, see Items 1.02, 3.02 and 5.02 of this Current Report, which are incorporated herein by reference.
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure of Directors
In accordance with the Plan,
Appointment of Directors
As of
• the Board consists of seven members;
•
•
Pursuant to the terms of the Plan, the Board consists of (i) the Chief Executive Officer of the Company and (ii) six directors selected by the Required Consenting Senior Noteholders (as defined in the Plan).
In accordance with the terms of the Plan, the Required Consenting Senior
Noteholders have selected
The Board consists of a single class of directors with the initial term of office to expire at the Company's 2022 annual meeting of stockholders or until such director's earlier death, resignation or removal.
The current committees of the Board and directors appointed to each committee are as follows:
• Audit Committee:
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Description
Number
2.1 Sixth Amended Joint Plan of Reorganization of
its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code
(incorporated by reference to Exhibit A of the Confirmation Order attached as
Exhibit 99.1 hereto, filed as Exhibit 2.1 to the Company's Current Report on
Form 8-K filed on December 30, 2020 ).
3.1 Amended and Restated Certificate of Incorporation of
Inc.
3.2 Amended and Restated Bylaws of Extraction Oil & Gas , Inc.
10.1 RBL Credit Agreement dated as of January 20 ,
2021, among Extraction
Oil & Gas, Inc. , as borrower,Wells Fargo Bank ,
National Association, as
administrative agent, and the lenders and other parties party thereto.
10.2 Registration Rights Agreement dated as of January 20 , 2021, by and
among Extraction Oil & Gas, Inc. and the other parties signatory thereto.
10.3 Tranche A Warrant Agreement dated as of January 20 , 2021, between
Extraction Oil & Gas, Inc. andAmerican Stock Transfer & Trust Company, LLC . 10.4 Tranche B Warrant Agreement dated as of January
20 , 2021, between
Extraction Oil & Gas, Inc. and American Stock Transfer & Trust Company, LLC.
10.5 Form of Indemnification Agreement.
10.6 Extraction Oil & Gas, Inc. 2021 Long Term Incentive Plan.
10.7 Form of Restricted Stock Unit (RSU) Agreement (Time and Performance
Vesting).
10.8 Form of Deferred Stock Unit Agreement (Directors).
10.9 Employment Agreement, dated as of January 20 , 2021, by and between
Extraction Oil & Gas, Inc. and Thomas B. Tyree, Jr.
Employment Agreement, dated as of January 20 , 2021, by and between
10.10 Extraction Oil & Gas, Inc. and Matthew B. Owens.
Employment Agreement, dated as of January 20 , 2021, by and between
10.11 Extraction Oil & Gas, Inc. and Marianella Foschi.
Employment Agreement, dated as of January 20 , 2021, by and between
10.12 Extraction Oil & Gas, Inc. and Tom L. Brock.
Employment Agreement, dated as of January 20 , 2021, by and between
10.13 Extraction Oil & Gas, Inc. and Eric J. Christ.
Order Confirming Sixth Amended Joint Plan of Reorganization (incorporated by
reference to Exhibit 99.1 to Extraction Oil & Gas, Inc.'s Current Report on Form
99.1 8-K filed on December 30, 2020 ).
99.2 Press Release dated January 20, 2021 .
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