CIMAREX ENERGY CO. (NYSE:XEC) Files An 8-K Completion of Acquisition or Disposition of Assets
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On March1, 2019, Cimarex Energy Co. (“Cimarex”) completed its previously announced acquisition of Resolute Energy Corporation (“Resolute”), to the Agreement and Plan of Merger, dated as of November18, 2018 (the “Merger Agreement”), by and among Cimarex, CR Sub 1 Inc., a direct wholly owned subsidiary of Cimarex (“Merger Sub 1”), CR Sub 2 LLC under its amended name, Cimarex Resolute LLC, a direct wholly owned subsidiary of Cimarex (“Merger Sub 2”), and Resolute. to the Merger Agreement, Merger Sub 1 merged with and into Resolute (the “First Merger”), with Resolute surviving and continuing as the surviving corporation. Immediately following the effective time of the First Merger (the“Effective Time”), Resolute merged with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Merger”), with Merger Sub 2 surviving and continuing as the surviving company.
to the Merger Agreement, each share of common stock, par value $0.0001 per share, of Resolute (“Resolute Common Stock”) issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares, Converted Shares and any Appraisal Shares (as such terms are defined in the Merger Agreement)) was converted into the right to receive, in accordance with such holder’s election, subject to proration as described below, one of the following forms of consideration (the “Merger Consideration”):
· an amount of cash, without interest, equal to $35.00 (subject to adjustment in accordance with the terms of the Merger Agreement); or
· 0.3943 shares of Cimarex Common Stock (subject to adjustment in accordance with the terms of the Merger Agreement).
In addition, holders of Resolute restricted stock (time and/or performance vested), outperformance share rights and/or options (collectively, the “Resolute Equity Awards”) at the Effective Time also had rights to receive the Merger Consideration, in accordance with such holder’s election, subject to proration as described below. Resolute stock appreciation rights and restricted cash awards were converted into rights to receive cash payments at the Effective Time.
The elections were subject to proration so that the aggregate Merger Consideration paid to all holders of Resolute shares eligible to make an election of the Merger Consideration (including holders of Resolute Equity Awards whose awards were converted into rights to receive the Merger Consideration) consisted of no more than 60% shares of Cimarex Common Stock and 40% cash, based on the closing sale price for shares of Cimarex Common Stock on November16, 2018. No fractional shares of Cimarex Common Stock were issued in the Merger, and holders of Resolute Common Stock instead received cash in lieu of fractional shares of Cimarex Common Stock.
Following proration, Cimarex issued approximately 5.7 million shares of Cimarex Common Stock and paid $325.6 million in cash to former holders of Resolute Common Stock and Resolute Equity Awards. At closing, the total amount of funds necessary to pay the cash portion of the Merger Consideration, pay transaction fees and expenses and repay in full the amounts outstanding under Resolute’s revolving credit facility was approximately $615million, which Cimarex funded with cash on hand. In connection with the Merger and concurrently with the closing, Cimarex also deposited funds sufficient to redeem any $600 million 8.50% Senior Notes of Resolute outstanding on April1, 2019 with cash on hand and borrowings under Cimarex’s revolving credit facility, satisfying and discharging the indenture governing the 8.50% Senior Notes. As of March1, 2019, Cimarex had $525 million in borrowings outstanding under its revolving credit facility, leaving an unused borrowing availability of $722.5 million.
to the Merger Agreement, each share of preferred stock of Resolute, par value $0.0001 per share, issued and outstanding immediately prior to the Effective Time was converted into the right to receive one share of 81/8% SeriesA Cumulative Perpetual Convertible Preferred Stock, par value $0.01 per share, of Cimarex (“Cimarex Preferred Stock”). As a result of the Merger, Cimarex issued 62,500 shares of Cimarex Preferred Stock and reserved for issuance 579,459 shares of Cimarex Common Stock issuable upon conversion of such Cimarex Preferred Stock. The terms of the Cimarex Preferred Stock are more fully described in the Certificate of Designations (as defined
below), a copy of which is filed as Exhibit3.1 to this Current Report on Form8-K and is incorporated herein by reference.
The foregoing description of the Merger Agreement and the transactions contemplated thereby in this Current Report onForm8-Kis only a summary and does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed as Exhibit2.1 to this Current Report on Form8-K and is incorporated by reference herein.
The issuance of Cimarex Common Stock and Cimarex Preferred Stock, including Cimarex Common Stock issuable upon conversion of 62,500 of Cimarex Preferred Stock, in connection with the Merger was registered under the Securities Act of 1933, as amended (the “Securities Act”), to Cimarex’s registration statement on FormS-4, as amended(FileNo.333-228809), which became effective on January30, 2019. The proxy statement/prospectus included in the registration statement contains additional information about the Merger.
ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
The information set forth in Item 2.01 of this Current Report on Form8-K is incorporated herein by reference.
ITEM 5.03. AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.
In anticipation of the Merger, on February28, 2019, Cimarex filed a Certificate of Designations with the Secretary of State of the State of Delaware, establishing the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of Cimarex Preferred Stock (the “Certificate of Designations”). The Certificate of Designations is authorized in accordance with Cimarex’s Amended and Restated Certificate of Incorporation, and Cimarex Preferred Stock was issued to the terms of the Certificate of Designations on March1, 2019.
ITEM 7.01 REGULATION FD DISCLOSURE.
On March1, 2019, the Company issued a press release announcing the completion of the Merger. A copy of the press release is furnished as Exhibit99.1 to this Current Report on Form8-K.
In accordance with General Instructions B.2. of Form8-K, this information shall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act except as shall be expressly set forth by specific reference in such a filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(D)Exhibits
CIMAREX ENERGY CO Exhibit
EX-3.1 2 a19-5703_2ex3d1.htm EX-3.1 Exhibit 3.1 CIMAREX ENERGY CO. CERTIFICATE OF DESIGNATIONS Pursuant to Section 151 of the General Corporation Law of the State of Delaware 81/8% SERIES A CUMULATIVE PERPETUAL CONVERTIBLE PREFERRED STOCK (Par Value $0.01 Per Share) Cimarex Energy Co. (the “Corporation”),…
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About CIMAREX ENERGY CO. (NYSE:XEC)
Cimarex Energy Co. is an independent oil and gas exploration and production company. The Company’s segment is exploration and production. Its operations are located mainly in Oklahoma, Texas and New Mexico. Its operations are focused in approximately two main areas, such as the Permian Basin and the Mid-Continent region. Its Permian Basin region includes west Texas and southeast New Mexico. Its Mid-Continent region consists of Oklahoma and the Texas Panhandle. Its Permian Basin efforts are located in the western half of the Permian Basin known as the Delaware Basin. It is focused on drilling horizontal wells that yielded oil and liquids-rich gas from the Wolfcamp shale, the Bone Spring formation and the Avalon shale. The Permian region produces approximately 542 million cubic feet equivalent per day. In the Mid-Continent region, it is focused in the Cana-Woodford shale and the Meramec horizon. The Mid-Continent region produces approximately 432 million cubic feet equivalent per day.
