GULFPORT ENERGY CORPORATION (NASDAQ:GPOR) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
Purchase Agreement
On December15, 2016, Gulfport Energy Corporation (Gulfport) and
certain subsidiary guarantors entered into a purchase agreement
(the Purchase Agreement) with Credit Suisse Securities (USA) LLC
and Merrill Lynch, Pierce, Fenner Smith Incorporated, as
representatives of the several initial purchasers named in the
Purchase Agreement, in connection with Gulfports private
placement of senior notes. The Purchase Agreement provides for,
among other things, the issuance and sale by Gulfport of
$600.0million in aggregate principal amount of 6.375% Senior
Notes due 2025 (the Notes) to qualified institutional buyers to
Rule144A under the Securities Act of 1933, as amended (the
Securities Act), and to certain non-U.S. persons in accordance
with Regulation S under the Securities Act (the Notes Offering).
Gulfport and the subsidiary guarantors of the Notes have agreed
to indemnify the initial purchasers against certain liabilities,
including liabilities under the Securities Act, or to contribute
to payments the initial purchasers may be required to make
because of any of such liabilities. Under the Purchase Agreement,
Gulfport also agreed to a 90-day lock-up with respect to, among
other things, an offer, sale or other disposition of its U.S.
dollar-denominated debt securities, subject to certain
exceptions. In addition, Gulfport and the subsidiary guarantors
have entered into an indenture and a registration rights
agreement relating to the Notes, which are discussed further
below under the headings Indenture and Registration Rights
Agreement, respectively.
Gulfport estimates that its net proceeds from the Notes Offering
will be approximately $590.8million, after deducting the initial
purchasers discounts and estimated offering expenses. Gulfport
intends to use the net proceeds from the Notes Offering, together
with the net proceeds from the Equity Offering (as defined below
under the heading Underwriting Agreement), (i) primarily to fund
the cash portion of the purchase price for Gulfports previously
announced pending acquisition of certain assets of Vitruvian II
Woodford, LLC (the Pending Acquisition) and (ii)for general
corporate purposes, which may include the funding of a portion of
Gulfports capital development plans. The Notes Offering closed on
December21, 2016.
The initial purchasers under the Purchase Agreement and their
respective affiliates have provided, and may provide in the
future, investment banking, commercial banking and other
financial services for Gulfport or its affiliates, and have
entered, and may in the future enter, into hedging transactions
with Gulfport or its affiliates, in the ordinary course of
business, for which they have received and will receive customary
compensation. In particular, an affiliate of Scotia Capital (USA)
Inc. acts as administrative agent, letter of credit issuer and
sole lead manager and affiliates of each of Credit Suisse
Securities (USA) LLC, Barclays Capital Inc., Wells Fargo
Securities, LLC, PNC Capital Markets LLC, KeyBanc Capital Markets
Inc., Morgan Stanley Co. LLC, BBVA Securities Inc., U.S. Bancorp
Investments, Inc., IBERIA Capital Partners L.L.C. and BOK
Financial Securities, Inc. act as a lender under Gulfports
secured revolving credit facility. Affiliates of KeyBanc Capital
Markets Inc. and PNC Capital Markets LLC also act as joint lead
arrangers and co-syndication agents under Gulfports secured
revolving credit facility. Certain of the initial purchasers or
their respective affiliates may hold positions in Gulfports
outstanding 6.625% Senior Notes due 2023 and 6.000% Senior Notes
due 2024. Certain of the initial purchasers or their affiliates
may also be underwriters in the Equity Offering. Merrill Lynch,
Pierce, Fenner Smith Incorporated or its affiliate is acting as
Gulfports financial advisor in connection with the Pending
Acquisition.
The preceding summary of the Purchase Agreement is qualified in
its entirety by reference to the full text of such agreement, a
copy of which is attached as Exhibit1.1 hereto and incorporated
herein by reference.
Indenture
The Notes were issued under an indenture, dated as of December21,
2016, among Gulfport, the subsidiary guarantors party thereto and
Wells Fargo Bank, N.A., as trustee (the Indenture). to the
Indenture, interest on the Notes will accrue at a rate of
6.375%per annum on the outstanding principal amount thereof from
December21, 2016, payable semi-annually on May15 and November15
of each year, commencing on May15, 2017. The Notes will mature on
May15, 2025.
The Notes are Gulfports senior unsecured obligations and rank
equally in right of payment with all of Gulfports other senior
indebtedness, including Gulfports existing senior notes, and
senior in right of payment to any of Gulfports future
subordinated indebtedness. All of Gulfports existing and future
restricted subsidiaries that guarantee its secured revolving
credit facility or certain other debt guarantee the Notes,
provided, however, that the Notes are not guaranteed by Grizzly
Holdings, Inc. and will not be guaranteed by any of Gulfports
future unrestricted subsidiaries. The guarantees rank equally in
right of payment with all of the senior indebtedness of the
subsidiary guarantors and senior in right of payment to any
future subordinated indebtedness of the subsidiary guarantors.
The Notes and the guarantees are effectively subordinated to all
of Gulfports and the subsidiary guarantors secured indebtedness
(including all borrowings and other obligations under Gulfports
secured revolving credit facility) to the extent of the value of
the collateral securing such indebtedness, and structurally
subordinated to all obligations, including trade payables, of any
of Gulfports subsidiaries that do not guarantee the Notes.
Gulfport may redeem some or all of the Notes at any time on or
after May15, 2020, at the redemption prices listed in the
Indenture. Prior to May15, 2020, Gulfport may redeem all or a
portion of the Notes at a price equal to 50% of the principal
amount of the Notes plus a make-whole premium and accrued and
unpaid interest to the redemption date. In addition, any time
prior to May15, 2020, Gulfport may redeem Notes in an aggregate
principal amount not to exceed 35% of the aggregate principal
amount of the Notes issued prior to such date at a redemption
price of 106.375%, plus accrued and unpaid interest to the
redemption date, with an amount equal to the net cash proceeds
from certain equity offerings.
If Gulfport experiences a change of control (as defined in the
Indenture), it will be required to make an offer to repurchase
the Notes at a price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of
repurchase. If Gulfport sells certain assets and fails to use the
proceeds in a manner specified in the Indenture, it will be
required to use the remaining proceeds to make an offer to
repurchase the Notes at a price equal to 50% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the
date of repurchase.
The Indenture contains certain covenants that, subject to certain
exceptions and qualifications, among other things, limit
Gulfports ability and the ability of its restricted subsidiaries
to incur or guarantee additional indebtedness, make certain
investments, declare or pay dividends or make distributions on
capital stock, prepay subordinated indebtedness, sell assets
including capital stock of restricted subsidiaries, agree to
payment restrictions affecting Gulfports restricted subsidiaries,
consolidate, merge, sell or otherwise dispose of all or
substantially all of its assets, enter into transactions with
affiliates, incur liens, engage in business other than the oil
and gas business and designate certain of Gulfports subsidiaries
as unrestricted subsidiaries. Certain of these covenants are
subject to termination upon the occurrence of certain events.
The preceding summary of the Indenture is qualified in its
entirety by reference to the full text of such agreement, a copy
of which is attached as Exhibit 4.1 hereto and incorporated
herein by reference.
Registration Rights Agreement
In connection with the Notes Offering, Gulfport and its
subsidiary guarantors entered into a Registration Rights
Agreement with the representatives of the initial purchasers,
dated as of December21, 2016 (the Registration Rights Agreement),
to which Gulfport agreed to file a registration statement with
respect to an offer to exchange the Notes for a new issue of
substantially identical debt securities registered under the
Securities Act. Under the Registration Rights Agreement, Gulfport
also agreed to use its commercially reasonable efforts to have
the registration statement declared effective by the Securities
and Exchange Commission (the SEC) on or prior to the 330th day
after the issue date of the Notes and to keep the exchange offer
open for not less than 30 days (or longer if required by
applicable law). Gulfport may be required to file a shelf
registration statement to cover resales of the Notes under
certain circumstances. If Gulfport fails to satisfy these
obligations under the Registration Rights Agreement, it agreed to
pay additional interest to the holders of the Notes as specified
in the Registration Rights Agreement.
The preceding summary of the Registration Rights Agreement is
qualified in its entirety by reference to the full text of such
agreement, a copy of which is attached as Exhibit 4.2 hereto and
incorporated herein by reference.
Underwriting Agreement
On December15, 2016, Gulfport entered into an underwriting
agreement with Credit Suisse Securities (USA) LLC and Merrill
Lynch, Pierce, Fenner Smith Incorporated, as representatives of
the several underwriters (the Underwriters) named therein (the
Underwriting Agreement). The Underwriting Agreement relates to
the public offering of 29,000,000 shares of Gulfports common
stock (the Firm Share Offering) at a public offering price of
$21.50 per share. to the Underwriting Agreement, the Underwriters
were granted a 30-day option to purchase a maximum of 4,350,000
additional shares of common stock (the Option) from Gulfport at
the public offering price (less the underwriting discount), which
Option was exercised in full by the Underwriters on December20,
2016 (the Optional Share Offering and, together with the Firm
Share Offering, the Offering). Gulfport has agreed to indemnify
the Underwriters against certain liabilities under the Securities
Act, or to contribute to payments the Underwriters may be
required to make because of any such liabilities. Under the
Underwriting Agreement, Gulfport also agreed, subject to certain
exceptions, that it will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file
with the SEC a registration statement under the Securities Act
relating to, any shares of Gulfports common stock or securities
convertible into or exchangeable or exercisable for any shares of
its common stock, or publicly disclose the intention to make any
offer, sale, pledge, disposition or filing, without the prior
written consent of Credit Suisse Securities (USA) LLC for a
period of 60 days from the date of the Underwriting Agreement.
Gulfport estimates that its net proceeds from the sale of an
aggregate of 33,350,000 shares of common stock in this equity
offering (the Equity Offering), will be approximately
$698.8million, after deducting underwriting discounts and
commissions and estimated offering expenses. Gulfport intends to
use the net proceeds from the Equity Offering, together with the
net proceeds from the Notes Offering, (i)primarily to fund the
cash portion of the purchase price for the Pending Acquisition
and (ii)for general corporate purposes, which may include the
funding of a portion of Gulfports capital development plans. In
connection with the Offering, the Underwriters have agreed to
reimburse Gulfport for an aggregate of approximately $50,000 of
Gulfports transactional expenses. The Equity Offering closed on
December21, 2016.
The Equity Offering was made to Gulfports effective automatic
shelf registration statement on Form S-3 (File No.333-215078),
filed with the SEC on December14, 2016 (the Shelf Registration
Statement), and a prospectus, which consists of a base
prospectus, filed with the SEC on December14, 2016, a preliminary
prospectus supplement, filed with the SEC on December15, 2016,
and a prospectus supplement, filed with the SEC on December19,
2016 (collectively, the Prospectus).
Certain of the Underwriters and their affiliates have performed
investment and commercial banking and advisory services for
Gulfport and its affiliates from time to time for which they have
received customary fees and expenses. In particular, an affiliate
of Scotia Capital (USA) Inc. acts as administrative agent, letter
of credit issuer and sole lead manager and affiliates of each of
Credit Suisse Securities (USA) LLC, Barclays Capital Inc., Wells
Fargo Securities, LLC, KeyBanc Capital Markets Inc., Morgan
Stanley Co. LLC and IBERIA Capital Partners L.L.C. act as a
lender under Gulfports secured revolving credit facility. An
affiliate of KeyBanc Capital Markets Inc. also acts as joint lead
arranger and co-syndication agent under Gulfports secured
revolving credit facility. Certain of the Underwriters or their
affiliates may also be initial purchasers under the Notes
Offering. Merrill Lynch, Pierce, Fenner Smith Incorporated or its
affiliate is acting as Gulfports financial advisor in connection
with the Pending Acquisition.
The preceding summary of the Underwriting Agreement is qualified
in its entirety by reference to the full text of such agreement,
a copy of which is attached as Exhibit 1.2 hereto and
incorporated herein by reference.
Item2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement
of a Registrant.
The information
set forth in Item1.01 above with respect to the Notes Offering is
incorporated herein by reference, as applicable.
| Item3.03. |
Material Modification to Rights of Security Holders. |
The information
set forth in Item1.01 above with respect to the Indentures
limitations on the payment of dividends, redemption of stock or
other distributions to Gulfports stockholders is incorporated
herein by reference.
| Item8.01. | Other Events. |
Borrowing Base
Confirmation under Revolving Credit Facility
As previously
disclosed, on December13, 2016, Gulfport entered into a seventh
amendment to its senior secured revolving credit facility, which
provided that any future senior notes issuances will reduce the
facilitys borrowing base by 25% of the amount of such issuance
(net of any proceeds used to repurchase or redeem senior notes).
On December16, 2016, the lenders under Gulfports senior secured
revolving credit facility waived the automatic reduction in the
borrowing base of $150.0million that would have otherwise been
triggered by the Notes Offering and confirmed that, after giving
effect to the closing of the Notes Offering, Gulfports borrowing
base will remain at $700.0million.
Exhibit 5.1 Legal
Opinion
Gulfport is filing
a legal opinion of Akin, Gump, Strauss, Hauer Feld, L.L.P.,
attached as Exhibit 5.1 to this Current Report onForm
8-K, to
incorporate such opinion by reference into the Shelf Registration
Statement and into the Prospectus.
| Item9.01. | Financial Statements and Exhibits |
(d)
Exhibits.
|
Number |
Exhibit |
|
| 1.1 |
Purchase Agreement, dated as of December15, 2016, by and among Gulfport Energy Corporation, the subsidiary guarantors party thereto and Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner Smith Incorporated, as representatives of the several initial purchasers. |
|
| 1.2 |
Underwriting Agreement, dated December15, 2016, by and among Gulfport Energy Corporation and Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner Smith Incorporated, as representatives of the several underwriters named therein. |
|
| 4.1 |
Indenture, dated as of December21, 2016, among Gulfport Energy Corporation, the subsidiary guarantors party thereto and Wells Fargo Bank, N.A., as trustee (including the form of Gulfport Energy Corporations 6.375% Senior Notes due 2025). |
|
| 4.2 |
Registration Rights Agreement, dated as of December21, 2016, among Gulfport Energy Corporation, the subsidiary guarantors party thereto and Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner Smith Incorporated, as representatives of the several initial purchasers. |
|
| 5.1 | Opinion of Akin, Gump, Strauss, Hauer Feld, L.L.P. | |
| 23.1 |
Consent of Akin, Gump, Strauss, Hauer Feld, L.L.P. (included in Exhibit 5.1). |
About GULFPORT ENERGY CORPORATION (NASDAQ:GPOR)