Royale Energy, Inc. (NASDAQ:ROYL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Amendment to Merger Agreement
On December 30, 2016, Royale Energy, Inc., (Royale), entered into
a First Amendment (the Amendment) to the Agreement and Plan of
Merger and Reorganization dated November 30, 2016 (the Merger
Agreement), among Royale, Royale Energy Holdings, Inc., a
Delaware corporation (the Parent), Royale Merger Sub, Inc., a
California corporation and wholly-owned subsidiary of Parent
(Royale Merger Sub), Matrix Merger Sub, Inc., a California
corporation and wholly-owned subsidiary of Parent (Matrix Merger
Sub), and Matrix Oil Management Corporation, a California
corporation (Matrix). The Amendment does not materially change
the terms of the transaction as between Royale, on one hand, and
Matrix and its affiliates, on the other hand, but it does change
the distribution of the consideration to be received as between
the owners of Matrix and its affiliates to the Merger Agreement.
a First Amendment (the Amendment) to the Agreement and Plan of
Merger and Reorganization dated November 30, 2016 (the Merger
Agreement), among Royale, Royale Energy Holdings, Inc., a
Delaware corporation (the Parent), Royale Merger Sub, Inc., a
California corporation and wholly-owned subsidiary of Parent
(Royale Merger Sub), Matrix Merger Sub, Inc., a California
corporation and wholly-owned subsidiary of Parent (Matrix Merger
Sub), and Matrix Oil Management Corporation, a California
corporation (Matrix). The Amendment does not materially change
the terms of the transaction as between Royale, on one hand, and
Matrix and its affiliates, on the other hand, but it does change
the distribution of the consideration to be received as between
the owners of Matrix and its affiliates to the Merger Agreement.
The Merger Agreement and Amendment are part of a series of
related transactions in which the Parent will (i) issue its
common stock to acquire all of (A) the common stock of Royale,
Matrix and Matrixs affiliate, Matrix Oil Corporation, a
California corporation, and (B) the partnership interests of
three limited partnerships affiliated with Matrix including
Matrix Investments, L.P., a California limited partnership
(Matrix Investments) and (ii) issue newly created Series B 3.5%
Convertible Preferred Stock in exchange for approximately
$20,124,000 of subordinated debt issued by Matrix and its
affiliates. The Merger Agreement and the related transactions are
more fully described in Royales Report on Form 8-K dated November
30, 2016, filed with the Securities and Exchange Commission on
December 2, 2016.
related transactions in which the Parent will (i) issue its
common stock to acquire all of (A) the common stock of Royale,
Matrix and Matrixs affiliate, Matrix Oil Corporation, a
California corporation, and (B) the partnership interests of
three limited partnerships affiliated with Matrix including
Matrix Investments, L.P., a California limited partnership
(Matrix Investments) and (ii) issue newly created Series B 3.5%
Convertible Preferred Stock in exchange for approximately
$20,124,000 of subordinated debt issued by Matrix and its
affiliates. The Merger Agreement and the related transactions are
more fully described in Royales Report on Form 8-K dated November
30, 2016, filed with the Securities and Exchange Commission on
December 2, 2016.
The Amendment recognizes an adjustment to the consideration to be
received by shareholders of Matrix in the partners of Matrix
Investments in light of an assignment and assumption of property
ownership interests between Matrix and Matrix Investments (the
“Matrix Investments Asset Transfer”). The aggregate
consideration to be received from the Parent by Matrix and its
affiliates in the merger and related transactions remains
unchanged. Royale, the Parent, Royale Merger Sub and Matrix
Merger Sub have also executed a written consent to the Matrix
Investments Asset Transfer to the Merger Agreement and Matrix and
its affiliates have executed an amendment of certain credit
documents with their senior secured lender as necessary to permit
the Matrix Investments Asset Transfer.
received by shareholders of Matrix in the partners of Matrix
Investments in light of an assignment and assumption of property
ownership interests between Matrix and Matrix Investments (the
“Matrix Investments Asset Transfer”). The aggregate
consideration to be received from the Parent by Matrix and its
affiliates in the merger and related transactions remains
unchanged. Royale, the Parent, Royale Merger Sub and Matrix
Merger Sub have also executed a written consent to the Matrix
Investments Asset Transfer to the Merger Agreement and Matrix and
its affiliates have executed an amendment of certain credit
documents with their senior secured lender as necessary to permit
the Matrix Investments Asset Transfer.
The preceding is a summary of the material provisions of the
Amendment and is qualified in its entirety by reference to the
complete text of the Amendment filed as Exhibit 2.1 to this
Current Report on Form 8-K and incorporated by reference
herein.
Amendment and is qualified in its entirety by reference to the
complete text of the Amendment filed as Exhibit 2.1 to this
Current Report on Form 8-K and incorporated by reference
herein.
Forward-Looking Statements
This current report contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 as
amended and Section 21E of the Securities and Exchange Act of
1934 as amended. Statements that are not strictly historical
statements constitute forward-looking statements and may often,
but not always, be identified by the use of such words such as
expects, believes, intends, anticipates, plans, estimates,
potential, possible, or probable or statements that certain
actions, events or results may, will, should, or could be
taken, occur or be achieved. The forward-looking statements
include statements about future operations, estimates of
reserve and production volumes and the anticipated timing for
closing the proposed merger. Forward-looking statements are
based on current expectations and assumptions and analyses made
by Royale and Matrix in light of experience and perception of
historical trends, current conditions and expected future
developments, as well as other factors appropriate under the
circumstances. However, whether actual results and developments
will conform with expectations is subject to a number of risks
and uncertainties, including but not limited to: the
possibility that the companies may be unable to obtain
stockholder or limited partner approval or satisfy the other
conditions to closing; the possibility that the companies may
be unable to obtain the consent of Matrixs senior secured
lender; that problems may arise in the integration of the
businesses of the two companies; that the acquisition may
involve unexpected costs; the risks of the oil and gas industry
(for example, operational risks in exploring for, developing
and producing crude oil and natural gas); risks and
uncertainties involving geology of oil and gas deposits; the
the meaning of Section 27A of the Securities Act of 1933 as
amended and Section 21E of the Securities and Exchange Act of
1934 as amended. Statements that are not strictly historical
statements constitute forward-looking statements and may often,
but not always, be identified by the use of such words such as
expects, believes, intends, anticipates, plans, estimates,
potential, possible, or probable or statements that certain
actions, events or results may, will, should, or could be
taken, occur or be achieved. The forward-looking statements
include statements about future operations, estimates of
reserve and production volumes and the anticipated timing for
closing the proposed merger. Forward-looking statements are
based on current expectations and assumptions and analyses made
by Royale and Matrix in light of experience and perception of
historical trends, current conditions and expected future
developments, as well as other factors appropriate under the
circumstances. However, whether actual results and developments
will conform with expectations is subject to a number of risks
and uncertainties, including but not limited to: the
possibility that the companies may be unable to obtain
stockholder or limited partner approval or satisfy the other
conditions to closing; the possibility that the companies may
be unable to obtain the consent of Matrixs senior secured
lender; that problems may arise in the integration of the
businesses of the two companies; that the acquisition may
involve unexpected costs; the risks of the oil and gas industry
(for example, operational risks in exploring for, developing
and producing crude oil and natural gas); risks and
uncertainties involving geology of oil and gas deposits; the
uncertainty of reserve estimates; revisions to reserve
estimates as a result of changes in commodity prices; the
uncertainty of estimates and projections relating to future
production, costs and expenses; potential delays or changes in
plans with respect to exploration or development projects or
capital expenditures; health, safety and environmental risks
and risks related to weather; further declines in oil and gas
prices; inability of management to execute its plans to meet
its goals, shortages of drilling equipment, oil field personnel
and services, unavailability of gathering systems, pipelines
and processing facilities and the possibility that government
policies may change. Royales annual report on Form 10-K for the
year ended December 31, 2015, recent current reports on Form
8-K, and other SEC filings discuss some of the important risk
factors identified that may affect its business, results of
operations, and financial condition. Royale and Matrix
undertake no obligation to revise or update publicly any
forward-looking statements, except as required by law.
estimates as a result of changes in commodity prices; the
uncertainty of estimates and projections relating to future
production, costs and expenses; potential delays or changes in
plans with respect to exploration or development projects or
capital expenditures; health, safety and environmental risks
and risks related to weather; further declines in oil and gas
prices; inability of management to execute its plans to meet
its goals, shortages of drilling equipment, oil field personnel
and services, unavailability of gathering systems, pipelines
and processing facilities and the possibility that government
policies may change. Royales annual report on Form 10-K for the
year ended December 31, 2015, recent current reports on Form
8-K, and other SEC filings discuss some of the important risk
factors identified that may affect its business, results of
operations, and financial condition. Royale and Matrix
undertake no obligation to revise or update publicly any
forward-looking statements, except as required by law.
Additional Information about the Transaction
In connection with the proposed transaction, Royale intends to
file with the SEC a registration statement on Form S-4 that will
include a proxy statement of Royale that also constitutes a
prospectus of Royale relating to the Parent Common Stock to be
issued in connection with the Merger Agreement and the related
transactions. The proxy statement/prospectus will include
important information about Royale, Matrix and Matrixs
affiliates. Royale also plans to file other relevant documents
with the SEC regarding the proposed transaction. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE REGISTRATION
STATEMENT, THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ROYALE,
MATRIX AND THE PROPOSED TRANSACTION. Investors and security
holders may obtain these documents when available free of charge
at the SECs website at www.sec.gov . In addition, the
documents filed with the SEC by Royale can be obtained free of
charge from Royales website at www.royl.com .
file with the SEC a registration statement on Form S-4 that will
include a proxy statement of Royale that also constitutes a
prospectus of Royale relating to the Parent Common Stock to be
issued in connection with the Merger Agreement and the related
transactions. The proxy statement/prospectus will include
important information about Royale, Matrix and Matrixs
affiliates. Royale also plans to file other relevant documents
with the SEC regarding the proposed transaction. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE REGISTRATION
STATEMENT, THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ROYALE,
MATRIX AND THE PROPOSED TRANSACTION. Investors and security
holders may obtain these documents when available free of charge
at the SECs website at www.sec.gov . In addition, the
documents filed with the SEC by Royale can be obtained free of
charge from Royales website at www.royl.com .
Participants in Solicitation
Royale and its executive officers and directors may be deemed
to be participants in the solicitation of proxies from the
shareholders of Royale in respect of the proposed transaction.
Information regarding Royales directors and executive officers
is available in its annual report on Form 10-K for the year
ended December 31, 2015, which was filed with the SEC on March
15, 2016, and its proxy statement for its 2015 annual meeting
of shareholders, which was filed with the SEC on April 22,
2015. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained
in the proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
to be participants in the solicitation of proxies from the
shareholders of Royale in respect of the proposed transaction.
Information regarding Royales directors and executive officers
is available in its annual report on Form 10-K for the year
ended December 31, 2015, which was filed with the SEC on March
15, 2016, and its proxy statement for its 2015 annual meeting
of shareholders, which was filed with the SEC on April 22,
2015. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained
in the proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
(d) Exhibits .
The following exhibits are filed with this Current Report on Form
8-K:
8-K:
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Exhibit No.
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Description
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2.1
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First Amendment to the Agreement and Plan of Merger and
Reorganization dated as of November 30, 2016, by and among Royale Energy, Inc., Royale Energy Holdings, Inc., Royale Merger Sub, Inc., Matrix Merger Sub, Inc. and Matrix Oil Management Corporation. |