WildHorse Resource Development Corporation (NYSE:WRD) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
Indenture
On September19, 2017, WildHorse Resource Development Corporation (the “Company”), completed its private placement of $150.0 million in aggregate principal amount of the Company’s 6.875% Senior Notes due 2025 (the “New Notes”) to Wells Fargo Securities, LLC (the “Representative”) and the other initial purchasers (collectively, the “Initial Purchasers”). The New Notes rank equally with, and are treated under the Indenture (as defined below) as a single class of debt securities with, the $350.0 million aggregate principal amount of the outstanding 6.875% Senior Notes due 2025 previously issued by the Company on February1, 2017 (the “Initial Notes” and, together with the New Notes, the “Notes”). The New Notes were issued at a price of 98.26% of par, and the sale resulted in net proceeds (after deducting the Initial Purchasers’ discounts and commissions and estimated offering expenses and excluding accrued interest) to the Company of approximately $144.1million. The Company intends to use the net proceeds to repay the borrowings outstanding under the Company’s revolving credit facility and for general corporate purposes. The closing of the issuance and sale of the New Notes occurred on September19, 2017.
The New Notes were issued and sold to the Initial Purchasers in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Initial Purchasers intend to resell the New Notes to qualified institutional buyers inside the United States in reliance on Rule 144A of the Securities Act and to persons outside the United States under Regulation S of the Securities Act. The New Notes have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. The New Notes were issued to an indenture, dated February1, 2017 (as supplemented, the “Indenture”), among the Company, the subsidiary guarantors named therein (including WHR Eagle Ford LLC, the “Guarantors”) and U.S. Bank National Association, as trustee.
The Notes are the general unsecured senior obligations of the Company. The Notes rank equally in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior in right of payment to any of the Company’s existing and future subordinated indebtedness. The Notes are effectively junior in right of payment to all of the Company’s existing and future secured indebtedness and other secured obligations, including borrowings outstanding under the Company’s revolving credit facility, to the extent of the value of the assets securing such indebtedness and obligations. The Notes are structurally junior to all existing and future indebtedness and other liabilities of anynon-guarantor subsidiaries. The Notes are fully and unconditionally guaranteed on a senior unsecured basis by each of the Guarantors and by certain future subsidiaries of the Company.
Maturity and Interest
The Notes will mature on February1, 2025. Interest on the New Notes will accrue from August1, 2017 and will be payable semiannually on February1 and August1 of each year.
Redemption
The Company may redeem all or any part of the Notes at a “make-whole” redemption price specified in the Indenture, plus accrued and unpaid interest, at any time before February1, 2020. The Company may also, on any one or more occasions, redeem up to 35% of the aggregate principal amount of the Notes prior to February1, 2020, in an amount not greater than the net cash proceeds from one or more equity offerings at a redemption price of 106.875% of the principal amount thereof, plus accrued and unpaid interest, if any, under certain circumstances. In addition, the Company has the option to redeem all or a portion of the Notes at any time on or after February1, 2020 at the redemption prices specified in the Indenture plus accrued and unpaid interest, if any. The Company may also be required to repurchase the Notes upon a change of control followed by a rating decline, as described more fully in the Indenture.
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Certain Covenants
The Indenture restricts the Company’s ability, and the ability of the Company’s restricted subsidiaries, to: (i)pay dividends on, purchase or redeem the Company’s common stock or purchase or redeem subordinated debt; (ii)make certain investments; (iii)incur or guarantee additional indebtedness or issue certain types of equity securities; (iv)create or incur certain secured debt; (v)sell assets; (vi)consolidate, merge or transfer all or substantially all of the Company’s assets; (vii)enter into agreements that restrict distributions or other payments from the Company’s restricted subsidiaries to the Company; (viii)engage in transactions with affiliates; and (ix)create unrestricted subsidiaries. These covenants are subject to a number of important qualifications and limitations. In addition, most of the covenants will be terminated before the Notes mature if at any time no default (as defined under the Indenture) exists under the Indenture and the Notes receive an investment grade rating from both of two specified ratings agencies.
Events of Default
The Indenture contains customary events of default. In the case of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or any of the Company’s restricted subsidiaries that is (or group of restricted subsidiaries that, taken together would be) a significant subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other event of default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
The foregoing description of the Indenture is not complete and is qualified in its entirety by reference to the full text of the Indenture, a copy of which was filed as Exhibit 4.1 to the Current Report on Form8-Kfiled with Securities Exchange Commission (the “Commission”) on February1, 2017 and is incorporated herein by reference.
Registration Rights Agreement
In connection with the issuance and sale of the New Notes, the Company and the Guarantors entered into a registration rights agreement (the “Registration Rights Agreement”) with the Representative, as representative of the Initial Purchasers, dated September19, 2017. to the Registration Rights Agreement, the Company and the Guarantors agreed to file a registration statement with the Securities and Exchange Commission so that holders of the New Notes can exchange the New Notes for registered notes that have substantially identical terms as the New Notes. In addition, the Company and the Guarantors have agreed to exchange the guarantees related to the New Notes for registered guarantees having substantially the same terms as the original guarantees. The Company and the Guarantors will use commercially reasonable best efforts to cause the exchange to be consummated by February1, 2018. The Company and the Guarantors are required to pay additional interest if they fail to comply with their obligations to register the New Notes within the specified time periods.
The foregoing description of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, a copy of which is filed as Exhibit 4.3 to this Current Report on Form8-Kand is incorporated herein by reference.
Purchase Agreement
On September15, 2017, the Company entered into a purchase agreement (the “Purchase Agreement”), by and among the Company, the Guarantors and the Representative, as representative of the Initial Purchasers, to which the Company agreed to issue and sell to the Initial Purchasers the New Notes as described above.
The Purchase Agreement contains customary representations, warranties and agreements of the parties and customary conditions to closing, obligations of the parties and termination provisions. The Company and the Guarantors 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 those liabilities.
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Relationships
Certain of the Initial Purchasers or their affiliates perform and have performed commercial and investment banking and advisory services for the Company from time to time for which they receive and have received customary fees and reimbursement of expenses. In particular, certain of the Initial Purchasers or their affiliates participated as underwriters in the Company’s initial public offering of its common stock and the offering of the Initial Notes receiving customary fees for such services. In addition, affiliates of each of the Initial Purchasers are lenders under the Company’s revolving credit facility and therefore may receive their pro rata share of the net proceeds from the sale of the New Notes that are used to repay borrowings under the Company’s revolving credit facility. The Initial Purchasers may, from time to time, engage in transactions with and perform services for the Company in the ordinary course of their business for which they will receive customary fees and reimbursement of expenses.
Item 1.01 Creation of a Direct Financial Obligation or an Obligation under anOff-BalanceSheet Arrangement of a Registrant.
The information included under Item 1.01 of this Current Report on Form8-Kis incorporated by reference into this Item 1.01.
Item 1.01 Other Events
On September15, 2017, the Company issued a press release announcing that it had priced its private placement of the New Notes. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form8-Kand is incorporated in this Item 1.01 by reference.
The press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.
Item 1.01 Financial Statements and Exhibits.
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Exhibit Number |
Description |
| 4.1 | Indenture, dated as of February 1, 2017, by and among WildHorse Resource Development Corporation, the subsidiary guarantors named therein and U.S. Bank National Association, as Trustee, incorporated by reference herein to Exhibit 4.1 to the Company’s Form 8-K filed on February 1, 2017 |
| 4.2 | Form of 6.875% Senior Note due 2025 (included as Exhibit A to Exhibit 4.1) |
| 4.3 | Registration Rights Agreement, dated as of September 19, 2017, by and among WildHorse Resource Development Corporation, the subsidiary guarantors named therein and Wells Fargo Securities, LLC, as representative of the initial purchasers named therein |
| 99.1 | Press release dated September 15, 2017 |
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WildHorse Resource Development Corp ExhibitEX-4.3 2 d451168dex43.htm EX-4.3 EX-4.3 Exhibit 4.3 Execution Version WILDHORSE RESOURCE DEVELOPMENT CORPORATION REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT is dated as of September 19,…To view the full exhibit click here
About WildHorse Resource Development Corporation (NYSE:WRD)
WildHorse Resource Development Corporation is a holding company. The Company is an independent oil and natural gas company. The Company is focused on the acquisition, exploitation, exploration and development of oil, natural gas and natural gas liquid (NGL) resources in the United States. Its assets are characterized by concentrated acreage positions in Southeast Texas and North Louisiana with multiple producing stratigraphic horizons, or stacked pay zones, and single-well rates of return. In Southeast Texas, it operates in Burleson, Lee and Washington Counties where it primarily targets the Eagle Ford Shale (Eagle Ford Acreage), which is an active shale trends in North America. In North Louisiana, the Company operates in and around the Terryville Complex, where it primarily targets the overpressured Cotton Valley play (North Louisiana Acreage). The Company’s subsidiaries include WildHorse Resources II, LLC (WildHorse) and Esquisto and Acquisition Co.