Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On December 4,
2017, Bill Barrett Corporation (
we
,
us
, the
Company
or
Parent
) entered into an Agreement and Plan of Merger (the
Merger Agreement
) with Fifth Creek Energy
Operating Company, LLC, a Delaware limited liability company (
Fifth Creek
), Red Rider Holdco, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (
New Parent
), Rio Merger Sub, LLC, a Delaware
limited liability company and a direct wholly owned subsidiary of New Parent (
Rio Grande Merger Sub
), Rider Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of New Parent (
Parent Merger
Sub
and, together with Parent, New Parent and Rio Grande Merger Sub, the
Parent Parties
), for certain limited purposes set forth in the Merger Agreement, Fifth Creek Energy Company, LLC, a Delaware limited liability
company (
Holdings
), and for certain limited purposes set forth in the Merger Agreement, NGP Natural Resources XI, L.P., a Delaware limited partnership (the
Fund
).
Pursuant to the terms of the Merger Agreement, at the closing of the mergers contemplated by the Merger Agreement (collectively, the
Merger
) (a) Parent Merger Sub will be merged with and into Parent, with Parent surviving the merger, and (b) Rio Grande Merger Sub will be merged with and into Fifth Creek, with Fifth Creek surviving the merger, as a result
of which the Parent and Fifth Creek will each become direct wholly owned subsidiaries of New Parent.
As consideration to the
Companys stockholders, at the closing of the Merger, each share of our common stock will be converted into the right to receive one share of New Parent common stock and Holdings will receive 100 million shares of New Parent common stock.
The shares of common stock received by Holdings in the Merger will be subject to the terms of the Stockholders Agreement described below.
The Merger Agreement contains various representations, warranties and covenants of the parties customary for transactions of this type,
including covenants limiting the ability of the Company to consider alternative transactions. The closing of the Merger is subject to a number of customary conditions, including the approval of the Companys stockholders.
A copy of the Merger Agreement is included as an exhibit to this report on
Form 8-K.
The
foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit. The representations, warranties and covenants contained in the Merger Agreement were made solely for
purposes of the Merger, were made as of specific dates, were made solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ
from those applicable to security holders. Security holders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or Fifth Creek.
Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures.
Stockholders Agreement
Pursuant to
the terms of the Merger Agreement, upon closing of the Mergers, New Parent will enter into a stockholders agreement (the
Stockholders Agreement
) with Holdings and, for limited purposes set forth therein, the Fund, pursuant to
which, among other matters, New Parent will grant Holdings certain director designation rights for so long as Holdings continues to own at least 10% of New Parents issued and outstanding common stock. Holdings will also have preemptive rights
to subscribe for any equity securities New Parent proposes to issue in accordance with Holdings percentage beneficial ownership of New Parent common stock and registration rights for the shares of New Parent common stock it receives in the
Merger, subject to customary exceptions. Holdings will agree, among other things, that until such time that its ownership of New Parents common stock falls under a certain threshold and stays below such threshold for a period of time, to be
subject to a customary standstills and certain voting and transfer restrictions.
A form of Stockholders Agreement is included as an
exhibit to this report on
Form 8-K.
The foregoing description of the Stockholders Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit.
Exchange Agreement, Consent Solicitation and Consent Agreement
On December 4, 2017, the Company entered into an Exchange Agreement (the Exchange Agreement) with an unaffiliated third party
that holds outstanding 7% Senior Notes due 2022 issued by the Company (the 7% Senior Notes). Pursuant to the Exchange Agreement, the Company agreed to acquire $50 million aggregate principal amount of 7% Senior Notes in exchange for
the issuance to the holder of shares of the Companys common stock. The number of shares to be issued will be calculated based on the volume-weighted average trading price of the common stock on December 6, 2017 and the price of the bonds
will be at 102% of par.
In connection with the Merger Agreement, we expect to launch solicitations (the consent
solicitations) pursuant to which we will seek consents from holders of the 7.0% Senior Notes and holders of our 8.75% senior notes due 2025 (collectively, the Senior Notes) to amend each of the indentures governing the Senior Notes
to, among other things, amend the defined term Change of Control in each of the indentures to provide that the Merger will not constitute a Change of Control under the indentures. To become effective with respect to either
series of Senior Notes, the proposed amendments must be approved by at least a majority of the holders of the then-outstanding aggregate principal amount of the Senior Notes governed by the applicable indenture. We expect to pay a consent fee equal
to $2.50 per $1,000 principal amount of Senior Notes for consents validly delivered and not validly revoked upon the execution and effectiveness of the applicable supplemental indenture giving effect to the proposed amendments. On December 4,
2017, we entered into a consent agreement with certain unaffiliated holders of Senior Notes holding a majority of the outstanding aggregate principal amount of each series of Senior Notes pursuant to which such holders have agreed to deliver
consents in the consent solicitations with respect to all Senior Notes they hold. Accordingly, we expect that upon delivery of such consents, the consents necessary to implement the proposed amendments will have been obtained.