LONESTAR RESOURCES US INC. Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On
The Merger Agreement provides that, among other things and upon the terms and
subject to the conditions set forth therein,
Subject to the terms and conditions of the Merger Agreement, at the effective
time of the First Merger (the "Effective Time"), each share of common stock,
Promptly following the effective time of the Second Merger, Penn Virginia will
contribute all of the limited liability company interests in the
Following the closing of the Mergers, Penn Virginia's existing shareholders and Lonestar's existing stockholders will own approximately 86% and 14%, respectively, of the combined company.
The board of directors of Lonestar has unanimously (i) determined that the Transactions are in the best interests of, and are advisable to, Lonestar and its shareholders and (ii) approved and declared advisable (a) the Merger Agreement and the Transactions, including the Mergers and the Contribution, and (b) the Pi Support Agreement (as defined below) and the transactions contemplated thereby.
Penn Virginia and Lonestar intend, for
Treatment of Lonestar Equity Awards and Warrants
The Merger Agreement provides that, immediately prior to the Effective Time, each Lonestar restricted stock unit (including those subject to performance-based vesting conditions) (each, a "Lonestar RSU") that is outstanding immediately prior to the Effective Time, whether vested or unvested, will automatically become fully vested and will be cancelled and converted into a number of shares of Penn Virginia Common Stock based on the Exchange Ratio, less applicable tax withholdings and with any applicable performance-based conditions treated as having been achieved in full.
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In addition, the Merger Agreement provides that immediately prior to the Effective Time, Lonestar may grant any remaining unissued restricted stock units under the Lonestar 2021 Management Incentive Plan, pursuant to the terms of such plan (the "Additional Lonestar RSUs"). Such Additional Lonestar RSUs shall be treated the same as any other outstanding Lonestar RSUs upon the occurrence of the Effective Time.
The Merger Agreement provides that, at the Effective Time, each outstanding, unexpired and unexercised warrant to purchase Lonestar Common Stock shall be (i) cancelled and extinguished for no consideration on the closing date of the Mergers, or (ii) in the case of the Tranche 1 Warrants (as defined in the Merger Agreement), acquired by Penn Virginia for a number of shares of Penn Virginia Common Stock equal to the Exchange Ratio, in each case in accordance with the terms of the agreement governing such warrants.
Conditions to the Mergers
The completion of the Mergers are subject to various customary closing
conditions, including, among other things, (i) the receipt of certain approvals
of the Penn Virginia shareholders and the Lonestar stockholders; (ii) the
expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended; (iii) the effectiveness of the
registration statement on Form S-4 that Penn Virginia is obligated to file with
the
No Solicitation
From and after the date of the Merger Agreement, except as expressly contemplated in the Merger Agreement, each of Penn Virginia and Lonestar has agreed that neither it nor nor its subsidiaries shall, and has agreed to use reasonable best efforts to cause its representatives not to, (i) directly or indirectly initiate or solicit, or knowingly encourage or knowingly facilitate any inquiries or the making or submission of any proposal that constitutes, or could reasonably be expected to lead to, an alternative business combination proposal with respect to itself (an "Acquisition Proposal"), (ii) other than clarifying terms of the Acquisition Proposal in accordance with the Merger Agreement, participate or engage in discussions or negotiations with, or disclose any non-public information or data relating to such party or any of its subsidiaries or afford access to the properties, books or records of such party or any of its subsidiaries to, any person that has made, or to any person in contemplation of making, an Acquisition Proposal with respect to such party or (iii) accept an Acquisition Proposal with respect to such party or enter into any agreement, arrangement or understanding, (A) constituting or related to, or that is intended to or could reasonably be expected to lead to, any Acquisition Proposal with respect to such party or (B) requiring, intending to cause, or which could reasonably be expected to cause Penn Virginia or Lonestar, as applicable, to abandon, terminate or fail to consummate the Mergers or any other transaction contemplated by the Merger Agreement. Each of Penn Virginia and Lonestar has further agreed to, and has agreed to cause its subsidiaries and their respective representatives to, immediately cease and terminate any existing activities, discussions or negotiations with any parties relating to any possible Acquisition Proposal with respect to such party. Except as expressly contemplated in the Merger Agreement, each of Penn Virginia and Lonestar have further agreed that its board of directors will not change its recommendation of the proposals to be voted on by its stockholders.
Termination Rights
The Merger Agreement contains certain termination rights for both Penn Virginia
and Lonestar including: (i) upon mutual written consent of Penn Virginia and
Lonestar; (ii) by Penn Virginia or Lonestar, (A) if the closing of the Mergers
is not consummated by
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3 business days following the delivery of a notice of effectiveness of the Registration Statement to each Lonestar Supporting Stockholder (as defined below) by Penn Virginia, and no Lonestar stockholder meeting election is made by Penn Virginia, or in the event that a Lonestar stockholder meeting election is made, the required approval of the Lonestar stockholders at the Lonestar stockholders' meeting is not obtained; (D) if either party breaches its respective covenants, representations or warranties, or if any of their . . .
Item 5.01 Change of Control of Registrant.
As a result of the consummation of the Second Merger, at the Effective Time,
Lonestar will merge with and into
The information set for in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.01.
Additional Information and Where To Find It
In connection with the proposed merger (the "Proposed Transaction") between Penn
Virginia Corporation ("Penn Virginia") and
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THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PENN VIRGINIA AND LONESTAR, THE PROPOSED TRANSACTION, THE RISKS RELATED THERETO AND RELATED MATTERS.
After the Registration Statement has been declared effective, a definitive proxy
statement/consent solicitation statement/prospectus will be mailed to
shareholders of each of Penn Virginia and Lonestar. Investors will be able to
obtain free copies of the Registration Statement and the proxy statement/consent
solicitation statement/prospectus, as each may be amended from time to time, and
other relevant documents filed by Penn Virginia and Lonestar with the
Participants in the Solicitation
Penn Virginia, Lonestar and certain of their respective directors, executive
officers and other members of management and employees may be deemed to be
participants in the solicitation of proxies from Penn Virginia's shareholders
and the solicitation of written consents from Lonestar's stockholders, in each
case with respect to the Proposed Transaction. Information about Penn Virginia's
directors and executive officers is available in Penn Virginia's Annual Report
on Form 10-K for the 2020 fiscal year filed with the
No Offer or Solicitation
This Current Report on Form 8-K is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Forward Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements,
other than statements of historical fact, included in this Current Report on
Form 8-K that address activities, events or developments that Penn Virginia or
Lonestar expects, believes or anticipates will or may occur in the future are
forward-looking statements. Words such as "estimate," "project," "predict,"
"believe," "expect," "anticipate," "potential," "create," "intend," "could,"
"would," "may," "plan," "will," "guidance," "look," "goal," "future," "build,"
"focus," "continue," "strive," "allow" or the negative of such terms or other
variations thereof and words and terms of similar substance used in connection
with any discussion of future plans, actions, or events identify forward-looking
statements. However, the absence of these words does not mean that the
statements are not forward-looking. These forward-looking statements include,
but are not limited to, (1) Lonestar's future production and capital
expenditures, its ability to maintain low cost structure, the impact of
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of future results. There are a number of risks and uncertainties that could
cause actual results to differ materially from the forward-looking statements
included in this Current Report on Form 8-K. These include the possibility that
shareholders of Penn Virginia may not approve the issuance of new shares of Penn
Virginia common stock in the Proposed Transaction or that stockholders of
Lonestar may not approve the Merger Agreement; the risk that a condition to
closing of the Proposed Transaction may not be satisfied, that either party may
terminate the Merger Agreement or that the closing of the Proposed Transaction
might be delayed or not occur at all; potential adverse reactions or changes to
business or employee relationships, including those resulting from the
announcement or completion of the Proposed Transaction; the parties do not
receive regulatory approval of the Proposed Transaction; the risk that changes
in Lonestar's capital structure and governance, including its status as a
controlled company, could have adverse effects on the market value of its
securities; the ability of Lonestar to retain customers and retain and hire key
personnel and maintain relationships with its suppliers and customers and on
Lonestar's operating results and business generally; the risk the Proposed
Transaction could distract management from ongoing business operations or cause
Lonestar to incur substantial costs; the risk that the expanded acreage
footprint does not allow for longer laterals, lower per unit operating expenses,
and increased number of wells per pad as expected; the ability of Lonestar to
develop drilling locations, which do not represent oil and gas reserves, into
production or proved reserves; the risk that Lonestar may be unable to reduce
expenses or access financing or liquidity; the risk that Lonestar does not
realize expected benefits of its hedges; the impact of the COVID-19 pandemic,
any related economic downturn and any related substantial decline in demand for
oil and natural gas; the risk of changes in governmental regulations or
enforcement practices, especially with respect to environmental, health and
safety matters; and other important factors that could cause actual results to
differ materially from those projected. All such factors are difficult to
predict and are beyond Lonestar's control, including those detailed in
Lonestar's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K that are available on Lonestar's website at
www.pennvirginia.com and on the website of the
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits Exhibit Number Description of Exhibit 2.1* Merger Agreement, dated as ofJuly 10, 2021 , by and between Penn Virginia and Lonestar. 10.1 Form of Support Agreement, dated as ofJuly 10, 2021 , by and between Penn Virginia and the Lonestar Supporting Stockholders (included as Exhibit A in Exhibit 2.1). 10.2 Support Agreement, dated as ofJuly 10, 2021 , by and between Lonestar and the Penn Virginia Supporting Shareholders. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* This filing excludes schedules pursuant to Item 601(b)(2) of
Regulation S-K, which the registrant agrees to furnish supplementally to the
* * *
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date:July 12, 2021 LONESTAR RESOURCES US INC. By: /s/ Frank D. Bracken IIIName : Frank D. Bracken III Title: Chief Executive Officer
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