Item 1.01 Entry Into a Material Definitive Agreement.
Agreement and Plan of Merger
On October 21, 2021, FTS International, Inc., a Delaware corporation ("FTSI" or
the "Company"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") by and among the Company, ProFrac Holdings, LLC, a Texas limited
liability company ("Parent") and ProFrac Acquisitions, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), pursuant to
which Merger Sub will merge (the "Merger") with and into the Company, with the
Company surviving as a wholly owned subsidiary of Parent (the "Surviving
Corporation").
Subject to the terms and conditions set forth in the Merger Agreement, at the
effective time of the Merger (the "Effective Time"), each share of Class A
common stock of the Company, par value $0.01 per share ("Class A Common Stock")
and each share of Class B common stock of the Company, par value $0.01 per share
("Class B Common Stock" and, together with the Class A Common Stock, the
"Shares") (other than Shares held by the Company as treasury stock or by any
subsidiary of the Company and Shares held by Parent or Merger Sub) issued and
outstanding immediately prior to the Effective Time (other than dissenting
shares) will be converted into the right to receive $26.52 in cash, without
interest (the "Merger Consideration").
Pursuant to the Merger Agreement, at the Effective Time:
· Each option (or portion thereof) to acquire Shares that is vested (including
those that vest in connection with the transactions contemplated by the Merger
Agreement) and outstanding immediately prior to the Effective Time (each, a
"Company Option"), shall be cancelled and converted into the right to receive
an amount in cash to be paid promptly following the Effective Time and in no
event more than five days following the Effective Time, determined by
multiplying (i) the excess, if any, of the Merger Consideration over the
applicable exercise price of such cancelled Company Option by (ii) the number
of Shares subject to such Company Option immediately prior to the Effective
Time;
· Each time-based restricted stock unit of the Company that is vested (including
those that vest in connection with the transactions contemplated by the Merger
Agreement) and outstanding immediately prior to the Effective Time (each, a
"Company RSU"), shall be cancelled and converted into the right to receive, at
or no more than five days after the Effective Time, solely an amount in cash
equal to the product of (i) the Merger Consideration and (ii) the total number
of Shares subject to such Company RSU; and
· Each performance-based restricted stock unit of the Company that is outstanding
and unvested immediately prior to the Effective Time (each, a "Company PRSU"),
shall be deemed to vest (if at all) based on actual performance achieved as of
the Effective Time with respect to the applicable performance-based vesting
conditions relating to such Company PRSU and such vested number of Company
PRSUs (if any) shall be cancelled and converted into the right to receive, at
or promptly after the Effective Time, an amount in cash equal to the product of
(i) the Merger Consideration and (ii) the total number of Shares subject to
such Company PRSU that are deemed vested in accordance with the foregoing based
on actual performance achieved as of the Effective Time with respect to
applicable performance-based vesting conditions.
If the Merger is consummated, the Company's securities will be de-listed from
the NYSE American and de-registered under the Securities Exchange Act of 1934 as
soon as practicable following the Effective Time.
The consummation of the Merger (the "Closing") is subject to certain customary
mutual conditions, including (i) the approval of the Company's stockholders
holding a majority of the outstanding Shares, (ii) the absence of any order or
law that prohibits, renders illegal or enjoins the consummation of the Merger
and (iii) the expiration or termination of any waiting period applicable to the
consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act"). The Company's obligation to close the Merger is
also conditioned upon approval by a majority of the outstanding Shares other
than Shares held by Parent and its affiliates. The obligation of each party to
consummate the Merger is also conditioned upon (a) the accuracy of the
representations and warranties of the other party as of the Closing (subject to
customary materiality qualifiers), (b) compliance by the other party in all
material respects with its pre-Closing obligations under the Merger Agreement
and (c) in Parent's case, the absence of a material adverse effect with respect
to the Company.
Pursuant to the terms of a "go-shop" provision in the Merger Agreement, during
the period beginning on the date of the Merger Agreement and ending at 11:59
p.m. (New York City time) on December 5, 2021 (the "Go-Shop Period End Date"),
the Company and its representatives and subsidiaries may: (i) solicit, initiate,
propose, encourage and facilitate any inquiry, discussion, offer or request that
constitutes, or could reasonably be expected to lead to, an acquisition proposal
from a third party; and (ii) engage in discussions and negotiations with, and
furnish non-public information relating to the Company and its subsidiaries and
afford access to the personnel and information of the Company and its
subsidiaries to, any third party in connection with an acquisition proposal.
Beginning on the Go-Shop Period End Date, the Company will become subject to
customary "no-shop" restrictions on its ability (and the ability of its
subsidiaries and representatives), except as permitted by the Merger Agreement,
to (i) solicit, initiate or knowingly take any actions to facilitate or
encourage the submission of any acquisition proposal by a third party, and (ii)
enter into, engage in or participate in any discussions or negotiations with,
furnish any information relating to the Company or any of its subsidiaries or
afford access to information related to the Company or any of its subsidiaries
to, any Third Party that, to the Company's knowledge, is seeking to make, or has
made, an acquisition proposal.
The Company, Parent and Merger Sub have each made customary representations,
warranties and covenants in the Merger Agreement. Subject to certain exceptions,
the Company has agreed, among other things, to customary covenants relating to
the conduct of its business during the interim period between the execution of
the Merger Agreement and the consummation of the Merger. In addition, subject to
certain exceptions, the Company has agreed to covenants relating to (i) the
submission of the Merger Agreement to the Company's stockholders at a special
meeting thereof for approval and (ii) the recommendation by the board of
directors of the Company in favor of the adoption by the Company's stockholders
of the Merger Agreement.
Parent is required to take any and all steps necessary to avoid or eliminate as
soon as possible each and every impediment under the HSR Act or other applicable
law so as to enable the parties to consummate the Merger; provided that Parent
shall not be required to take any actions with respect to the assets or
businesses of any person other than the Company and its subsidiaries.
Either the Company or Parent may terminate the Merger Agreement if (i) Parent,
Merger Sub and the Company agree by mutual written consent to do so, (ii) the
Merger has not been consummated on or before 11:59 p.m. (New York City time) on
October 21, 2022 (such time and date, the "End Date"); provided that the End
Date may be extended for successive 90 day periods (not to be extended beyond
January 21, 2023 in any event) if on the End Date (as may have been previously
extended) all of the conditions to the Merger have been satisfied or waived (to
the extent waivable) other than conditions relating to antitrust approvals,
(iii) any governmental authority has issued an order permanently enjoining or
otherwise prohibiting the Merger and such order or other action has become,
final and non-appealable, (iv) the approval of a majority of the outstanding
Shares and, unless the Company has waived such condition, a majority of the
outstanding Shares other than Shares held by Parent and its affiliates is not
obtained at a meeting of the Company's stockholders called for the purpose of
adopting the Merger Agreement or (v) the other party breaches any
representation, warranty or covenant that results in the failure of the related
closing condition to be satisfied, subject to a cure period in certain
circumstances. In addition, the Company may, under certain circumstances,
terminate the Merger Agreement (a) in order for the Company to enter
concurrently into a definitive written agreement with respect to a superior
acquisition proposal, subject to the Company having first complied with certain
matching rights and other obligations set forth in the Merger Agreement or (b)
in the event that approval by a majority of the outstanding Shares other than
Shares held by Parent and its affiliates is not obtained at a meeting of the
Company's stockholders called for the purpose of adopting the Merger Agreement.
Additionally, Parent may, under certain circumstances, terminate the Merger
Agreement if (x) the board of directors of the Company withdraws or adversely
modifies its recommendation that the Company's stockholders vote in favor of
adopting the Merger Agreement or (y) the Company materially, knowingly and
intentionally breaches its "no-shop" obligations under the Merger Agreement.
If the Merger Agreement is terminated by the Company in order for the Company to
enter concurrently into a definitive written agreement with respect to a
superior acquisition proposal, (i) prior to the Go-Shop Period End Date, the
Company will be obligated to pay to Parent a one-time fee equal to $7,800,000 in
cash or (ii) after the Go-Shop Period End Date, the Company will be obligated to
pay Parent a one-time fee equal to $11,700,000 in cash.
If the Merger Agreement is terminated by Parent because the board of directors
of the Company withdraws or adversely modifies its recommendation that the
Company's stockholders vote in favor of adopting the Merger Agreement, the
Company will be obligated to pay Parent a one-time fee equal to $11,700,000 in
cash. Additionally, in the event that (i) an alternative acquisition proposal is
publicly disclosed or proposed to the board of directors of the Company prior to
the meeting of the Company's stockholders called for the purpose of adopting the
Merger Agreement, (ii) the Merger Agreement is terminated as a result of either
(x) the Merger not occurring on or before the End Date (unless the Company
stockholder approvals have been obtained (or, in the case of the approval by
stockholders other than Parent and its affiliates, waived) by the Company) or
(y) because the Company has committed a breach that results in the failure of a
condition to the Closing and (iii) within one year after such termination of the
Merger Agreement, the Company enters into a definitive agreement with respect to
an alternative transaction that is later consummated, the Company will be
obligated to pay Parent a one-time fee equal to $11,700,000 in cash. In
addition, the Company will be required to reimburse Parent for costs and
expenses incurred by Parent in connection with an action that results in a
judgment that the Company must pay the termination fee.
THRC Holdings, LP, an affiliate of Parent ("THRC") has delivered an equity
financing letter to the Company, pursuant to which, upon the terms and subject
to the conditions set forth therein, THRC has committed to provide the necessary
equity financing (up to a maximum of $400 million) to Parent to fund the
transactions contemplated by the Merger Agreement. The transaction is not
subject to a financing condition. In addition, THRC and the Company have entered
into a voting and support agreement, pursuant to which, upon the terms and
subject to the conditions set forth therein, THRC has agreed to vote in favor of
the transactions under the Merger Agreement, including the Merger, at a meeting
of the stockholders of the Company called for the purpose of adopting the Merger
Agreement. THRC owns 2,750,000 shares of Class A Common Stock, which constitutes
19.6% of the outstanding Shares as of October 15, 2021.
The Merger Agreement and the above descriptions have been included to provide
investors with information regarding its terms. They are not intended to provide
any other factual information about the Company, Parent or any of their
respective subsidiaries or affiliates or to modify or supplement any factual
disclosures about the Company included in its public reports filed with the SEC.
The representations, warranties and covenants contained in the Merger Agreement
were made only for purposes of the Merger Agreement as of specific dates, were
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 Merger Agreement, instead of establishing these
matters as facts, and may be subject to standards of materiality that differ
from those applicable to investors. Investors 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,
Parent or any of their respective subsidiaries or affiliates.
The foregoing description of the Merger Agreement and the transactions
contemplated thereby, including the Merger, does not purport to be complete and
is qualified in its entirety by reference to the actual Merger Agreement. A copy
of the Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form
8-K and incorporated herein by reference.
Important Information For Investors And Stockholders
This communication does not constitute an offer to buy or sell or the
solicitation of an offer to buy or sell any securities or a solicitation of any
vote or approval. This communication relates to a proposed transaction between
the Company and Parent. In connection with this proposed transaction, the
Company may file one or more proxy statements or other documents with the
. . .
Item 9.01. Financial Statements and Exhibits.
Exhibit
Number Description
2.1 Agreement and Plan of Merger by and among FTS International, Inc.,
ProFrac Holdings, LLC and ProFrac Acquisitions, Inc., dated as of October
21, 2021.*
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* The schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
The Company agrees to furnish supplementally a copy of such schedules, or any
section thereof, to the SEC upon request.
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