Item. 1.01 Entry into a Material Definitive Agreement
In connection with the Merger (as defined below), Citizen Energy Operating, LLC
("Parent" or the "Borrower") and Citizen Energy Holdings, LLC ("CEH") entered
into a credit agreement (the "Credit Agreement") on December 6, 2019 with
JPMorgan Chase Bank, N.A., as administrative agent, an issuing bank and a
swingline lender; the lenders party thereto; and JPMorgan Chase Bank, N.A., BMO
Capital Market Corp., TD Securities (USA) LLC and BofA Securities, Inc., as
joint lead arrangers and joint lead bookrunners, pursuant to which the lenders
have agreed to provide initial aggregate commitments in the amount of
$725.0 million. The lenders are not obligated to make any loans to the Borrower,
and none of the covenants, representations and warranties or events of default
will be effective, and no collateral or guarantees will be provided, until the
satisfaction of certain conditions, including the Merger and the termination of
the Roan Credit Agreements (as defined below) described in Item 1.02 below. The
date on which such funding conditions are satisfied (or waived) is referred to
in the Credit Agreement as the "Initial Funding Date."
Parent's obligations under the Credit Agreement will be, as of the Initial
Funding Date, (i) guaranteed by Parent, the Company and certain other material
subsidiaries of the Borrower (collectively, the "Loan Parties") and
(ii) secured, subject to customary permitted liens and other agreed-upon
exceptions, by a perfected security interest in all assets of the Credit Parties
(including 85% of the PV-9 (as defined in the Credit Agreement) of the Oil and
Gas Properties (as defined in the Credit Agreement) of the Loan Parties), except
for certain customary excluded assets.
Borrowings under the Credit Agreement may be used to pay costs, fees and
expenses in connection with the Merger and associated transactions, to make
payments in respect of the Merger and for capital expenditures, working capital
and other general corporate purposes. Pursuant to the terms of the Credit
Agreement, after the Initial Funding Date, the Borrower may, subject to the
satisfaction of certain conditions, obtain up to $35 million of letters of
credit and up to $30 million of swingline loans under the Credit Agreement,
depending, in each case, on the amount outstanding under the facility.
The Credit Agreement has an initial term of five years after the Initial Funding
Date.
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Parent may terminate, in whole or in part, the unused portion of the credit
facility commitments under the Credit Agreement at any time during the term of
the Credit Agreement. Once terminated, a commitment may not be reinstated.
Borrowings under the facility bear interest, at Parent's option, at either
(i) the sum of Adjusted LIBO Rate (as defined in the Credit Agreement), plus a
margin ranging between 2.00% to 3.00%, depending on Parent's borrowing base
Utilization Percentage (as defined in the Credit Agreement), or (ii) the sum of
the Alternate Base Rate (as defined in the Credit Agreement), plus a margin
ranging between 1.00% to 2.00%, depending on Parent's borrowing base Utilization
. . .
Item. 1.02 Termination of a Material Definitive Agreement
In connection with the Merger (as defined below), on December 6, 2019, the
Company repaid all of its outstanding obligations in respect of principal,
interest and fees under (i) the Credit Agreement, dated September 5, 2017, by
and among Roan Resources LLC, the banks, financial institutions and other
lending institutions from time to time parties as lenders thereto, Citibank,
N.A., as administrative agent and as a letter of credit issuer, and each other
letter of credit issuer from time to time party thereto, as amended, restated,
supplemented or otherwise modified from time to time and (ii) the Credit
Agreement, dated June 27, 2019, by and among the Company, the financial
institutions and other lending institutions or investors from time to time
parties as lenders thereto and Cortland Capital Market Services LLC, as
administrative agent, as amended, restated, supplemented or otherwise modified
from time to time (the "Roan Credit Agreements"), and terminated the Roan Credit
Agreements.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On December 6, 2019, pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of October 1, 2019, by and among Parent, Citizen Energy
Pressburg Inc. ("Merger Sub") and the Company, the Company completed its
previously announced merger whereby Merger Sub merged with and into the Company
(the "Merger"), with the Company continuing as the surviving corporation and a
wholly owned subsidiary of Parent.
At the effective time of the Merger on December 6, 2019 (the "Effective Time"),
each share of the Company's Class A common stock, $0.001 par value per share
(the "Company common stock"), issued and outstanding immediately prior to the
Effective Time was cancelled and automatically converted into the right to
receive $1.52 in cash, without interest (the "Merger Consideration"), other than
(i) shares that were held in the treasury of the Company or owned of record by
any wholly owned subsidiary of the Company, (ii) shares owned of record by
Parent or any of its wholly owned subsidiaries and (iii) shares held by
stockholders who did not vote in favor of or consent to the adoption of the
Merger Agreement and who properly demanded appraisal of such shares and complied
in all respects with all the provisions of the Delaware General Corporation Law
concerning the right of holders of shares to require appraisal (collectively,
the "Cancelled Shares and Dissenting Shares"). Effective as of the Effective
Time, (a) all outstanding and unvested Company restricted stock units, other
than those held by Richard A. Gideon, became fully vested and non-forfeitable
and were cancelled and converted into the right to receive an amount in cash,
without interest, equal to the product of (i) the number of Company restricted
stock units subject to such award multiplied by (ii) the Merger Consideration
and (b) all outstanding and unvested Company performance share units were
cancelled without consideration.
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The foregoing description of the Merger Agreement and the Merger does not
purport to be complete and is subject to, and qualified in its entirety by, the
full text of the Merger Agreement, which was filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K filed on October 1, 2019, and is
incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
To the extent applicable, the information set forth under Item 1.01 of this
Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 3.03 Material Modification to Rights of Security Holders.
To the extent applicable, the information set forth under Item 2.01, Item 5.01
and Item 5.03 of this Current Report on Form 8-K is incorporated by reference
into this Item 3.03.
Item 5.01 Change in Control of Registrant
To the extent applicable, the information set forth under Item 2.01 of this
Current Report on Form 8-K is incorporated by reference into this Item 5.01.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements to Certain
Officers.
In connection with the Merger, the board of directors of the Company adopted
resolutions to terminate the Company's Amended and Restated Management Incentive
Plan and any other employee or director stock plan pursuant to which any
restricted stock unit, performance share unit or other equity compensation award
is outstanding (the "Company Stock Plans"), effective as of the Effective Time.
From and after the Effective Time, no equity awards or other rights with respect
to Company common stock will be granted or be outstanding under the Company
Stock Plans.
In connection with the Merger, at the Effective Time, Richard A. Gideon, Joseph
A. Mills, Matthew Bonanno, Evan Lederman, John V. Lovoi, Paul B. Loyd Jr.,
Michael Raleigh, Andrew Taylor and Anthony Tripodo resigned as directors of the
Company. The decision of each of Messrs. Gideon, Mills, Bonanno, Lederman,
Lovoi, Loyd Jr., Raleigh, Taylor and Tripodo to resign as directors of the
Company was not the result of any disagreement with the Company on any matter
relating to the operations, internal controls, policies or practices of the
Company, and was solely as a result of the Merger. In connection with the
consummation of the Merger and as contemplated by the Merger Agreement, from and
after the Effective Time, the Board of Directors of the Company (the "Board")
was reconstituted such that Gregory A. Augsburger, Robert J. Woodard, James R.
Woods, James Bush and James Levy were appointed as the directors of the
Company.The Board also decreased the size of the Board from nine to five
directors.
Effective as of the Effective Time, Mr. Gideon was terminated as Chief Executive
Officer of the Company.
Gregory A. Augsburger was selected by the Board to succeed Mr. Gideon as Chief
Executive Officer of the Company effective as of the Effective Time. There is no
arrangement or understanding between Mr. Augsburger and any other person
pursuant to which Mr. Augsburger was elected as Chief Executive Officer. Except
as described herein, there are no existing or currently proposed transactions to
which the Company or any of its subsidiaries is a party and in which Mr.
Augsburger has a direct or indirect material interest. There are no family
relationships between Mr. Augsburger and any of the directors or officers of the
Company or any of its subsidiaries..
Mr. Augsburger, 33, has served as the Chief Executive Officer of the Citizen
Energy companies since co-founding the firm with his partners in 2012. Mr.
Augsburger has also served as head of the Geology department of the Citizen
Energy companies since 2012. Prior to his employment by Citizen Energy, Mr.
Augsburger was employed by Apache Corporation as a Geologist. Mr. Augsburger has
spent his career exploring and producing oil and gas in the Anadarko Basin,
located in the Mid-Continent of the Onshore US E&P industry.
As a result of the Conversion, the business and affairs of the Company will be
overseen by CEH, in its capacity as the sole member of Parent, in its capacity
as the sole member of the Company. The officers of the Company immediately prior
to the Conversion Effective Time will be the officers of the Company at the
Conversion Effective Time.
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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
On December 6, 2019, the Company filed a Certificate of Merger (the "Merger
Certificate") with the Secretary of State of the State of Delaware (the "DE
Secretary of State") to effect the Merger. Pursuant to the terms of the Merger
Agreement, the certificate of incorporation and bylaws of the Company were
amended and restated in their entirety, effective as of the Effective Time.
Copies of the Merger Certificate and the Company's amended and restated
certificate of incorporation and amended and restated bylaws are included as
Exhibits 3.1, 3.2 and 3.3 hereto, respectively.
Also on December 6, 2019, to implement the Conversion, the Company filed with
the DE Secretary of State the Certificate of Conversion and the Certificate of
Formation.
At the Conversion Effective Time, the Company converted from a Delaware
corporation to a Delaware limited liability company pursuant to the Certificate
of Conversion and the Certificate of Formation and the Limited Liability Company
Agreement of the Company became effective.
The foregoing description of the Certificate of Conversion, the Certificate of
Formation and the Limited Liability Company Agreement does not purport to be
complete and is qualified in its entirety by reference to the complete text of
such agreements, copies of which are filed as Exhibits 3.4, 3.5 and 3.6 to this
Current Report on Form 8-K, respectively, and are incorporated by reference
herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description of Exhibit
2.1* Agreement and Plan of Merger, dated as of October 1, 2019, by
and among Citizen Energy Operating, LLC, Citizen Energy Pressburg
Inc. and Roan Resources, Inc. (incorporated by reference to
Exhibit 2.1 to the Current Report on Form 8-K of the Company
filed with the SEC on October 1, 2019).
3.1 Certificate of Merger of Citizen Energy Pressburg Inc. into
Roan Resources, Inc., effective as of December 6, 2019.
3.2 Third Amended and Restated Certificate of Incorporation of Roan
Resources, Inc.
3.3 Third Amended and Restated Bylaws of Roan Resources, Inc.
3.4 Certificate of Conversion of Roan Resources, Inc. into
Pressburg, LLC, effective as of December 6, 2019.
3.5 Certificate of Formation of Pressburg, LLC, dated December 6,
2019.
3.6 Limited Liability Company Agreement of Pressburg, LLC, dated
December 6, 2019.
10.1 Credit Agreement, dated as of December 6, 2019, by and among
Citizen Energy Operating, LLC, as borrower; Citizen Energy
Holdings, LLC, as holdings; JPMorgan Chase Bank, N.A., as
administrative agent, an issuing bank and a swingline lender; the
lenders party thereto; and JPMorgan Chase Bank, N.A., BMO Capital
Market Corp., TD Securities (USA) LLC and BofA Securities, Inc.,
as joint lead arrangers and joint lead bookrunners.
* The schedules to this Exhibit have been omitted pursuant to Item 601(b)(2) of
Regulation S-K and will be provided to the Securities and Exchange Commission
upon request.
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