Item 1.01. Entry into a Material Definitive Agreement.
On October 21, 2022, Talos Production Inc. ("Talos Production"), a wholly-owned
subsidiary of Talos Energy Inc. (the "Company" or "Talos"), commenced a consent
solicitation (the "Consent Solicitation") seeking consents for amendments (the
"Proposed Amendments") to the indenture, dated as of January 4, 2021 (the "Base
Indenture"), among Talos Production, the guarantors party thereto (the
"Guarantors") and Wilmington Trust, National Association, as trustee (the
"Trustee") and as collateral agent (the "Collateral Agent"), as supplemented by
the first supplemental indenture thereto, dated as of January 14, 2021 (the
"First Supplemental Indenture" and, collectively with the Base Indenture, the
"Indenture"), which governs the Company's 12.00% Second-Priority Senior Secured
Notes due 2026 (the "Notes"). The terms and conditions of the Consent
Solicitation were described in detail in the consent solicitation statement,
dated October 21, 2022 (the "Consent Solicitation Statement"). Because the
consents of the holders of more than 50% of the aggregate principal amount of
the Notes outstanding (excluding any Notes held by Talos Production, any
Guarantor or their respective affiliates) were received as of October 27, 2022,
Talos Production entered into a supplemental indenture to the Indenture (the
"Second Supplemental Indenture") with the Guarantors, the Trustee and the
Collateral Agent. The Second Supplemental Indenture became effective upon its
execution.
Upon the consummation of the Second Merger (as defined in the Consent
Solicitation Statement) and the cash payment by Talos Production of $5.00 per
$1,000 in principal amount of Notes for which consents were delivered, the
Proposed Amendments will become operative, which amend the Indenture to permit
the incurrence of indebtedness in respect of the 11.750% Senior Secured Second
Lien Notes due 2026 of EnVen Energy Corporation, a Delaware corporation
("EnVen"). If the Second Merger is not consummated, no Consent Fee (as defined
in the Consent Solicitation Statement) will be paid, the Proposed Amendments
will not become operative and the Notes will continue to be subject to the
current terms and conditions of the Indenture. The Consent Fee is expected to be
paid substantially concurrently with the Merger Closing (as defined in the
Consent Solicitation Statement).
The foregoing description of the Second Supplemental Indenture does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Second Supplemental Indenture, which is filed with this Current Report on
Form 8-K as Exhibit 4.1.
Item 7.01. Regulation FD Disclosure.
Consent Solicitation
On October 28, 2022, the Company issued a press release announcing that Talos
Production had completed the Consent Solicitation. The press release is attached
as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this
Item 7.01 by reference.
In accordance with General Instruction B.2 of Form 8-K, the information
contained in this Current Report on Form 8-K under Item 7.01 and set forth in
the attached Exhibit 99.1 is deemed to be "furnished" solely pursuant to Item
7.01 of Form 8-K and shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, nor shall such
information be deemed incorporated by reference into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
except as expressly set forth by specific reference in such a filing.
Additional Information and Where To Find It
In connection with the proposed merger (the "Proposed Transaction") between
Talos and EnVen, Talos intends to file with the Securities and Exchange
Commission (the "SEC") a registration statement on Form S-4 (the "Registration
Statement") to register the shares of Talos's common stock to be issued in
connection with the Proposed Transaction. The Registration Statement will
include a document that serves as a prospectus and proxy statement of Talos and
a consent solicitation statement of EnVen (the "proxy statement/consent
solicitation statement/prospectus"), and each party will file other documents
regarding the Proposed Transaction with the SEC. INVESTORS AND SECURITY HOLDERS
OF TALOS AND ENVEN ARE URGED TO CAREFULLY AND THOROUGHLY READ, WHEN THEY BECOME
AVAILABLE, THE REGISTRATION
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STATEMENT, THE PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS, AS
EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND OTHER RELEVANT
DOCUMENTS FILED BY TALOS AND ENVEN WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT TALOS AND ENVEN, 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 Talos and EnVen. 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 Talos and EnVen with the SEC (when they become
available) through the website maintained by the SEC at www.sec.gov. Copies of
documents filed with the SEC by Talos, including the proxy statement/consent
solicitation statement/prospectus (when available), will be available free of
charge from Talos's website at www.talosenergy.com under the "Investor
Relations" tab.
Participants in the Solicitation
Talos, EnVen 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 Talos's stockholders and the solicitation of
written consents from EnVen's stockholders, in each case with respect to the
Proposed Transaction. Information about Talos's directors and executive officers
is available in Talos's Annual Report on Form 10-K for the 2021 fiscal year
filed with the SEC on February 25, 2022, and its definitive proxy statement for
the 2022 annual meeting of stockholders filed with the SEC on April 6, 2022.
Information about EnVen's directors and executive officers is available via
EnVen's website at www.enven.com. Other information regarding the participants
in the solicitations and a description of their direct and indirect interests,
by security holdings or otherwise, will be contained in the Registration
Statement, the proxy statement/consent solicitation statement/prospectus and
other relevant materials to be filed with the SEC regarding the Proposed
Transaction when they become available. Security holders, potential investors
and other readers should read the proxy statement/consent solicitation
statement/prospectus carefully when it becomes available before making any
voting or investment decisions.
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.
Forward Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements, other than statements of historical fact included in this
Current Report on Form 8-K, regarding our strategy, future operations, financial
position, estimated revenues and losses, projected costs, prospects, plans and
objectives of management are forward-looking statements. When used in this
communication, the words "will," "could," "believe," "anticipate," "intend,"
"estimate," "expect," "project," "forecast," "may," "objective," "plan" and
similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words.
These forward-looking statements are based on our current expectations and
assumptions about future events and are based on currently available information
as to the outcome and timing of future events. These forward-looking statements
include, but are not limited to, (1) statements regarding the payment of the
Consent Fee and (2) statements regarding the Proposed Transaction with EnVen
described herein and as adjusted descriptions of the combined company and its
operations, integration, debt levels, acreage, well performance, development
plans, per unit costs, ability to maintain production within cash flow,
production, cash flows, synergies, type curves, opportunities and anticipated
future performance. Information adjusted for the Proposed Transaction should not
be
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considered a forecast 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 Talos stockholders may not approve the issuance of
new shares of Talos common stock in the Proposed Transaction or that
stockholders of EnVen may not approve the Agreement and Plan of Merger (as
amended, supplemented or otherwise modified from time to time, the "Merger
Agreement"), among Talos, Talos Production, EnVen, and the other parties
thereto; 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 Talos's capital structure and governance
could have adverse effects on the market value of its securities; the ability of
Talos to retain customers and retain and hire key personnel and maintain
relationships with its suppliers and customers and on Talos's operating results
and business generally; the risk that the Proposed Transaction could distract
management from ongoing business operations or cause Talos to incur substantial
costs; the risk that Talos does not realize expected benefits of its hedges; the
success of our carbon capture and sequestration projects; commodity price
volatility due to the continued impact of the coronavirus disease 2019
(COVID-19), including any new strains or variants, and governmental measures
related thereto on global demand for oil and natural gas and on the operations
of our business; the ability or willingness of OPEC and other state-controlled
oil companies (OPEC Plus), such as Saudi Arabia and Russia, to set and maintain
oil production levels; the impact of any such actions; the lack of a resolution
to the war in Ukraine and its impact on certain commodity markets; lack of
transportation and storage capacity as a result of oversupply, government and
regulations; lack of availability of drilling and production equipment and
services; adverse weather events, including tropical storms, hurricanes and
winter storms; cybersecurity threats; inflation; environmental risks; failure to
find, acquire or gain access to other discoveries and prospects or to
successfully develop and produce from our current discoveries and prospects;
geologic risk; drilling and other operating risks; well control risk; regulatory
changes; the uncertainty inherent in estimating reserves and in projecting
future rates of production; cash flow and access to capital; the timing of
development expenditures; potential adverse reactions or competitive responses
to our acquisitions and other transactions, generally, including those discussed
under the heading "Risk Factors" in our Annual Report on Form 10-K for the year
ended December 31, 2021 filed on February 25, 2022 and in our Quarterly Reports
on Form 10-Q that are available on Talos's website at www.talosenergy.com and on
the website of the SEC at www.sec.gov. All forward-looking statements are based
on assumptions that Talos believes to be reasonable but that may not prove to be
accurate. Any forward-looking statement speaks only as of the date on which such
statement is made, and Talos undertakes no obligation to correct or update any
forward-looking statement, whether as a result of new information, future events
or otherwise, except as required by applicable law. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
4.1 Second Supplemental Indenture, dated as of October 27, 2022, among
Talos Production, the Guarantors and Wilmington Trust, National
Association, as trustee and as collateral agent.
99.1 Press Release of Talos Energy, Inc., dated October 28, 2022,
announcing the completion of the Consent Solicitation.
104 Cover Page Interactive Data File (embedded within Inline XBRL
document)
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