UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report: August 6, 2008
Date of earliest event reported: July 31, 2008
Concho Resources Inc.
(Exact name of registrant as specified in its charter)
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| Delaware
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001-33615
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76-0818600 |
(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.) |
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550 West Texas Avenue, Suite 1300
Midland, Texas
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79701 |
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(Zip Code) |
Registrant’s telephone number, including area code: (432) 683-7443
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
Registration Rights Agreement
As previously disclosed, Concho Resources Inc. (the “Company”) entered into a Common Stock
Purchase Agreement (the “Purchase Agreement”) on June 5, 2008 with certain third-party
investors (the “Purchasers”) to sell 8,302,894 shares of the Company’s common stock (the “Stock”)
in a private placement (the “Private
Placement”) for aggregate cash consideration of
$250,000,138.34. All of the Purchasers were existing stockholders of
the Company and the Company believes that certain of the
Purchasers became greater than 5% stockholders of the Company after
the closing of the Private Placement. The Stock was issued and sold simultaneously with the closing of the Company’s
acquisition of Henry Petroleum LP and certain entities affiliated with Henry Petroleum LP
(collectively “Henry”) on July 31, 2008 and the Company used the net proceeds from the Private
Placement to finance a portion of the Henry Acquisition
(as defined hereinafter). The Stock was issued and sold by the
Company for a negotiated price of $30.11 per share in a private transaction exempt from
registration under Section 4(2) of the Securities Act of 1933 (the
“Securities Act”).
As contemplated by the Purchase Agreement, the Company entered into a Registration Rights
Agreement (the “Registration Rights Agreement”) with the Purchasers on July 31, 2008, the closing
date of the Private Placement. Pursuant to the Registration Rights Agreement, the Company agreed
to file a registration statement within sixty (60) days of the Company first becoming eligible to
file a registration statement on Form S-3 under the Securities Act; provided that in no event shall
the date of such filing be later than November 1, 2008. In addition, the Registration Rights
Agreement grants the Purchasers “piggyback” registration rights under certain circumstances and
also includes customary provisions dealing with indemnification, contribution and allocation of expenses.
The foregoing description is qualified in its entirety by reference to the Registration Rights
Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated into this Current
Report on Form 8-K by reference.
Amended and Restated Credit Agreement
On July 31, 2008, the Company entered into an amended and restated credit agreement (the “A&R
Credit Agreement”), by and among JPMorgan Chase Bank, N.A. (“JPMorgan”), as Administrative Agent,
Swing Line Lender and L/C Issuer, Bank of America, N.A., as Syndication Agent, Calyon New York
Branch, ING Capital LLC and BNP Paribas, as Co-Documentation Agents,
and certain other leaders
party thereto. The A&R Credit Agreement amends and restates the Credit Agreement dated as of
February 24, 2006
(the “Old Credit Agreement”), by and between the
Company and JPMorgan as Administrative Agent and certain other
leaders party thereto. The A&R Credit
Agreement is a $1.2 billion, five-year revolving loan facility,
which also includes a $50 million
letter of credit facility and a $25 million swing line loan facility
and is secured by a lien on substantially all of the assets of the
Company. At the closing of the Henry Acquisition, the Company borrowed
approximately $650 million under the A&R Credit Agreement
and has approximately $300 million of availability remaining currently.
The revolving loans bear interest at a rate equal to either (i) for ABR Loans (as defined in
the A&R Credit Agreement), the Alternate Base Rate (as defined in the A&R Credit Agreement) plus
the Applicable Margin (as defined in the A&R Credit Agreement) as determined by the portion of the
borrowing base used at the issuance of such loan, or (ii) for Eurodollar Loans (as defined in the
A&R Credit Agreement), the Adjusted LIBO Rate (as defined in the A&R Credit Agreement) plus the
Applicable Margin (as defined in the A&R Credit Agreement) as determined by the portion of the
borrowing base used at the issuance of such loan. The interest rate on
outstanding amounts borrowed under the A&R Credit Agreement was
3.964% at August 1, 2008.
Under the A&R Credit Agreement, the Company is obligated to comply with certain financial
covenants requiring it to maintain a ratio of Consolidated Current Assets (as defined in the A&R
Credit Agreement) to Consolidated Current Liabilities (as defined in the A&R Credit Agreement) of
not less than 1.00 to 1.00, and a Consolidated Leverage Ratio (as defined in the A&R Credit
Agreement) of not more than 4.00 to 1.00.
In addition, the A&R Credit Agreement contains various covenants that limit, among other
things, the Company’s ability to: incur indebtedness; grant liens; issue preferred stock; engage in
certain mergers, consolidations, liquidations and dissolutions; engage in certain sales of assets;
make distributions and dividends; enter into transactions with affiliates; and make certain
acquisitions and investments. The A&R Credit Agreement also requires the Company to engage in a
hedging program.
If an event of default exists under the A&R Credit Agreement, the lenders will be able to
accelerate the maturity of the credit facilities and exercise other rights and remedies. An event
of default includes, among other things: nonpayment of principle when due; nonpayment of interest,
fees or other amounts (subject to a three-day grace period for interests and fees and a five-day
grace period for other amounts); material inaccuracy of representations and warranties; violation
of covenants; cross-default to material indebtedness; bankruptcy events; certain ERISA events;
material judgments; and a change in control over the Company.
The foregoing description is qualified in its entirety by reference to the A&R Credit
Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated into this Current
Report on Form 8-K by reference.
Item 1.02 Termination of a Material Definitive Agreement.
Termination of the Second Lien Term Loan Facility
On
July 31, 2008, the Company repaid the outstanding balance of
approximately $110.9 million under the
$200 million five year Second Lien Credit Agreement (the “Second Lien Credit
Agreement”). The Second lien Credit Agreement, which was entered into on
March 27, 2007 with Bank of America, N.A., as the administrative agent for the other lenders
thereunder, bore interest at 7.75% at July 31, 2008 and was secured by a second lien on the same
assets that secured the Company’s Old Credit Agreement. The Company repaid and terminated the
Second Lien Credit Agreement in connection with the closing of the A&R Credit
Agreement and incurred a prepayment penalty of approximately $2.2 million as a result.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On
July 31, 2008, the Company closed the previously announced
acquisition of Henry from James C. Henry, Paula Henry, Henry
Securities, Ltd., Henchild LLC and Henry Family Investment Group and certain
additional non-operated rights and interests in certain of
Henry’s properties from Henry Heirs, Ltd., RCS1
Investments LLC, William R. Fair, Rodney Kim Harris, J&M Petroleum, DAVLIN LLC and JUSDY LLC for aggregate cash
consideration of approximately $588.3 million (the “Henry
Acquisition”). The properties acquired by the Company in the Henry Acquisition consist of oil and gas
assets located in the Permian Basin of West Texas and Southeast New Mexico. The Henry Acquisition
was funded through the combined proceeds of the Company’s
approximately $250 million Private Placement and
borrowings under the A&R Credit Facility.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 above is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Since
it is impracticable to provide the required financial statements for
the entities acquired in the Henry Acquisition described in Item 2.01
at the time of this filing and no financials (audited or unaudited)
are available at this time, the Company hereby confirms that it intends
to file the required financial statements on or before October 20,
2008, by amendment to this Current Report on Form 8-K.
(d) Exhibits.
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Description |
10.1
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Registration Rights Agreement, dated July 31, 2008, by and
between Concho Resources Inc. and the purchasers named
therein. |
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10.2
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Amended and Restated Credit Agreement, dated July 31, 2008,
by and among Concho Resources Inc., JP Morgan Chase Bank,
N.A., Bank of America, N.A., Calyon New York Branch, ING
Capital LLC and BNP Paribas and certain other lenders party
thereto. |