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Bonanza Creek Energy, Inc. and HighPoint Resources Corporation announced that they have entered into a definitive merger agreement to combine both companies in a transaction valued at approximately $3761 million as of November 6, 2020.
Under the terms of the merger agreement, Bonanza Creek and HighPoint have agreed to commence a registered exchange offer and consent solicitation and simultaneous solicitation of a prepackaged plan of reorganization under Chapter 11 of the United States Bankruptcy Code. The Exchange Offer and Consent Solicitation will be conditioned on a minimum participation of not less than 97.5% of the aggregate outstanding principal amount of HighPoint senior unsecured notes.
If the Minimum Participation Condition is met and if certain customary closing conditions are satisfied (including approval by each company’s shareholders), the companies will carry on the Exchange Offer and Consent Solicitation and Bonanza Creek will acquire HighPoint at closing outside of Chapter 11.
HighPoint Resources has also announced third quarter of 2020 financial and operating results, reporting a net loss of $16 million, or $3.72 per diluted share.
After the transaction closes, Bonanza Creek shareholders would own about 68% of the combined entity. Existing HighPoint shareholders would own about 1.6% of the combined company, while HighPoint noteholders would receive the remaining shares and up to $100 million in newly issued 7.5% senior unsecured notes due in 2026. The transaction implies an exchange ratio of 0.114 share of Bonanza Creek of each HighPoint share.
The combined company would have five board members from Bonanza Creek and two selected by HighPoint’s supporting noteholders. Bonanza Creek President and Chief Executive Eric Greager would serve as CEO of the combined company, while Bonanza Creek Chairman Brian Steck would remain chairman.
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