Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

v3.21.2
Subsequent Events
6 Months Ended
Jun. 30, 2021
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
Announced Acquisition of Lonestar Resources
On July 10, 2021, we entered into a definitive merger agreement (the “Merger Agreement”) with Lonestar Resources US Inc. (“Lonestar”) under which Penn Virginia will acquire Lonestar in an all-stock transaction (the “Merger”). Under the terms of the merger agreement, Lonestar shareholders will receive 0.51 shares of Penn Virginia for each Lonestar share. The transaction is expected to close in the second half of 2021, subject to the satisfaction of customary closing conditions, including obtaining the requisite shareholder and regulatory approvals. The transaction has been unanimously approved by the Boards of Directors of both companies. In addition, following the execution of the merger agreement, Lonestar shareholders holding approximately 80% of the voting power of Lonestar and Penn Virginia shareholders holding approximately 60% of the voting power of Penn Virginia signed binding support agreements obligating them to vote in favor of the transaction. Upon completion of the transaction, Penn Virginia shareholders will own approximately 87% of the combined company, and Lonestar shareholders will own approximately 13% of the combined company. Following the transaction completion, Lonestar will have the right to nominate one independent director to the Penn Virginia Board of Directors.
Offering of Senior Unsecured Notes
On July 27, 2021, our indirect, wholly owned subsidiary Penn Virginia Escrow LLC (the “Escrow Issuer”) priced an offering of $400 million aggregate principal amount of senior unsecured notes due 2026 (the “Notes”). The closing date is anticipated to be on or about August 10, 2021 and the Notes will bear interest at 9.25%. The Notes were initially sold at 99.018% of par. The gross proceeds of the offering and other funds will initially be deposited in an escrow account pending satisfaction of certain conditions, including the expected consummation of the Merger on or prior to November 26, 2021. Upon satisfaction of the escrow release conditions, Penn Virginia Holdings, LLC (“Holdings”) will assume the obligations under the Notes, the Escrow Issuer will be merged with and into Holdings (with Holdings as the surviving entity), the Notes will be guaranteed by the subsidiaries of Holdings that guarantee its reserve-based revolving Credit Facility, and the escrowed proceeds relating to the offering of the Notes will be released.
Upon the release of the funds from escrow, we intend to use the proceeds from the Notes to repay and discharge the long-term debt of Lonestar and to use the remainder, along with cash on hand, to repay our Second Lien Facility loan in full and pay related expenses.
If escrow release conditions are not satisfied on or before November 26, 2021, or at any time prior to such date the Merger has been terminated or we have decided that we will not pursue the consummation of the Merger (or determined that the consummation of the Merger is not reasonably likely to be satisfied by such date), then the escrowed funds will be applied to the mandatory redemption of the Notes at a price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The Notes were offered and sold in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act.
The Notes were not registered under the Securities Act or any state securities laws and may not be offered or sold in the United States or to, or for the benefit of, U.S. persons absent registration under, or an applicable exemption from, the registration requirements of the Securities Act and applicable state securities laws.
In July 2021, we entered into Amendment No. 10 to the Credit Agreement (the “Tenth Amendment”) permitting certain actions to be executed in accordance with the escrow arrangement of the Notes as described above.