Each one in plain English, with the numbers worked through for a shareholder.
1 Feb 2021business combination● Neutral
An 8-K reports that on January 29, 2021 the company and HighPoint amended the November 2020 merger agreement. The 97.5% note participation test now applies to each series of HighPoint notes separately, instead of 97.5% of both series combined plus a majority of each series. All other material terms are said to remain substantially the same. This continues the HighPoint merger thread and matches the change already seen in the S-4 amendments. The filing says the registration statements were not yet effective.
Amendment No. 1 to the joint proxy S-4, dated January 29, 2021 (posted February 1), restates the HighPoint deal terms: about 68% to existing company holders, 1.6% to HighPoint stockholders and 30.4% to participating noteholders, with 0.114 shares per HighPoint share. The changes seen are that the 97.5% note participation test now applies to each series of notes and that the notes are referred to as those of HighPoint Operating Corporation. The prepackaged Chapter 11 remains the fallback if the exchange or HighPoint holder vote fails. The special meeting date is still blank, and the filing is truncated, so other changes are not seen.
Amendment No. 1 to the noteholder-exchange S-4, filed around January 29, 2021 (posted February 1), sets the minimum payout: for each $1,000 of HighPoint notes, at least 14.9027424 company shares (worth $301.78 at the January 26, 2021 close) and $138.46 of new company notes, plus accrued interest and the $2.50 consent fee. The 97.5% minimum now applies to each series of notes rather than the total, and the notes are described as issued by HighPoint Operating Corporation. Total stock stays at 9,314,214 shares, so existing holders' roughly 68% stake is unchanged; the extra shares or notes depend on participation. Meeting and deadline dates are still blank.
The Mangrove Partners Master Fund, Ltd, Mangrove Partners, Nathaniel August reported a CIVITAS RESOURCES, INC. shareholding of 989,677 shares (4.80% of votes) in a periodic institutional filing.
The Mangrove Partners Master Fund, Ltd, Mangrove Partners, Nathaniel August reported a CIVITAS RESOURCES, INC. shareholding of 1,343,678 shares (6.40% of votes) in a periodic institutional filing.
A second S-4 filed December 17, 2020 registers the securities for the HighPoint noteholder exchange: 9,314,214 company shares (about $210.6 million at $22.61 per share) and up to $100 million of new 7.5% Senior Notes due 2026, guaranteed by company subsidiaries. HighPoint's $350 million 7.0% 2022 notes and $275 million 8.75% 2025 notes would be exchanged, with a $2.50 per $1,000 consent fee, and out-of-court closing needs 97.5% participation. This continues the November 2020 merger thread and adds the new notes as a company debt obligation if the exchange completes. The filing is truncated, so per-$1,000 consideration is not seen here.
On December 17, 2020 the company filed its first registration statement (Form S-4) for the HighPoint deal announced November 9, 2020. This one registers 490,221 shares for HighPoint stockholders (0.114 company shares per HighPoint share, valued at about $11.1 million at $22.61 per share) and carries the joint proxy statement asking both companies' holders to vote. Terms match the announced deal: existing company holders about 68% after closing, and a company-board recommendation to vote for the share issuance. If the notes exchange falls short of 97.5% or HighPoint holders do not approve, HighPoint intends to use a prepackaged Chapter 11. The meeting date is blank and the filing is truncated, so no new terms are seen.
Mangrove Partners Master Fund, Mangrove Partners and Nathaniel August filed Amendment No. 7 to their Schedule 13D, reporting 1,770,504 shares (about 8.5%) as of December 11, 2020. The filing showed they had sold shares and all their swaps in recent weeks.
Bonanza Creek filed a Schedule 13D on HighPoint Resources, reporting shared voting power over 2,000,000 HighPoint shares (about 46.5%) held by Fifth Creek and covered by a stockholder support agreement tied to the merger. It disclaimed beneficial ownership of those shares.
A companion filing on November 9, 2020 that announces the HighPoint merger through a joint press release and an investor presentation. The body is mostly legal notices (no-offer, proxy and S-4 registration, forward-looking statement warnings) and adds no new deal terms beyond the main merger filing. It lists the risks that shareholders may not approve, closing conditions may not be met, or HighPoint may need to reorganize in bankruptcy.
On November 9, 2020 the company agreed to acquire HighPoint Resources through a merger plus an exchange of HighPoint's $625 million of senior notes for 9,314,214 new company shares and up to $100 million of new company senior notes. After closing, existing company shareholders would own about 68% of the combined company, HighPoint shareholders 1.6% and participating HighPoint noteholders 30.4%, so current holders are diluted to about 68%. HighPoint stockholders would get a fixed ratio of 0.114 company shares per HighPoint share. The deal would close out of court if 97.5% of the notes tender and HighPoint holders approve; otherwise HighPoint may use a prepackaged Chapter 11 plan, with deadlines of April 8, 2021 and May 24, 2021. Brian Steck is to be chairman of a seven-member board, and HighPoint paid the company a $6 million fee at signing. This is a new thread, and the filing is truncated, so some terms are not seen.
On June 18, 2020, at its scheduled semi-annual review, the company and its JPMorgan-led lenders cut the borrowing base on the December 2018 credit facility from $375 million to $260 million and lowered the elected loan limit from $350 million to $260 million. The amendment also adds tighter terms: weekly mandatory repayment of cash above $35.0 million, a lower maximum leverage ratio (4.0 to 3.5), and higher interest margins. All lenders supported it, and the next redetermination is due around November 1, 2020. This reduces the company's borrowing room compared with the $350 million base set in 2018.
CIVITAS RESOURCES, INC. shareholders approved the routine matters put to a vote at the company's annual meeting (director elections, auditor ratification, and the executive-pay advisory vote).
