Item 1.01 Entry into a Material Definitive Agreement
On January 12, 2021, Corning Natural Gas Holding Corporation, a New York
corporation (the "Company") entered into an Agreement and Plan of Merger (the
"Merger Agreement"), by and among the Company, ACP Crotona Corp., a Delaware
corporation ("Parent") and ACP Crotona Merger Sub Corp., a New York corporation
("Merger Sub"), pursuant to which Merger Sub will merge with and into the
Company (the "Merger"), on the terms and subject to the conditions set forth in
the Merger Agreement, and the Company will continue as the surviving corporation
and a wholly-owned subsidiary of Parent. As a result of the Merger, shareholders
of the Company will receive consideration for their shares in the following
amounts: (i) $24.75 in cash, without interest, per share of common stock (the
"Merger Consideration"); (ii) $25 per share of Series A preferred stock plus any
unpaid dividends; (iii) $29.70 per share of Series B preferred stock reflecting
that each share is convertible into 1.2 shares of common stock, plus any unpaid
dividends; and (iv) $25 per share of Series C preferred stock plus any unpaid
dividends, in accordance with and subject to the terms of the Merger Agreement.
Parent and Merger Sub are affiliates of Argo Infrastructure Partners LP (
"Argo") and were formed by Argo in order to acquire the Company.
Pursuant to the Merger Agreement, at the effective time of the Merger (the
"Effective Time"), each share of common stock of the Company issued and
outstanding immediately prior to the Effective Time will be cancelled and
automatically converted into the right to receive the Merger Consideration,
other than (i) shares that are held in the treasury of the Company or owned by
any direct or indirect wholly owned subsidiary of the Company (but not including
those shares held by the Rabbi Trust established by Corning Natural Gas
Corporation to fund a deferred compensation plan for certain officers), (ii)
shares owned by Parent, Merger Sub or any of their respective wholly owned
subsidiaries, and (iii) shares held by shareholders who have complied in all
respects with all of the provisions of the New York Business Corporation Law
concerning such shareholder's rights as a dissenting shareholder. A fund managed
by Argo has committed to capitalize Parent, at or immediately prior to the
effective time of the Merger, with an aggregate equity contribution in an amount
of up to $94,700,000, subject to the terms and conditions set forth in an equity
commitment letter, dated as of January 12, 2021.
The Board of Directors of the Company unanimously determined that the
transactions contemplated by the Merger Agreement, including the Merger, are in
the best interests of the Company and its stockholders and approved the Merger
Agreement and the transactions contemplated thereby, and unanimously resolved to
recommend that the Company's stockholders vote in favor of approval of the
Merger Agreement.
The Company has made customary representations and warranties in the Merger
Agreement and has agreed to customary covenants regarding the operation of the
business of the Company and its subsidiaries prior to the closing of the Merger.
The Merger is subject to, among other customary closing conditions, the
approvals of the New York State Public Service Commission and the Pennsylvania
Public Utility Commission. In addition, the Merger requires the approval of the
Company's shareholders and the expiration of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act. The Merger Agreement also
includes certain termination rights for both the Company and Parent and provides
that, in connection with the termination of the Merger Agreement under specified
circumstances, the Company or Parent will be required to pay to Parent or the
Company, respectively, a termination fee of $1,721,526, if the termination
occurs during the go shop period (as discussed below) or $2,486,648, if the
termination occurs after the expiration of the go shop period.
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The Merger Agreement provides for a 45-day go shop period which expires February
26, 2021. During such period, the Company's Board of Directors, together with
the Company's financial and legal advisors, may actively solicit, receive,
evaluate and potentially enter into negotiations with parties that offer
alternative proposals to acquire the Company. At the end of the go shop period,
the Company will cease such activities, and will be subject to a customary "no
shop" provision that restricts the Company's ability to solicit acquisition
proposals from third parties and to provide non-public information to and engage
in discussions or negotiations with third parties regarding acquisition
proposals after the go shop period. The no shop provision also allows the
Company, under certain circumstances and in compliance with certain obligations,
to provide non-public information and engage in discussions and negotiations
with respect to an unsolicited acquisition proposal, including from certain
third parties who initially submitted an acquisition proposal during the go shop
period, that constitutes or is reasonably expected to lead to a superior
proposal.
In addition, in connection with the execution of the Merger Agreement, the
Company's directors, who in the aggregate beneficially own approximately 30% of
the Company's outstanding shares, have entered into a voting agreement (the
"Voting Agreement") with Parent pursuant to which each director has agreed to
vote in favor of the Merger and the approval of the Merger Agreement as a
shareholder of the Company, subject to the limitations set forth in the Voting
Agreement. The obligations under the Voting Agreement will terminate if, among
other reasons, the Merger Agreement is terminated in accordance with its terms
In connection with execution of the Merger Agreement, the Company has suspended
its dividend reinvestment plan effective immediately.
Upon consummation of the Merger, the Company's common stock will be delisted
from the OTCQX and deregistered under the Exchange Act as soon as practicable
following the Effective Time.
The foregoing description of the Merger Agreement is not complete and is
qualified in its entirety by reference to the Merger Agreement, which is
attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated
herein by reference.
The Merger Agreement, and the foregoing description of the Merger Agreement,
have been included to provide investors and stockholders with information
regarding the terms of the Merger Agreement. The assertions embodied in the
representations and warranties contained in the Merger Agreement are qualified
by information in confidential disclosure schedules delivered by the Company to
Parent in connection with the signing of the Merger Agreement. Moreover, certain
representations and warranties in the Merger Agreement were made as of a
specified date, may be subject to a contractual standard of materiality
different from what might be viewed as material to stockholders, or may have
been used for the purpose of allocating risk between the parties to the Merger
Agreement. Accordingly, the representations and warranties in the Merger
Agreement should not be relied on by any persons as characterizations of the
actual state of facts and circumstances of the Company at the time they were
made and such persons should consider the information in the Merger Agreement in
conjunction with the entirety of the factual disclosure about the Company in the
Company's public reports filed with the U.S. Securities and Exchange Commission
(the "SEC"). Information concerning the subject matter of the representations
and warranties may change after the date of the Merger Agreement, which
subsequent information may or may not be fully reflected in the Company's public
disclosures.
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Item 7.01 Regulation FD Disclosure
In connection with the execution of the Merger Agreement discussed in Item 1.01
above, the Company issued a press release on January 13, 2021. A copy of the
press release is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
Safe Harbor Regarding Forward-Looking Statements
The Company is including the following cautionary statement in this release to
make applicable, and to take advantage of, the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, Corning Natural Gas Holding
Corporation. Forward-looking statements are all statements other than statements
of historical fact, including, without limitation, those that are identified by
the use of the words "anticipates," "estimates," "expects" "intends," "plans,"
"predicts," "believes," "may," "will" and similar expressions. Such statements
are inherently subject to a variety of risks and uncertainties that could cause
actual results to differ materially from those expressed. Factors that may
affect forward-looking statements and the Company's business generally include,
but are not limited to the Company's ability to complete the proposed
transaction; any other proposals that may or may not arise during the "go shop"
period; any event, change or circumstance that might give rise to the
termination of the merger agreement; the effect of the announcement of the
proposed transaction on the Company's relationships with its customers,
operating results and business generally; the risk that the proposed transaction
will not be consummated in a timely manner; the ability of the Company to obtain
shareholder approval of the proposed transaction; the ability of the Company to
obtain regulatory approval of the proposed transaction; the Company's continued
ability to make dividend payments; the Company's ability to implement its
business plan, grow earnings and improve returns on investment; fluctuating
energy commodity prices; the possibility that regulators may not permit the
Company to pass through all of its increased costs to its customers; changes in
the utility regulatory environment; wholesale and retail competition; the
Company's ability to satisfy its debt obligations, including compliance with
financial covenants; weather conditions; litigation risks; and various other
matters, many of which are beyond the Company's control; the risk factors and
cautionary statements made in the Company's public filings with the Securities
and Exchange Commission (the "SEC"); and other factors that the Company is
currently unable to identify or quantify, but may exist in the future. The
Company expressly undertakes no obligation to update or revise any
forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based. Additional factors that
may affect the future results of the Company are set forth in its filings with
the SEC, including its Annual Report on Form 10-K for the fiscal year
ended September 30, 2020, which is available on the SEC's website
at www.sec.gov. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date thereof.
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Additional Information and Where to find It:
This communication may be deemed to be solicitation material in respect of the
merger of the Company and a subsidiary of ACP Crotona Corp.. In connection with
the Merger, the Company intends to file relevant materials with the SEC,
including a proxy statement in preliminary and definitive form that will contain
important information about the proposed transaction and related matters, and
deliver a copy of the proxy statement to its shareholders. Investors are urged
to read the definitive proxy statement and other relevant documents carefully
and in their entirety when they become available because they will contain
important information about the merger and related matters. Investors may
obtain a free copy of these materials when they are available and other
documents filed by the Company with the SEC at the SEC's website at www.sec.gov,
at the Company's website at https://www.corninggas.com/ or by writing to the
Company's Corporate Secretary at Corning Natural Gas Holding Corporation., 330
W. William St., Corning, NY 14830, or by calling the Company's Corporate
Secretary at (607) 936-3755.
Security holders also may read and copy any reports, statements and other
information filed by the Company with the SEC at the SEC public reference room
at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 or visit the SEC's website for further information on its public
reference room.
Participants in The Solicitation
The Company and its directors, executive officers and other persons may be
deemed to be participants in the solicitation of proxies in respect of the
transaction. Information regarding the Company's directors and executive
officers is available in the Company's proxy statement filed with the SEC on
March 12, 2020 in connection with its 2020 annual meeting of shareholders. Other
information regarding persons who may be deemed participants in the proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy statement and
other relevant materials to be filed with the SEC when they become available.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Agreement and Plan of Merger, dated as of January 12, 2021, by and
among Corning Natural Gas Holding Corporation, ACP Crotona Corp., and ACP
Crotona Merger Sub Corp.
99.1 Press Release dated January 13, 2021
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