Item 8.01 Other Events.
As previously disclosed, on
On
Litigation Related to the Extraction merger
As of the date hereof, the Company has to its knowledge received a total of two
demand letters from purported stockholders of Extraction (the "Demand Letters")
alleging that the Proxy Statement contained disclosure deficiencies and/or
incomplete information regarding the Mergers. The Company also is aware of four
complaints having been filed with respect to the Mergers. The four complaints
(collectively referred to as, the "Stockholder Actions") are captioned as
follows: Harbour v.
Extraction believes that no supplemental disclosures are required under applicable laws; however, in order to moot the purported Extraction stockholders' disclosure claims, avoid the risk of the Demand Letters or Stockholder Actions delaying the Mergers, avoid nuisance and minimize the distractions, uncertainties and expense inherent in litigation, and without admitting any liability or wrongdoing, Extraction is voluntarily making certain disclosures below that supplement those contained in the Proxy Statement. These disclosures, and disclosures on certain other matters, are provided in this Current Report on Form 8-K. Nothing in this Current Report on Form 8-K shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth herein. To the contrary, Extraction specifically denies all allegations in the Demand Letters and Stockholder Actions and specifically denies that any additional disclosure was or is required.
The supplemental disclosures contained herein will not affect the timing of
special meetings of Bonanza Creek's and Extraction's stockholders, which are
scheduled to be held on
SUPPLEMENT TO PROXY STATEMENT
Extraction is supplementing the Proxy Statement with certain additional information set forth below. These disclosures should be read in connection with the Proxy Statement, which should be read in its entirety. All page references are to pages in the Proxy Statement, and terms used below, unless otherwise defined, have the meanings set forth in the Proxy Statement.
The disclosure on pages 33 and 34 of the proxy statement is hereby supplemented by revising the section labeled "Litigation Relating to the Mergers" as follows:
Litigation Relating to the Mergers (see page 152)
Following the public announcement of the mergers, five putative stockholder
lawsuits relating to the mergers were filed. Two actions were filed in the
For additional information, see the section entitled "The Extraction Merger - Litigation Relating to the Mergers."
The disclosure on page 61 of the proxy statement is hereby supplemented by revising the risk factor labeled "Litigation relating to the mergers could result in an injunction preventing the completion of the mergers and/or substantial costs to Bonanza Creek, Extraction and Crestone Peak" as follows:
Litigation relating to the mergers could result in an injunction preventing the completion of the mergers and/or substantial costs to Bonanza Creek, Extraction and Crestone Peak.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger, or other business combination agreements. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Bonanza Creek's, Extraction's and Crestone Peak's respective liquidity and financial condition.
Following the public announcement of the mergers, five putative stockholder lawsuits relating to the mergers have been filed. Additional lawsuits in connection with the mergers may be filed in the future. The outcome of these lawsuits or any other lawsuits that may be filed challenging the mergers is uncertain. If these lawsuits or any future lawsuit is successful in obtaining any order enjoining consummation of the mergers, then such order may prevent the mergers from being consummated, or from being consummated within the expected time frame, and could result in substantial costs to Bonanza Creek, Extraction and Crestone Peak. Any such injunction or delay in the merger being completed may adversely affect Bonanza Creek's, Extraction's and Crestone Peak's respective business, financial condition, results of operation and cash flows. Additionally, the defense or settlement of any lawsuit or claim that remains unresolved at the time the mergers are completed may adversely affect Bonanza Creek's business, financial condition, results of operations and cash flows. For additional information, see the section entitled "The Extraction Merger - Litigation Relating to the Mergers."
There can be no assurance that any of the defendants will be successful in the outcome of any pending or any potential future lawsuits. The defense or settlement of any lawsuit or claim that remains unresolved at the time the mergers are completed may adversely affect Bonanza Creek's, Extraction's or Crestone Peak's business, financial condition, results of operations and cash flows.
The disclosure on page 88 of the Proxy Statement is hereby supplemented by adding the following before the first sentence of the last paragraph on the page as follows:
The disclosure on page 94of the Proxy Statement is hereby supplemented by adding the following paragraph after the first full paragraph on the page as follows:
Between
The disclosure on page 111 of the Proxy Statement is hereby supplemented by revising the first table on the page labeled "Extraction Stand-Alone" as follows: Extraction Stand-Alone Q2-Q4 2021E 2022E 2023E 2024E 2025E ($ in millions, except production) Production (Mboe/d) 68 62 63 56 64 Adjusted EBITDA(1) $ 404$ 488 $ 457 $ 377 $ 462 Capital Expenditures $ (85 )$ (227 ) $ (147 ) $ (195 ) $ (188 ) Levered Free Cash Flow(2) $ 313$ 254 $ 305 $ 169 $ 251
(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation,
and amortization, and certain other adjustments. Adjusted EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income (loss), operating income (loss) or other measures prepared in accordance with GAAP. The table below presents additional prospective financial information regarding Extraction used in the forecast of Adjusted EBITDA.
(2) Levered free cash flow is defined as discretionary cash flow minus capital
expenditures and does not include cash inflows or outflows related to changes in net working capital. Levered free cash flow is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income (loss), operating income (loss) or other measures prepared in accordance with GAAP. The table below presents additional prospective financial information regarding Extraction used in the forecast of Levered Free Cash Flow. The line item for "Other" in the table below includes difference in settlements on commodity derivatives due to one month delay in receipts. Extraction Stand-Alone Q2-Q4 2021E 2022E 2023E 2024E 2025E ($ in millions, except production) Revenue $ 621$ 702 $ 683 $ 588 $ 691 Cash Operating Expenses$ (142 ) $ (176 ) $ (195 ) $ (181 ) $ (200 ) General & Administrative Expenses $ (25 )$ (30 ) $ (30 ) $ (30 ) $ (30 ) Loss on Commodity Derivatives $ (50 )$ (7 ) $ 0 $ 0 $ 0 Adjusted EBITDA $ 404$ 488 $ 457 $ 377 $ 462 Extraction Stand-Alone Q2-Q4 2021E 2022E 2023E 2024E 2025E ($ in millions, except production) Revenue $ 621$ 702 $ 683 $ 588 $ 691 Cash Operating Expenses$ (142 ) $ (176 ) $ (195 ) $ (181 ) $ (200 ) General & Administrative Expenses $ (25 )$ (30 ) $ (30 ) $ (30 ) $ (30 ) Loss on Commodity Derivatives $ (50 )$ (7 ) $ 0 $ 0 $ 0 Adjusted EBITDA $ 404$ 488 $ 457 $ 377 $ 462 Interest Expense $ (4 )$ (3 ) $ (3 ) $ (3 ) $ (3 ) Other $ 5$ (5 ) $ 0 $ 0 $ 0 Income Taxes $ (7 )$ 0 $ (3 ) $ (10 ) $ (20 ) Capital Expenditures $ (85 )$ (227 ) $ (147 ) $ (195 ) $ (188 ) Levered Free Cash Flow $ 313$ 254 $ 305 $ 169 $ 251 The disclosure on page 112 of the Proxy Statement is hereby supplemented by revising the first table on the page labeled "Extraction Stand-Alone" as follows: Extraction Stand-Alone Q2-Q4 2021E 2022E 2023E 2024E 2025E ($ in millions, except production) Production (Mboe/d) 68 62 63 56 64 Adjusted EBITDA(1) $ 416$ 522 $ 485 $ 386 $ 471 Capital Expenditures $ (85 )$ (227 ) $ (147 ) $ (195 ) $ (188 ) Levered Free Cash Flow(2) $ 327$ 286 $ 332 $ 178 $ 260
(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation,
and amortization, and certain other adjustments. Adjusted EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income (loss), operating income (loss) or other measures prepared in accordance with GAAP. The table below presents additional prospective financial information regarding Extraction used in the forecast of Adjusted EBITDA.
(2) Levered free cash flow is defined as discretionary cash flow minus capital
expenditures and does not include cash inflows or outflows related to changes in net working capital. Levered free cash flow is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income (loss), operating income (loss) or other measures prepared in accordance with GAAP. The table below presents additional prospective financial information regarding Extraction used in the forecast of Levered Free Cash Flow. The line item for "Other" in the table below includes difference in settlements on commodity derivatives due to one month delay in receipts. Extraction Stand-Alone Q2-Q4 2021E 2022E 2023E 2024E 2025E ($ in millions, except production) Revenue $ 647$ 743 $ 713 $ 605 $ 701 Cash Operating Expenses$ (144 ) $ (180 ) $ (198 ) $ (190 ) $ (201 ) General & Administrative Expenses $ (25 )$ (30 ) $ (30 ) $ (30 ) $ (30 ) Loss on Commodity Derivatives $ (61 )$ (11 ) $ 0 $ 0 $ 0 Adjusted EBITDA $ 416$ 522 $ 485 $ 386 $ 471 Extraction Stand-Alone Q2-Q4 2021E 2022E 2023E 2024E 2025E ($ in millions, except production) Revenue $ 647$ 743 $ 713 $ 605 $ 701 Cash Operating Expenses$ (144 ) $ (180 ) $ (198 ) $ (190 ) $ (201 ) General & Administrative Expenses $ (25 )$ (30 ) $ (30 ) $ (30 ) $ (30 ) Loss on Commodity Derivatives $ (61 )$ (11 ) $ 0 $ 0 $ 0 Adjusted EBITDA $ 416$ 522 $ 485 $ 386 $ 471 Interest Expense $ (3 )$ (3 ) $ (3 ) $ (3 ) $ (3 ) Other $ 6$ (6 ) $ 0 $ 0 $ 0 Income Taxes $ (7 )$ (0 ) $ (3 ) $ (10 ) $ (20 ) Capital Expenditures $ (85 )$ (227 ) $ (147 ) $ (195 ) $ (188 ) Levered Free Cash Flow $ 327$ 286 $ 332 $ 178 $ 260
The disclosure on page 137 of the Proxy Statement is hereby supplemented by revising the following sentence after the first sentence of the second paragraph on the page as follows:
Pursuant to the terms of its engagement letter, Extraction has agreed to pay
The disclosure on page 152 of the joint proxy statement is hereby supplemented by revising the section labeled "Litigation Relating to the Merger" as follows:
Litigation Relating to the Mergers
Following the public announcement of the mergers, five putative stockholder lawsuits related to the mergers were filed.
On
Additionally, four complaints by purported Extraction stockholders have been
filed with respect to the mergers. The four complaints (collectively referred to
as, the "XOG Stockholder Actions") are captioned as follows: Harbour v.
The lawsuits described above are at preliminary stages and the defendants have not answered or otherwise responded to the complaint. In the case of the Orphanidis lawsuit, defendants have not yet been served. Litigation is inherently uncertain, and there can be no assurance regarding the likelihood that Bonanza Creek's and Extraction's defense of these lawsuits (or any other lawsuits related to the mergers that may be filed in the future) will be successful, nor can Bonanza Creek or Extraction predict the amount of time and expense that will be required to resolve the lawsuits.
No Offer or Solicitation
This communication relates to the Mergers and the related transactions (the "Transactions"). This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any securities or a solicitation of any vote or approval, in any jurisdiction, with respect to the Transactions or otherwise, nor shall there be any sale, issuance or transfer of the securities referred to in this Current Report on Form 8-K in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Offers of securities with respect to the Extraction merger shall be made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act. Bonanza Creek intends to issue the merger consideration in connection with the Crestone Peak merger in reliance on the exemptions from registration requirements under the Securities Act, pursuant to Section 4(a)(2) thereof.
Important Additional Information
In connection with the Transactions, Bonanza Creek and Extraction have filed the
Proxy Statement and a form of proxy card with the
Participants in the Solicitation
Bonanza Creek, Extraction and their respective directors and certain of their
executive officers and other members of management and employees may be deemed,
under
Forward-Looking Statements
Certain statements in this Current Report on Form 8-K concerning the Transactions, including any statements regarding the combined company's expected credit facility, expected timetable for completing the Transactions, the results, effects, benefits and synergies of the Transactions, future opportunities for the combined company, future financial performance and condition, guidance and any other statements regarding Bonanza Creek's, Extraction's or Crestone Peak's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts are "forward-looking" statements based on assumptions currently believed to be valid. Forward-looking statements are all statements other than statements of historical facts. The words "anticipate," "believe," "ensure," "expect," "if," "intend," "estimate," "probable," "project," "forecasts," "predict," "outlook," "aim," "will," "could," "should," "would," "potential," "may," "might," "anticipate," "likely" "plan," "positioned," "strategy," and similar expressions or other words of similar meaning, and the negatives thereof, are intended to identify forward-looking statements. Specific forward-looking statements include statements regarding Bonanza Creek's, Extraction's and Crestone Peak's plans and expectations with respect to the Transactions and the anticipated impact of the Transactions on the combined company's results of operations, financial position, growth opportunities and competitive position. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including, but not limited to, the possibility that shareholders of Bonanza . . .
© Edgar Online, source