Item 1.01. Entry into a Material Definitive Agreement
Amendment to the Merger Agreement
As previously disclosed, FTS International, Inc. (the "Company" or "FTSI")
entered into an Agreement and Plan of Merger, dated October 21, 2021 (the
"Merger Agreement") with ProFrac Holdings, LLC ("Parent") and ProFrac
Acquisitions, Inc., a wholly owned subsidiary of Parent ("Merger Sub").
The Merger Agreement provides, upon the terms and subject to the conditions set
forth therein, (i) for the Merger of Merger Sub with and into the Company, with
the Company surviving as a subsidiary of Parent (the "Merger") and (ii) that at
the effective time of the Merger (the "Effective Time"), each share of Class A
common stock of the Company, par value $0.01 per share, and Class B common stock
of the Company, par value $0.01 per share (together, the "Shares") outstanding
immediately prior to the Effective Time (other than Shares held by (i) the
Company as treasury stock or by any subsidiary of the Company, (ii) Parent or
Merger Sub, and (iii) any stockholder who has properly demanded and not failed
to perfect or validly withdrawn appraisal rights in accordance with Delaware
law) shall be converted into the right to receive $26.52 per Share in cash,
without interest (the "Merger Consideration").
On March 1, 2022, the Company, Parent and Merger Sub entered into Amendment
No. 1 to the Merger Agreement (the "First Amendment"), providing for the Shares
owned by THRC Holdings, LP, an affiliate of Parent ("THRC"), to remain
outstanding, and not to be converted into the right to receive the Merger
Consideration, following the Effective Time. As a result of the transactions
contemplated by the Merger Agreement, as amended by the First Amendment,
following the Effective Time, the Company will be owned approximately 80.6% by
Parent and 19.4% by THRC.
The First Amendment will not affect the Merger Consideration to be received by
any holder of Shares in connection with the Merger other than THRC, which as of
the date hereof, owns approximately 50% of the equity interests in Parent and
approximately 19.4% of the Shares. The First Amendment will result in THRC
retaining its direct interest in FTSI rather than having Shares held by THRC be
converted into the right to receive the Merger Consideration. Pursuant to a
letter agreement dated March 1, 2022 (the "Letter Agreement"), THRC has
acknowledged and agreed to this change in the treatment of the Shares held by
it. The First Amendment may be terminated by the Company at any time prior to
the Effective Time by giving notice of termination to Parent. In the event the
First Amendment is so terminated it would not have the effects described herein.
Other than as expressly modified pursuant to the First Amendment, the Merger
Agreement, which was previously filed as Exhibit 2.1 to the Current Report on
Form 8-K filed with the Securities and Exchange Commission ("SEC") by the
Company on October 25, 2021 , remains in full force and effect. The foregoing
description of the First Amendment is not complete and is qualified in its
entirety by reference to the full text of the First Amendment, a copy of which
is filed as Exhibit 2.1 hereto and is incorporated herein by reference. The
foregoing description of the Letter Agreement is not complete and is qualified
in its entirety by reference to the full text of the Letter Agreement, a copy of
which is filed as Exhibit 2.2 hereto and is incorporated herein by reference.
Item 8.01. Other Events
Supplemental Disclosures
Pursuant to the Merger Agreement, on January 24, 2022, the Company filed a
definitive proxy statement (the "Proxy Statement") with the SEC. In connection
with the First Amendment, the Company is supplementing the Proxy Statement with
certain additional information set forth below. The supplemental disclosures
contained herein will not affect the timing of special meetings of the Company's
stockholders, which is scheduled to be held virtually on March 3, 2022 at 9:00
a.m. Eastern Time. The following supplemental disclosures should be read in
conjunction with the Proxy Statement, which should be read in its entirety. To
the extent that information herein differs from or updates information contained
in the Proxy Statement, the information contained herein supersedes the
information contained in the Proxy Statement. All page references are to
pages in the Proxy Statement, and defined terms used but not defined herein
shall have the meanings set forth in the Proxy Statement. For clarity, new text
within restated paragraphs and tables from the Proxy Statement are highlighted
with bold, underlined text and stricken-through text shows text being deleted to
a referenced disclosure in the Proxy Statement. The First Amendment may be
terminated by the Company at any time prior to the Effective Time by giving
notice of termination to Parent. In the event the First Amendment is so
terminated the changes resulting from the First Amendment described in the
disclosure below would not be effective and should be disregarded.
The letter to FTSI Stockholders from Jared Vitemb, Senior Vice President,
General Counsel, Chief Compliance Officer and Secretary of the Company (the
"Stockholder Letter"), set forth in the forepart of the Schedule 14A on which
the Proxy Statement is filed, is hereby amended and supplemented by replacing
the first and second paragraphs of the Stockholder Letter with the following:
On October 21, 2021, FTS International, Inc. ("FTSI" or the "Company") entered
into a definitive Merger Agreement (the "Original Merger Agreement") with
ProFrac Holdings, LLC ("Parent") and ProFrac Acquisitions, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"). References
to the "Merger Agreement" refer to the Original Merger Agreement as amended by
Amendment No. 1 to the Merger Agreement, dated as of March 1, 2022, unless the
context is clear that the reference is to the Original Merger Agreement.
Pursuant to the terms of the Merger Agreement, Merger Sub will be merged with
and into the Company, with the Company surviving the Merger as a
whollymajority-owned subsidiary of Parent (the "Merger").
If the Merger is completed, FTSI stockholders will have the right to receive
$26.52 in cash, without interest and less any applicable withholding taxes, in
exchange for each share of Class A common stock of the Company, par value $0.01
per share ("Class A Common Stock") and each share of Class B common stock of the
Company, par value $0.01 per share ("Class B Common Stock" and, together with
the Class A Common Stock, the "Shares") (other than Shares held by (i) the
Company as treasury stock or by any subsidiary of the Company, and Shares held
by(ii) Parent or Merger Sub and (iii) THRC Holdings, LP, an affiliate of
Parent), that they own immediately prior to the effective time of the Merger
unless they have properly demanded appraisal rights for such Shares in
accordance with Delaware law. The purchase price represents approximately a 14%
premium over the Company's 60-day volume-weighted average closing share price
through October 21, 2021. The closing share price of the Class A Common Stock on
the NYSE American on October 20, 2021, the last trading day prior to entry into
the Merger Agreement, was $27.09 per share.
The Notice of Special Meeting of Stockholders (the "Notice") set forth
immediately following the Stockholder Letter in the forepart of Proxy Statement
is hereby amended and supplemented by replacing the first paragraph across from
the heading "Item of Business" in the Notice in its entirety with the following:
ITEMS OF BUSINESS Consider and vote on:
• A proposal to approve and adopt the
Agreement and Plan of Merger, dated as
of October 21, 2021 (the "Original
Merger Agreement"), by and among FTS
International, Inc. ("FTSI"), ProFrac
Holdings, LLC ("Parent") and ProFrac
Acquisitions, Inc., a Delaware
corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), as
may be amended from time to time (the
"Merger Agreement"), a copy of which is
included as Annex A to the proxy
statement of which this notice forms a
part, and pursuant to which Merger Sub
will be merged with and into FTSI, with
FTSI surviving the Merger as a
whollymajority-owned subsidiary of
Parent (the "Merger"). References to the
"Merger Agreement" refer to the Original
Merger Agreement as amended by Amendment
No. 1 to the Merger Agreement, dated as
of March 1, 2022, unless the context is
clear that the reference is to the
Original Merger Agreement;
The disclosure under the heading "Summary" is hereby amended and supplemented by
replacing the second full paragraph on page 1 of the Proxy Statement in its
entirety with the following:
All references to "FTSI," "we," "us" or "our" in this proxy statement refer to
FTS International, Inc., a Delaware corporation; all references to "Parent"
refer to ProFrac Holdings, LLC, a Texas limited liability company; all
references to "Merger Sub" refer to ProFrac Acquisitions, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent formed for the sole purpose
of effecting the Merger; all references to "Class A Common Stock" refer to the
Class A common stock, par value $0.01 per share, of FTSI; all references to
"Class B Common Stock" refer to the Class B common stock, par value $0.01 per
share, of FTSI; all references to "Shares" refer to the Class A Common Stock and
the Class B Common Stock, collectively; all references to the "FTSI board" or
"FTSI board of directors" refer to the board of directors of FTSI; all
references to the "Merger" refer to the Merger of Merger Sub with and into FTSI
with FTSI surviving as a whollymajority-owned subsidiary of Parent; and, unless
otherwise indicated or as the context requires,all references to the "Original
Merger Agreement" refer to the Agreement and Plan of Merger, dated as of
October 21, 2021, as may be amended from time to time, by and among FTSI, Parent
and Merger Sub, a copy of which is included as Annex A to this proxy statement.;
and, unless otherwise indicated or as the context requires, all references to
the "Merger Agreement" refer to the Original Merger Agreement, as amended by
Amendment No. 1 to the Merger Agreement, dated as of March 1, 2022 (the "First
Amendment"), as may be further amended from time to time. FTSI, following the
completion of the Merger, is sometimes referred to in this proxy statement as
the "Surviving Corporation." A copy of the First Amendment was filed as
Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on March 1,
2022 and is incorporated herein by reference.
The disclosure under the heading "The Companies" is hereby amended by replacing
the last sentence of the final full paragraph on page 3 of the Proxy Statement
under the subheading "Merger Sub" in its entirety with the following:
Immediately following the consummation of the Merger, Merger Sub will cease to
exist and FTSI will continue as the Surviving Corporation and as a
whollymajority-owned subsidiary of Parent.
The disclosure under the heading "The Merger" is hereby amended and supplemented
by replacing the first full paragraph on page 4 of the Proxy Statement in its
entirety with the following:
A copy of the Original Merger Agreement is attached as Annex A to this proxy
statement. A copy of the First Amendment was filed as Exhibit 2.1 to our Current
Report on Form 8-K filed with the SEC on March 1, 2022. We encourage you to read
the entire Merger Agreement carefully because it is the principal document
governing the Merger. For more information on the Merger Agreement, see the
section entitled "The Merger Agreement" beginning on page 62 of this proxy
statement.
The disclosure under the heading "The Merger" is hereby amended by replacing all
three paragraphs under the heading "Effects of the Merger" on page 4 of the
Proxy Statement in its entirety with the following:
If the Merger is completed, then, at the effective time of the Merger (the
"Effective Time"), Merger Sub will be merged with and into FTSI in accordance
with the DGCL. As a result of the Merger, the separate existence of Merger Sub
will cease, and FTSI will survive the Merger as a whollymajority-owned
subsidiary of Parent.
Upon consummation of the Merger, each Share (other than Shares held by (i) the
Company as treasury stock or by any subsidiary of the Company and (ii) Shares
held by Parent, or Merger Sub or and (iii) THRC Holdings, LP, an affiliate of
Parent ("THRC")) issued and outstanding immediately prior to the Effective Time
(other than dissenting Shares) will be converted into the right to receive the
per share Merger Consideration described below.
As a result, you will not own any shares of the Surviving Corporation, and you
will no longer have any interest in its future earnings or growth. As a result
of the Merger, FTSI will cease to be a publicly-traded company and will be
whollymajority-owned by Parent. Following consummation of the Merger, the
Surviving Corporation will terminate the registration of FTSI's Shares on the
NYSE American and FTSI will no longer be subject to reporting obligations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The disclosure under the heading "The Merger" is hereby amended by replacing the
first full paragraph under the heading "Financing of the Merger" on page 5 of
the Proxy Statement in its entirety with the following:
THRC Holdings, LP, an affiliate of Parent ("THRC"), THRC has delivered an equity
financing letter to FTSI, pursuant to which, upon the terms and subject to the
conditions set forth therein, THRC has committed to provide the necessary equity
financing (up to a maximum of $400 million) to Parent to fund the transactions
contemplated by the Merger Agreement. The transaction is not subject to a
financing condition.
The disclosure under the heading "Questions and Answers" is hereby amended by
replacing the first sentence in the full paragraph under the subheading "Q: What
will happen in the Merger?" in its entirety with the following:
A: If the Merger is completed, Merger Sub will merge with and into FTSI,
whereupon the separate existence of Merger Sub will cease and FTSI will be the
Surviving Corporation and a whollymajority-owned subsidiary of Parent.
The disclosure under the heading "Questions and Answers" is hereby amended and
supplemented by replacing the first full paragraph under the subheading "Q: Who
will own FTSI after the Merger?" in its entirety with the following:
A: Immediately following the Merger, FTSI will be a whollymajority-owned
subsidiary of Parent., with Parent owning approximately 80.6% of FTSI and THRC
owning approximately 19.4% of FTSI.
The disclosure under the heading "Questions and Answers" is hereby amended and
supplemented by replacing the first full paragraph under the subheading "Q: What
will I receive in the Merger?" in its entirety with the following:
A: Upon the terms and subject to the conditions of the Merger Agreement, if the
Merger is completed, the holders of Shares (other than any Shares held by
(i) the Company as treasury stock or by any subsidiary of the Company, and
Shares held by (ii) Parent,or Merger Sub or THRC, or and (iii) any stockholder
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
2.1 Amendment No. 1 to Agreement and Plan of Merger, dated as of March 1,
2022, by and among FTS International, Inc., ProFrac Holdings, LLC and
ProFrac Acquisitions, Inc.
2.2 Letter Agreement, dated as of March 1, 2022, by and among THRC Holdings,
LP, FTS International, Inc., ProFrac Holdings, LLC and ProFrac
Acquisitions, Inc.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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