UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
On January 29, 2020, CNX Midstream Partners LP ( “CNXM”) entered into an Exchange Agreement (the “Agreement”) with CNX Midstream GP LLC (the “General Partner”), the general partner of CNXM and an indirect wholly owned subsidiary of CNX Resources Corporation (the “Company”), and CNX Gas Company LLC (“CNX Gas”), a wholly owned subsidiary of the Company, pursuant to which all of the incentive distribution rights representing limited partner interests in CNXM (the “IDRs”) were cancelled and the 2.0% general partner interest in CNXM held by the General Partner was converted into a non-economic general partner interest in CNXM in exchange for (i) the issuance by CNXM to CNX Gas of 26,000,000 common units representing limited partner interests in CNXM (“Common Units”) and 3,000,000 newly created Class B units representing limited partner interests in CNXM (“Class B Units”) and (ii) an aggregate cash payment by CNXM to CNX Gas of $135.0 million to be paid in installments of $50.0 million due December 31, 2020, $50.0 million due December 31, 2021 and $35.0 million due December 31, 2022 (together, the “Restructuring Transactions”).
The Agreement contains representations, warranties and covenants customary for an agreement of this type. The closing of the Restructuring Transactions occurred simultaneously with the execution of the Agreement on January 29, 2020.
In connection with the Restructuring Transactions, the Second Amended and Restated Agreement of Limited Partnership of CNXM, dated as of January 3, 2018, was amended and restated to, among other things, reflect the cancellation of the IDRs, the restructuring of the general partner interest in CNXM and the issuance of the Class B Units pursuant to the Restructuring Transactions.
Holders of a Class B Unit have the same rights and obligations of a holder of Common Units, except (i) the right to vote (which is limited to matters requiring approval by a unit majority of all unitholders, in which case the Class B Units will vote alongside Common Units as a single class), (ii) the right to participate in the allocation of income, gain, loss and deduction to Common Units and (iii) the right to participate in distributions made with respect to Common Units. On January 1, 2022, each Class B Unit will automatically convert into a Common Unit on a one-for-one basis, and thereafter the converted Class B Units will be treated like Common Units.
The foregoing description of the Restructuring Transactions and the Agreement is not complete and is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
The terms of the Agreement were approved on behalf of CNXM by the conflicts committee and the board of directors of the General Partner (the “Conflicts Committee”). The Conflicts Committee, which is comprised of independent members of the board of directors of the General Partner, retained independent legal and financial advisors to assist it in evaluating and negotiating the Restructuring Transactions. The terms of the Agreement were approved on behalf of the Company by the board of directors of the Company.
Relationships
The General Partner manages CNXM’s operations and activities through the General Partner’s officers and directors. Certain individuals serve as officers and/or directors of the Company and the General Partner. As of January 29, 2020, and following the Restructuring Transactions, CNX indirectly owns 47,692,198 Common Units and 3,000,000 Class B Units.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit Number |
Description of the Exhibit | |||
| 10.1 |
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| 104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CNX RESOURCES CORPORATION | ||
| By: |
/s/ Donald W. Rush | |
| Name: |
Donald W. Rush | |
| Title: |
Chief Financial Officer and Executive Vice President | |
Dated: January 30, 2020