UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
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| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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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 |
Third Amendment to Merger Agreement
On February 16, 2024, Battalion Oil Corporation, a Delaware corporation (the “Company” or “we”), Fury Resources, Inc., a Delaware corporation (“Parent”), and San Jacinto Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Parent (“Merger Sub”), entered into a Third Amendment (the “Third Amendment”) to the Agreement and Plan of Merger, dated as of December 14, 2023 (the “Merger Agreement”), by and among the Company, Parent and Merger Sub, as amended by that certain First Amendment to Agreement and Plan of Merger, dated as of January 24, 2024 (the “First Amendment”), and the Second Amendment to the Agreement and Plan of Merger, dated as of February 6, 2024 (the “Second Amendment”).
Pursuant to the Merger Agreement, Parent agreed to deposit amounts in cash into a segregated escrow account (the “Escrow Account”) established pursuant to that certain Escrow Agreement, dated as of December 14, 2023, by and among Parent, the Company and Wilmington Trust, National Association, as escrow agent, for purposes of securing Parent’s obligations pursuant to the Merger Agreement. Prior to the execution and delivery of the Merger Agreement, Parent had deposited $10,000,000 (the “Initial Deposit Amount”) into the Escrow Account and, pursuant to the terms of the Merger Agreement as amended by the First Amendment and the Second Amendment, agreed to deposit an additional $15,000,000 into the Escrow Account (the “Subsequent Deposit Amount”) on or before 5:00 p.m. Central Time on February 15, 2024 (such date and time, the “Funding Deadline” and the funding of the Subsequent Deposit Amount into the Escrow Account, the “Full Escrow Funding”). On January 24, 2024, pursuant to the terms of the Merger Agreement as amended by the First Amendment, Parent caused an amount equal to $9,999,999.99 of the Initial Deposit Amount to be released to the Company. In addition, under the terms of the Second Amendment, Parent agreed to deliver, by the Funding Deadline, binding financing agreements evidencing financing in an amount equal to $100,000,000, in the aggregate (the “Qualifying Additional Financing Documents”). Pursuant to the terms of the Merger Agreement as amended by the First Amendment and the Second Amendment, the Company had the right to terminate the Merger Agreement if (a) Parent failed to complete the Full Escrow Funding by the Funding Deadline, or (b) Parent failed to deliver Qualifying Additional Financing Documents by the Funding Deadline. For a summary of the material terms of the Merger Agreement and the First Amendment and Second Amendment, including the escrow arrangements, please see the Company’s Current Reports on Forms 8-K filed with the Securities and Exchange Commission on December 18, 2023, January 24, 2024 and February 6, 2024.
On February 15, 2024, Parent informed the Company that it would not complete the Full Escrow Funding by the Funding Deadline and not deliver Qualifying Additional Financing Documents by the Funding Deadline. To facilitate Parent’s efforts to obtain equity financing to consummate the transactions contemplated by the Merger Agreement, on February 16, 2024, the Company, Parent and Merger Sub entered into the Third Amendment.
The Third Amendment amends the Merger Agreement to reflect, among other things, the following changes:
| • | Parent is no longer obligated to deposit the Subsequent Deposit Amount into the Escrow Account. Instead, Parent has the option of depositing the Subsequent Deposit Amount into the Escrow Account at its discretion. |
| • | The amount of the Company Termination Fee (as defined in the Merger Agreement) has been reduced from $3,500,000 to $0. However, if Parent completes the Full Escrow Funding, the Company Termination Fee will increase to $3,500,000. |
| • | All of the interim operating covenants of the Company set forth in Section 6.2 of the Merger Agreement have been deleted in their entirety. |
| • | The Company no longer has the right to terminate the Merger Agreement if (a) Parent fails to complete the Full Escrow Funding by the Funding Deadline, or (b) Parent fails to deliver Qualifying Additional Financing Documents by the Funding Deadline. |
| • | The Company has the right to terminate the Merger Agreement at any time prior to Parent providing sufficient evidence to the Company demonstrating that Parent has obtained, in escrow and including the Initial Deposit Amount and any Subsequent Deposit Amount (if deposited), aggregate financing equal to at least $200,000,000 (such evidence, the “Evidence of Funding”). However, if the Company exercises such termination right and the Closing Failure Fee (as defined in the Merger Agreement) in respect thereof becomes payable under the terms of the Merger Agreement, the Company has agreed not to enforce any guarantee in respect of the payment of the Closing Failure Fee, which includes the guarantee provided by Abraham Mirman in favor of the Company (the “Limited Guarantee”) summarized in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2024. |
| • | The Company has the right to terminate the Merger Agreement if Parent fails to deliver the Evidence of Funding to the Company on or before 5:00 p.m. Central Time on April 10, 2024. The Closing Failure Fee shall become payable upon the exercise of such termination right and the obligation to make such payment would be a guaranteed obligation under the Limited Guarantee, but subject to the limitations set forth in the Limited Guarantee. |
| • | For the avoidance of doubt, Parent has agreed that it will not, without the Company’s prior written consent, amend any provision to which the Company is a third party beneficiary in any of Parent’s equity financing agreements. |
Except as modified by the Third Amendment, the terms of the Merger Agreement, the First Amendment and the Second Amendment, in the forms filed as Exhibit 2.1 to the Current Reports on Form 8-K filed by the Company on December 18, 2023, January 24, 2024 and February 6, 2024, respectively, with the U.S. Securities and Exchange Commission (the “SEC”), are unchanged.
The foregoing descriptions of the Third Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the Third Amendment, which is attached hereto as Exhibit 2.1 and is incorporated by reference herein.
Important Information for Investors and Stockholders
This communication is being made in respect of the proposed transaction involving the Company and Parent. In connection with the proposed transaction, the Company intends to file the relevant materials with the SEC, including a proxy statement on Schedule 14A and a transaction statement on Schedule 13e-3 (the “Schedule 13e-3”). Promptly after filing its definitive proxy statement with the SEC, the Company will mail the definitive proxy statement, the Schedule 13e-3 and a proxy card to each stockholder of the Company entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the proxy statement, the Schedule 13e-3 or any other document that the Company may file with the SEC or send to its stockholders in connection with the proposed
transaction. The materials to be filed by the Company will be made available to the Company’s investors and stockholders at no expense to them and copies may be obtained free of charge on the Company’s website at www.battalionoil.com. In addition, all of those materials will be available at no charge on the SEC’s website at www.sec.gov. Investors and stockholders of the Company are urged to read the proxy statement, the Schedule 13e-3 and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction because they contain important information about the Company and the proposed transaction.
The Company and its directors, executive officers, other members of its management and employees may be deemed to be participants in the solicitation of proxies of the Company stockholders in connection with the proposed transaction under SEC rules. Investors and stockholders may obtain more detailed information regarding the names, affiliations and interests of the Company’s executive officers and directors in the solicitation by reading the Company’s Annual Report on Form 10-K, as amended on Form 10-K/A, for the fiscal year ended December 31, 2022, and the proxy statement, the Schedule 13e-3 and other relevant materials that will be filed with the SEC in connection with the proposed transaction when they become available. Information concerning the interests of the Company’s participants in the solicitation, which may, in some cases, be different than those of the Company’s stockholders generally, will be set forth in the proxy statement relating to the proposed transaction and the Schedule 13e-3 when they become available.
Forward-Looking Statements
All statements and assumptions in this communication that do not directly and exclusively relate to historical facts could be deemed “forward-looking statements.” Forward-looking statements are often identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “may,” “could,” “should,” “forecast,” “goal,” “intends,” “objective,” “plans,” “projects,” “strategy,” “target” and “will” and similar words and terms or variations of such. These statements represent current intentions, expectations, beliefs or projections, and no assurance can be given that the results described in such statements will be achieved. Forward-looking statements include, among other things, statements about the potential benefits of the proposed transaction; the prospective performance and outlook of the Company’s business, performance and opportunities; the ability of the parties to complete the proposed transaction and the expected timing of completion of the proposed transaction; as well as any assumptions underlying any of the foregoing. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of the Company’s control. Important factors that could cause actual results to differ materially from those described in forward-looking statements include, but are not limited to, (i) the risk that the proposed transaction may not be completed in a timely manner or at all; (ii) the failure to receive, on a timely basis or otherwise, the required approvals of the proposed transaction by the Company’s stockholders; (iii) the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); (iv) the possibility that competing offers or acquisition proposals for the Company will be made; (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction, including in circumstances, which would require the Company to pay a termination fee; (vi) the effect of the announcement or pendency of the proposed transaction on the Company’s ability to attract, motivate or retain key executives and employees, its ability to maintain relationships with its customers, suppliers and other business counterparties, or its operating results and business generally; (vii) risks related to the proposed transaction diverting management’s attention from the Company’s ongoing business operations; (viii) the amount of costs, fees and expenses related to the proposed transaction; (ix) the risk that the Company’s stock price may decline significantly if the Merger is not consummated; (x) the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay; and (xi) other factors as set forth from time to time in the Company’s filings with the SEC, including its Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2022, as may be updated or supplemented by any subsequent Quarterly Reports on Form 10-Q or other filings with the SEC. Readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. The Company does not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events except as required by law.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits. The following exhibits are furnished as part of this Current Report on Form 8-K:
| Exhibit No. | Description | |
| 2.1 | Third Amendment to Agreement and Plan of Merger, dated February 16, 2024, by and among Battalion Oil Corporation, Fury Resources, Inc. and San Jacinto Merger Sub, Inc. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BATTALION OIL CORPORATION | ||
| February 16, 2024 | By: | /s/ Matthew B. Steele |
| Name: | Matthew B. Steele | |
| Title: | Chief Executive Officer | |
Exhibit 2.1
Execution Version
THIRD AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER
THIS THIRD AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER is made as of February 16, 2024 (this “Amendment”) by and among Battalion Oil Corporation, a Delaware corporation (the “Company”), Fury Resources, Inc., a Delaware corporation (“Parent”), and San Jacinto Merger Sub, Inc., a Delaware corporation (“Merger Sub”).
WHEREAS, the Company, Parent and Merger Sub are parties to that certain Agreement and Plan of Merger, dated as of December 14, 2023 (the “Agreement”), which was amended pursuant to that certain First Amendment to the Agreement and Plan of Merger, dated as of January 23, 2024, and that certain Second Amendment to the Agreement and Plan of Merger, dated as of February 6, 2024; and
WHEREAS, the Company, Parent and Merger Sub desire to amend certain terms of the Agreement to the extent provided herein.
NOW, THEREFORE, in consideration of foregoing and the mutual covenants and agreements contained herein, the parties, intending to be legally bound, agree as follows:
1. Amendments.
a. Amendments to Section 1.1.
1. Definition of “Closing Failure Fee”. The definition of “Closing Failure Fee” in Section 1.1 of the Agreement is hereby deleted and replaced in its entirety with the following language:
“Closing Failure Fee” means an amount equal to the Initial Deposit Escrow Amount plus $15,000,000.
2. Definition of “Company Termination Fee”. The definition of Company Termination Fee in Section 1.1 of the Agreement is hereby deleted and replaced in its entirety with the following language:
“Company Termination Fee” means an amount equal to $0; provided, that if Parent consummates the Full Escrow Funding, then the Company Termination Fee shall increase to $3,500,000 from and after the time that such Full Escrow Funding is consummated.
3. Definition of “Qualifying Additional Financing Documents”. The definition of Qualifying Additional Financing Documents in Section 1.1 of the Agreement is hereby deleted in its entirety.
4. Definition of “Specified Acquisition”. The definition of Specified Acquisition in Section 1.1 of the Agreement is hereby deleted in its entirety.
5. Definition of “Subsequent Escrow Deposit Amount”. The definition of Subsequent Escrow Deposit Amount in Section 1.1 of the Agreement is hereby deleted in its entirety.
b. Amendment to Section 6.2. Section 6.2 of the Agreement is hereby deleted and is replaced in its entirety with the following language:
[Intentionally Omitted]
c. Amendment to Section 8.1(d)(iv). Section 8.1(d)(iv) of the Agreement is hereby deleted and replaced in its entirety with the following language:
[Intentionally Omitted]
d. Amendment to Section 8.1(d)(v). Section 8.1(d)(v) of the Agreement is hereby deleted and replaced in its entirety with the following language:
if Parent fails to deliver the Evidence of Funding to the Company on or before 5 p.m., Central Time, on April 10, 2024; or
e. Amendment to Section 8.1(d)(vi). Section 8.1(d)(vi) of the Agreement is hereby deleted and replaced in its entirety with the following language:
[Intentionally Omitted]
f. New Section 8.1(d)(vii). Section 8.1 of the Agreement is hereby amended to include the following language as a new subsection (d)(vii):
at any time prior to the delivery of Evidence of Funding by Parent.
g. Amendment to Section 8.3(b)(iv). Section 8.3(b)(iv) of the Agreement is hereby deleted and replaced in its entirety with the following language:
this Agreement is terminated (A) for any reason pursuant to Section 8.1 other than (1) those contemplated by clause (B) below or (2) under circumstances in which the Company Termination Fee is payable to Parent pursuant to Section 8.3(b)(i) or Section 8.3(b)(ii), then the Company shall retain the Initial Escrow Deposit Amount, or (B) (1) by the Company pursuant to Section 8.1(d)(i), Section 8.1(d)(iii), Section 8.1(d)(v) or Section 8.1(d)(vii) or (2) by either Parent or the Company pursuant to Section 8.1(b) under circumstances where the Company would have been entitled to terminate this Agreement pursuant to Section 8.1(d)(i), Section 8.1(d)(iii), Section 8.1(d)(v) or Section 8.1(d)(vii), then the Company shall retain the Initial Escrow Deposit Amount as contemplated by the immediately preceding clause (A) (it being understood that such retention shall be deemed to be a partial payment by Parent to the Company of the Closing Failure Fee in an amount equal to the Initial Escrow Deposit Amount) and Parent shall pay to the Company the remainder of the Closing Failure Fee in accordance with Section 8.4(b)(iii); provided, that (x) if at the time of such termination, there are not sufficient Escrow Funds to pay the remainder of the Closing Failure Fee, then Parent shall pay the amount of such shortfall to the Company by wire transfer of immediately available funds within two (2) Business Days following such termination, and (y) if the Closing Failure Fee becomes payable pursuant to the foregoing as a result of a termination pursuant to Section 8.1(d)(vii), the Company acknowledges and agrees that it shall not collect all or any portion of the Closing Failure Fee from any Person guaranteeing Parent’s or Merger Sub’s obligations under this Agreement.
2
h. Deletion of Section 8.3(m). Section 8.3(m) of the Agreement is hereby deleted and replaced in its entirety with the following language:
[Intentionally Omitted]
i. Amendment to Section 8.4(a). Section 8.4(a) of the Agreement is hereby deleted and replaced in its entirety with the following language:
Concurrently with the execution and delivery of this Agreement, Parent and the Company have entered into an escrow agreement, in the form attached hereto as Exhibit F (the “Escrow Agreement”), with Wilmington Trust, National Association, as escrow agent (the “Escrow Agent”), pursuant to which, among other things, Parent (i) concurrently with the execution and delivery of this Agreement, shall deposit an amount in cash equal to $10,000,000 (the “Initial Escrow Deposit Amount”) into a segregated escrow account established by the Escrow Agent (the “Escrow Account”) and (ii) subsequent to the execution and delivery of this Agreement, may deposit an amount in cash equal to $15,000,000 into the Escrow Account (the deposit of such $15,000,000 amount into the Escrow Account, if undertaken, the “Full Escrow Funding”), in each case, for the purpose of funding Parent’s obligations under this Agreement, including Section 8.3(b)(iv).
2. Additional Financing Documents. For the avoidance of doubt, Parent acknowledges and agrees that it shall not amend any provisions of any Additional Financing Agreements to which the Company is a third party beneficiary without the express prior written consent of the Company.
3. Other Terms.
a. Interpretation; Effectiveness. The Agreement shall not be amended or otherwise modified by this Amendment except as set forth in Sections 1 and 2 of this Amendment. The provisions of the Agreement that have not been amended hereby shall be unchanged and shall remain in full force and effect. The provisions of the Agreement amended hereby shall remain in full force and effect as amended hereby. The amendments set forth in herein shall be effective immediately on the date hereof.
b. Reference to the Agreement. On and after the date hereof, each reference in the Agreement to “this Agreement,” “hereof,” “herein,” “herewith,” “hereunder” and words of similar import shall, unless otherwise expressly stated, be construed to refer to the Agreement as amended by this Amendment. No reference to this Amendment need be made in any instrument or document at any time referring to the Agreement and a reference to the Agreement in any such instrument or document shall, unless otherwise expressly stated, be deemed to be a reference to the Agreement as amended by this Amendment.
c. Miscellaneous. The provisions of Sections 9.4 (Counterparts), 9.5 (Interpretation), 9.7 (Governing Law and Venue; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury), 9.9 (Entire Understanding), 9.12 (Severability) and 9.13 (Construction) of the Agreement are incorporated herein by reference and form part of this Amendment as if set forth herein, mutatis mutandis.
[Signature pages follow]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date first above written.
| BATTALION OIL CORPORATION |
| By: | /s/Matthew Steele | ||
| Name: | Matthew Steele | ||
| Title: | Chief Executive Officer | ||
[Signature page to Third Amendment to Agreement and Plan of Merger]
| FURY RESOURCES, INC. |
| By: | /s/Ariella Fuchs | ||
| Name: | Ariella Fuchs | ||
| Title: | President and General Counsel | ||
| SAN JACINTO MERGER SUB, INC. |
| By: | /s/Ariella Fuchs | ||
| Name: | Ariella Fuchs | ||
| Title: | President and General Counsel | ||
[Signature page to Third Amendment to Agreement and Plan of Merger]
Cover |
Feb. 16, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Feb. 16, 2024 |
| Entity File Number | 001-35467 |
| Entity Registrant Name | Battalion Oil Corporation |
| Entity Central Index Key | 0001282648 |
| Entity Tax Identification Number | 20-0700684 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | 820 Gessner Road |
| Entity Address, Address Line Two | Suite 1100 |
| Entity Address, City or Town | Houston |
| Entity Address, State or Province | TX |
| Entity Address, Postal Zip Code | 77024 |
| City Area Code | 832 |
| Local Phone Number | 538-0300 |
| Written Communications | false |
| Soliciting Material | true |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock par value $0.0001 |
| Trading Symbol | BATL |
| Security Exchange Name | NYSEAMER |
| Entity Emerging Growth Company | false |