Subsequent Events

9 Months Ended

Sep. 30, 2024

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Amendment to Credit Facility

On November 8, 2024, we entered into Amendment No. 3 (the “Third Amendment”) to the Credit Agreement. The Third Amendment amends and restates the financial covenants contained in the Credit Agreement in order to (i) lower the maximum Consolidated Total Leverage Ratio to 2.00 to 1.00 (from 2.50 to 1.00), commencing with the fiscal quarter ending September 30, 2024 and for each fiscal quarter thereafter; (ii) increase the minimum Asset Coverage Ratio to 2.50 to 1.00 (from 2.00 to 1.00), commencing with the fiscal quarter ending September 30, 2024 and for each fiscal quarter thereafter; and (iii) decrease the minimum Consolidated Fixed Charge Coverage Ratio to 1.05 to 1.00 (from 1.25 to 1.00) for the fiscal quarter ending September 30, 2024, and to 1.10 to 1.00 for the fiscal quarter ending December 31, 2024, returning to 1.25 to 1.00 for the fiscal quarter ending March 31, 2025 and each fiscal quarter thereafter.

Merger Transaction

On November 11, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Tres Energy LLC, a Texas limited liability company (“Parent”), and ARE Acquisition Corporation, a Delaware corporation and a direct, wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”).

Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of our common stock issued and outstanding prior to the Effective Time (other than shares of our common stock (i) we hold as treasury stock or owned by Parent immediately prior to the Effective Time, (ii) held by any subsidiary of either us or Parent immediately prior to the Effective Time or (iii) owned by stockholders who have properly exercised appraisal rights under Delaware law) will be automatically cancelled and converted into the right to receive $38.00 in cash, without interest (the “Merger Consideration”).

If the Merger is consummated, our securities will be delisted from the NYSE American and deregistered under the Securities Exchange Act of 1934 as promptly as practicable after the Effective Time.

The consummation of the Merger (the “Closing”) is subject to certain customary conditions, including the approval of our stockholders holding at least a majority of our outstanding shares of Common Stock entitled to vote on the adoption of the Merger Agreement.

The Merger Agreement contains certain customary termination rights for us and Parent. If the Merger Agreement is terminated under certain specified circumstances, including due to our accepting a superior proposal, we will be required to pay Parent a termination fee of $4.0 million.