MIDLAND, Texas, March 26, 2018 /PRNewswire/ -- Legacy
Reserves LP ("Legacy") (NASDAQ:LGCY) today announced the execution
of definitive documentation to effectuate its corporate transition
to Legacy Reserves Inc. ("New Legacy"), a newly-created
Delaware corporation (the
"Transaction").
Key Elements of the Transaction
- Each unit representing a limited partner interest (NASDAQ:
LGCY) will be converted into the right to receive 1.0 share of New
Legacy's common stock ("Common Stock");
- Each 8% Series A and Series B Fixed-to-Floating Rate Cumulative
Redeemable Perpetual Preferred Unit (the "Preferred Units," NASDAQ:
LGCYP and LGCYO, respectively) will be converted into the right to
receive 1.9620 and 1.72236 shares (pursuant to Legacy's partnership
agreement) of Common Stock, respectively, with any rights to
accumulated and unpaid distributions being discharged and the
Preferred Units being cancelled;
- All incentive distribution units will be automatically
cancelled and will cease to exist;
- New Legacy will purchase the General Partner for $3 million in cash; and
- The general partner interest of Legacy will remain outstanding,
indirectly owned by New Legacy.
Mr. Paul T. Horne, Chairman and
Chief Executive Officer of Legacy's general partner, commented, "As
a result of the Transaction, Legacy will become a newly-traded
C-Corp stock with a less complicated balance sheet and an enhanced
opportunity to raise capital and grow the business. We took
our first steps towards this transition over two years ago and,
after considerable time, effort and evaluation, we are thrilled to
make this announcement and look forward to continuing our great
operations under a new, simplified corporate structure. We have
established a platform for the creation of significant value for
the company and we look forward to stepping out from the dark cloud
we have been under as an upstream MLP."
Conditions to Closing
Completion of the associated merger is subject to customary
conditions including the affirmative vote of the majority of votes
cast by unitholders at a special meeting of the unitholders and the
customary closing conditions of the associated purchase agreement
having been satisfied or waived. Under the terms of Legacy's
partnership agreement, holders of the Preferred Units are not
entitled to vote on the merger. The Board of Directors of the
General Partner (the "GP Board") has unanimously approved the terms
of, and has recommended that the unitholders approve, the
merger. The GP Board approved New Legacy's purchase of the
General Partner with the special approval of the Conflicts
Committee of the GP Board. The Merger is intended to be tax-free to
unitholders subject to potential recapture for some unitholders as
a result of the change in tax status from a partnership to a
C-Corporation.
Other Capital Structure Items
Legacy's existing revolving credit facility, second lien term
loan, and senior unsecured notes will remain in place with Legacy
remaining as the borrower. Legacy has entered into separate
agreements to amend the revolving credit facility and the second
lien term loan to, among other things, permit the Transaction,
allow for the incurrence and payment of tax and overhead expenses
at New Legacy and further restrict Legacy's ability to make
distributions. As part of the Spring redetermination,
Legacy's borrowing base was reaffirmed at $575 million. Legacy intends to commence a
consent solicitation to amend the provisions of the indentures of
its senior unsecured notes to, among other things, amend the
definition of Change of Control to exclude the Transaction and
reflect the new corporate structure. Legacy owns over 50% of
the outstanding principal amount of its 6.625% Senior Notes due
2021 ("2021 Notes") and intends to vote in favor of the proposed
amendment. In addition, holders of over 50% of the outstanding
principal amount of Legacy's 8% Senior Notes due 2020 ("2020
Notes") have agreed to vote in favor of the proposed amendment.
Legacy is not offering or paying any consent fees to any holders of
2020 Notes or 2021 Notes for such consents.
Advisors
Kirkland & Ellis LLP acted as legal counsel to
Legacy. Evercore Partners acted as independent financial
advisor and Richards, Layton &
Finger, PA acted as independent legal counsel to the Conflicts
Committee of the GP Board.
Conference Call
Legacy will host a conference call to
discuss the Transaction later today at 3:30
p.m. (Central Time). Those wishing to participate in the
conference call should dial 877-870-4263. A replay of the call will
be available through Monday, April 2,
2018, by dialing 877-344-7529 and entering replay code
10118395. Those wishing to listen to the live or archived web cast
via the Internet or view the corresponding presentation materials
should go to the Investor Relations tab of our website at
www.legacylp.com. Following our prepared remarks, we will be
pleased to answer questions from securities analysts and
institutional portfolio managers and analysts; the complete call is
open to all other interested parties on a listen-only basis.
About Legacy Reserves LP
Legacy Reserves LP is a
master limited partnership headquartered in Midland, Texas and focused on the development
of oil and natural gas properties primarily located in the Permian
Basin, East Texas, Rocky Mountain
and Mid-Continent regions of the United
States. Additional information is available at
www.LegacyLP.com.
Additional Information and Where to Find It
In
connection with the proposed Transaction, New Legacy will prepare
and file with the U.S. Securities and Exchange Commission (the
"SEC") a registration statement on Form S-4 that will include a
proxy statement of Legacy and a prospectus of New Legacy (the
"proxy statement/prospectus") which Legacy plans to mail to its
unitholders to solicit approval for the merger.
INVESTORS AND UNITHOLDERS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
LEGACY AND NEW LEGACY, AS WELL AS THE TRANSACTION AND RELATED
MATTERS.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities 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. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as
amended.
A free copy of the proxy statement/prospectus and other filings
containing information about Legacy and New Legacy may be obtained
at the SEC's Internet site at www.sec.gov. In addition, the
documents filed with the SEC by Legacy and New Legacy may be
obtained free of charge by directing such request to: Legacy
Reserves LP, Attention: Investor Relations, at 303 W. Wall, Suite
1800, Midland, Texas 79701 or
emailing IR@legacylp.com or calling 855-534-5200. These documents
may also be obtained for free from Legacy's investor relations
website at https://www.legacylp.com/investor-relations.
Legacy and its general partner's directors, executive officers,
other members of management and employees may be deemed to be
participants in the solicitation of proxies from Legacy's
unitholders in respect of the Transaction that will be described in
the proxy statement/prospectus. Information regarding the directors
and executive officers of Legacy's general partner is contained in
Legacy's public filings with the SEC, including its definitive
proxy statement on Form DEF 14A filed with the SEC on April 10, 2017 and its Current Report on Form 8-K
filed with the SEC on February 21,
2018.
A more complete description will be available in the
registration statement and the proxy statement/prospectus.
Cautionary Statement Relevant to Forward-Looking
information
Certain statements in this press release are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including, without
limitation, statements regarding the expected benefits of the
Transaction to Legacy and its limited partners, the anticipated
completion of the Transaction or the timing thereof, the expected
future growth, dividends, distributions of the reorganized company,
and plans and objectives of management for future operations. All
statements, other than statements of historical facts, included in
this press release that address activities, events or developments
that Legacy expects, believes or anticipates will or may occur in
the future, are forward-looking statements. Words such as
"anticipates," "expects," "intends," "plans," "targets,"
"projects," "believes," "seeks," "schedules," "estimated," and
similar expressions are intended to identify such forward-looking
statements. These forward-looking statements rely on a number of
assumptions concerning future events and are subject to a number of
uncertainties, factors and risks, many of which are outside the
control of Legacy, which could cause results to differ materially
from those expected by management of Legacy. Such risks and
uncertainties include, but are not limited to, realized oil and
natural gas prices; production volumes, lease operating expenses,
general and administrative costs and finding and development costs;
future operating results; and the factors set forth under the
heading "Risk Factors" in Legacy's filings with the SEC, including
its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K. The reader should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release. Unless legally required, Legacy
undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
CONTACT:
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Legacy Reserves
LP
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Dan
Westcott
|
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President and Chief
Financial Officer
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432-689-5200
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SOURCE Legacy Reserves LP