Business Context and Reporting Period
This Form 8-K Current Report was filed by Midstates Petroleum Company, Inc. on May 23, 2013. The filing discloses the entry into a material definitive agreement regarding a private placement of senior notes. Note: The input metadata references "Amplify Energy Corp.", but the filing text explicitly identifies the registrant as Midstates Petroleum Company, Inc.
Key Financial Metrics
- Debt Issuance: $700 million aggregate principal amount of 9.25% senior notes due 2021.
- Net Proceeds: Approximately $681.5 million (after deducting discounts and estimated offering expenses).
- Use of Proceeds: Primarily to fund the acquisition of producing properties and undeveloped acreage from Panther Energy Company, LLC, Red Willow Mid-Continent, LLC, and Linn Energy Holdings, LLC (the "Panther Acquisition").
- Secondary Use: Repayment of outstanding borrowings under the revolving credit facility, general corporate purposes, and transaction expenses.
Material Changes and Transaction Details
The Company entered into a Purchase Agreement on May 23, 2013, to sell the notes in a private placement under Rule 144A and Regulation S. The offering is expected to close on May 31, 2013, concurrently with the Panther Acquisition. If the acquisition does not close by August 2, 2013, or is terminated prior to that date, escrowed funds will be used to mandatorily redeem the Notes at 100% of the initial offering price plus accrued interest.
Guidance, Risks, and Contingencies
- Contingency: The closing of the note offering is contingent upon the closing of the Panther Acquisition. Proceeds are subject to escrow if the acquisition is delayed.
- Related Party Transactions: Initial Purchasers and their affiliates have engaged in investment banking and commercial dealings with the Company. Some acted as arrangers or lenders under the Company's revolving credit facility and as financial advisors for the Panther Acquisition.
- Bridge Facility: Certain Initial Purchasers have agreed to provide an unsecured bridge credit facility if the offering is not consummated.
Investor Verification Checklist
- Verify the closing status of the Panther Acquisition to confirm the release of escrowed funds.
- Review the full text of the Purchase Agreement (Exhibit 1.1) for specific covenants and redemption terms.
- Confirm the exact amount of debt repaid from the revolving credit facility post-closing.
- Assess the impact of the 9.25% interest rate on future interest expense and cash flow.