| Item 1.01 | Entry Into a Material Definitive Agreement. |
Purchase and Sale Agreement
On March 8, 2019, Riviera Upstream, LLC (“Riviera Upstream”), a wholly-owned subsidiary of Riviera Resources, Inc., a Delaware corporation (the “Company”) entered into a Purchase and Sale Agreement (the “PSA”), with Mayzure, LLC (“Mayzure”), a wholly-owned subsidiary of the Company, providing for the sale by Riviera Upstream of limited term overriding royalty interests (the “VPP”) in helium produced from certain long-lived wells in the Hugoton Basin in the State of Kansas. The PSA contains customary representations, warranties and covenants, as well as customary indemnification provisions, among the parties. Subject to the satisfaction of customary closing conditions, the Company expects the transaction contemplated by the PSA to yield total cash proceeds to the Company of approximately $82 million (subject to closing costs).
The VPP consists of a limited term overriding royalty interest in helium produced from certain of the Company’s wells in the Hugoton Basin. Upon closing of the transaction, Mayzure will issue 5.16% senior secured notes in the amount of approximately $82 million, expected to be satisfied in third quarter 2026 (the “Notes”), secured by the VPP. In consideration for the VPP, Mayzure will distribute the proceeds of the Notes (less closing costs) to the Company at closing. Neither the Company nor any of its subsidiaries, other than Mayzure, will guarantee the Notes. The Company will retain all of its natural gas, oil and natural gas liquids production from the wells associated with the VPP and any new wells drilled would not be committed to the VPP.
The Company expects to close the transaction on or around March 20, 2019.
Amendment to Credit Agreement
On March 12, 2019, the Company entered into an amendment to their existing credit facility (the “Amendment”), which will become effective substantially simultaneously with the consummation of the PSA, to (i) carve out from the definition of “Debt” both the undischarged balance of the VPP and any obligations arising from (x) that certain Conveyance of Term Overriding Royalty Interest, dated as of the closing date of the Amendment, from the Company to Mayzure (the “Conveyance”), (y) that certain Mortgage, Line of Credit Mortgage, Assignment, Security Agreement, Fixture Filing and Financing Statement dated as of the closing date of the Amendment, from the Company, as mortgagor to Mayzure, as mortgagee (the “Mortgage”) and (z) the PSA (collectively with the Mortgage and the Conveyance, the “VPP Documents”) and (ii) create a new liens basket permitting liens on certain properties arising pursuant to the VPP and the Mortgage. Amendments to the VPP Documents that are materially adverse to the interests of the administrative agent and the lenders are not permitted under the credit facility.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment filed as Exhibit 10.1 hereto and incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation Under anOff-Balance Sheet Arrangement |
The information set forth above in Item 1.01 of this Current Report on Form8-K is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| | |
Exhibit
Number | | Description |
| |
| Exhibit 10.1 | | Third Amendment to Credit Agreement dated March 12, 2019, to the Credit Agreement dated as of August 4, 2017, among Linn Energy Holdco II LLC, as borrower, Linn Energy Holdco LLC, as parent, Linn Energy, Inc. as holdings, Royal Bank of Canada, as administrative agent, Citibank, N.A., as syndication agent, Barclays Bank PLC, JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and PNC Bank National Association, asco-documentation agents, and the lenders party thereto. |
