SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
JULY 31, 1996
NOBLE AFFILIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-7062 73-0785597
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
110 West Broadway, Ardmore, Oklahoma 73401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(405) 223-4110
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 31, 1996, Samedan Oil Corporation ("Samedan"), a Delaware
corporation and a wholly owned subsidiary of Noble Affiliates, Inc. (the
"Company"), acquired all the outstanding common stock of Energy Development
Corporation, a New Jersey corporation ("EDC"), pursuant to the terms of a
Stock Purchase Agreement (the "Stock Purchase Agreement") dated as of July 1,
1996 between Samedan and Enterprise Diversified Holdings Incorporated
("EDHI"), a New Jersey corporation and the sole stockholder of EDC.
EDC is a large independent gas and oil exploration and production
company headquartered in the United States. EDC has grown substantially
since 1988, primarily through strategic acquisitions and the exploitation of
its acquired properties.
The purchase price paid by Samedan at closing as determined under the
Stock Purchase Agreement was approximately $768,000,000 in cash. As
previously disclosed by the Company in a press release, the Company's
personnel have evaluated and estimated the proved reserves of EDC, as of
January 1, 1996, at approximately 37.7 million barrels of oil and 454.5
billion cubic feet of gas. Current daily production levels of EDC's
properties are approximately 11,000 barrels of oil and 211 million cubic feet
of gas. EDC's major properties are located in the Gulf of Mexico, onshore
gulf coast of Louisiana and Texas, and internationally in Argentina and the
United Kingdom Sector of the North Sea. In determining the amount of
consideration to be paid for the stock of EDC, the Company conducted a due
diligence review of EDC and its subsidiaries and their assets and
liabilities, including, without limitation, their holdings of proved reserves
of oil and gas. The purchase price was the result of arm's-length
negotiations with EDHI.
In connection with the acquisition, the Company entered into a new
$800,000,000 bank credit facility pursuant to a Credit Agreement (the "Credit
Agreement") (the terms of which are further described below) dated as of July
31, 1996 among the Company, as borrower, certain commercial lending
institutions which are or may become a party thereto, as lenders (the
"Lenders"), and Union Bank of Switzerland, Houston Agency, as agent (the
"Agent") for the Lenders. The borrowings of $800,000,000 under the Credit
Agreement were used to fund the purchase price for EDC and, together with
funds on hand, to repay $48,000,000 of outstanding indebtedness under the
Company's then existing credit agreement (the "old credit agreement") with
certain banks. The Company's old credit agreement was cancelled in
connection with the repayment.
The Credit Agreement provides for a $400,000,000 term loan, which has
certain scheduled prepayments and a final maturity of July 31, 2001, and a
$400,000,000 revolving credit facility with a final maturity of July 31,
2001. Borrowings under the Credit Agreement bear interest at a fluctuating
rate based on the Agent's base rate, or, at the Company's option, at a fixed
rate of interest for selected interest periods based upon a variable margin
over the Agent's Eurodollar rate.
The Credit Agreement contains covenants which limit, among other things,
the creation of liens on the assets of the Company and its subsidiaries, the
incurrence of additional indebtedness by the Company's subsidiaries, certain
mergers and acquisition of assets and certain
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transactions with affiliates. The Credit Agreement also restricts, during a
period of default under the Credit Agreement, the payment of dividends and
other distributions in respect of the capital stock of the Company. The
Credit Agreement also contains certain financial covenants relating to the
consolidated financial condition of the Company and its subsidiaries,
including covenants relating to the ratio of its earnings to its interest
expense and the ratio of its indebtedness to its total capitalization.
The Credit Agreement specifies a number of events of default including,
among others, the failure to make timely payments of principal, fees and
interest, the failure of representations and warranties to be true, the
failure to perform the covenants contained therein, the occurrence of a
"change of control" (as defined in the Credit Agreement to include, among
other things, the ownership by any person or group of more than thirty
percent (30%) of the outstanding shares of voting stock of the Company) and
the termination or other impairment of any guaranty of the Company's
indebtedness under the Credit Agreement. The Credit Agreement also contains
a cross-default to other indebtedness of the Company aggregating more than
$25,000,000 and certain customary bankruptcy, insolvency and similar defaults.
The Credit Agreement generally permits the Company to prepay at its
option, in whole or in part and without premium or penalty, the indebtedness
under the Credit Agreement.
Pursuant to the terms of the Credit Agreement, the Company generally
must make mandatory prepayments on the term loan in amounts equal to (i) the
net cash proceeds in excess of $1,000,000 in the aggregate in any calendar
year from the sale of any of the Company's or its subsidiaries' oil and gas
assets or properties, (ii) the net cash proceeds from the issuance by the
Company or any of its subsidiaries of any common stock or preferred stock
(other than stock issued by a subsidiary of the Company to the Company or
another subsidiary of the Company or issuances of stock to officers,
directors or employees pursuant to a stock option plan or otherwise) and
(iii) the net cash proceeds from any additional indebtedness incurred by the
Company to the extent that the proceeds of such additional indebtedness is
not used to refinance or repay any indebtedness in existence prior to the
date of the Credit Agreement.
Additionally, the Credit Agreement provides that the Company shall
prepay $50,000,000 of principal under the term loan on each of December 31,
1996, June 30, 1997 and December 31, 1997. In the event, however, that on or
before December 31, 1996 the holders of at least $200,000,000 in principal
amount of the Company's 4 1/4% Convertible Subordinated Notes due 2003 convert
their notes into common stock of the Company, then the date of each of the
mandatory prepayments described above in this paragraph will be extended by
six months. The amounts of the mandatory prepayments described above in this
paragraph are subject to reduction by the amount of any prepayments made
prior to the respective prepayment dates as a result of any voluntary
prepayments or mandatory prepayments resulting from sales of stock.
Samedan and EDC have guaranteed all of the Company's obligations under
the Credit Agreement pursuant to guaranty agreements given in favor of the
Lenders. A form of the guaranty agreement is attached as an exhibit to the
Credit Agreement.
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The foregoing statements are subject to the detailed provisions of the
Stock Purchase Agreement and the Credit Agreement and are qualified in their
entirety by reference to the Stock Purchase Agreement and the Credit
Agreement, copies of which are filed as exhibits to this report.
This report includes "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. All statements other than
statements of historical fact included in this report, including, without
limitation, statements regarding estimates of proved reserves of oil and gas,
are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Certain risks and uncertainties inherent in the Company's business are set
forth in other filings of the Company with the Securities and Exchange
Commission.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is impracticable to provide at this time the financial statements
required by Item 7(a) of Form 8-K. Pursuant to Item 7(a)(4) of Form 8-K,
such financial statements will be filed as soon as they are available and on
or before October 14, 1996.
(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable to provide at this time the pro forma financial
information required by Item 7(b) of Form 8-K. Pursuant to Item 7(b)(2) of
Form 8-K, such pro forma financial information will be filed as soon as it is
available and on or before October 14, 1996.
(c) EXHIBITS.
Exhibit 2.1 - Stock Purchase Agreement dated as of July 1, 1996
between Samedan Oil Corporation and Enterprise
Diversified Holdings Incorporated. (The Exhibits and
Schedules have been omitted pursuant to Item 601(b)(2)
of Regulation S-K. The Company hereby undertakes to
furnish to the Commission a copy of any omitted Exhibit
or Schedule upon request.)
Exhibit 10.1 - Credit Agreement dated as of July 31, 1996 among the
Company, as borrower, certain commercial lending
institutions which are or may become a party thereto, as
lenders, and Union Bank of Switzerland, Houston
Agency, as agent for the lenders.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 13, 1996 NOBLE AFFILIATES, INC.
By: /s/ WILLIAM D. DICKSON
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William D. Dickson,
Vice President-Finance and Treasurer
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