UNITED STATES

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): January 17, 2014

 

 

EXCO RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Texas   001-32743   74-1492779

(State or other jurisdiction of

incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

12377 Merit Drive

Suite 1700, LB 82

Dallas, Texas

  75251
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (214) 368-2084

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Section 1 – Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement.

On January 17, 2014, EXCO Resources, Inc. (the “ Company ”) issued 54,574,734 shares of its common stock, par value $0.001 per share (the “ Common Stock ”), pursuant to the Company’s previously announced rights offering (the “ Rights Offering ”) and the transactions contemplated by the Investment Agreements (as defined below) for an aggregate subscription price of approximately $272.9 million. The Rights Offering expired on January 9, 2014 at 5:00 p.m., New York City time.

The Company issued approximately 19,599,973 and 6,726,712 shares of Common Stock to the WL Ross Purchasers (as defined below) and the Hamblin Watsa Purchasers (as defined below), respectively, pursuant to the transactions contemplated by the Investment Agreements for aggregate subscription amounts of approximately $98.0 million and $33.6 million, respectively. After giving effect to the Rights Offering and the transactions contemplated by the Investment Agreements, the Company had 272,820,969 shares of its Common Stock outstanding as of January 17, 2014.

On January 17, 2014, in accordance with the terms of the two investment agreements (individually, the “ Investment Agreement ,” or, collectively, the “ Investment Agreements ”), each dated as of December 17, 2013, one with certain affiliates of WL Ross & Co. LLC (“ WL Ross ”) and one with Hamblin Watsa Investment Counsel Ltd. (“ Hamblin Watsa ”) (collectively, the “ Investors ”), the Company executed a Joinder Agreement to Registration Rights Agreement (the “ WL Ross Joinder Agreement ”) with WLR IV Exco AIV One, L.P., WLR IV Exco AIV Two, L.P., WLR IV Exco AIV Three, L.P., WLR IV Exco AIV Four, L.P., WLR IV Exco AIV Five, L.P., WLR IV Exco AIV Six, L.P., WLR Select Co-Investment XCO AIV, L.P., WLR/GS Master Co-Investment XCO AIV, L.P. and WLR IV Parallel ESC, L.P. (collectively, the “ WL Ross Purchasers ”) and a Joinder Agreement to Registration Rights Agreement (the “ Hamblin Watsa Joinder Agreement ” and together with the WL Ross Joinder Agreement, the “ Joinder Agreements ”) with Advent Syndicate 780, Clearwater Insurance Company, Northbridge General Insurance Company, Odyssey Reinsurance Company, Clearwater Select Insurance Company, Riverstone Insurance Limited, Zenith Insurance Company and Fairfax Master Trust Fund (collectively, the “ Hamblin Watsa Purchasers ” and, together with the WL Ross Purchasers, the “ Purchasers ”), each dated as of January 17, 2014.

The Joinder Agreements relate to the Company’s First Amended and Restated Registration Rights Agreement, dated December 30, 2005, by and among EXCO Holdings Inc. (the Company’s predecessor by merger) and the Initial Holders (as defined therein) (the “ Registration Rights Agreement ”). Pursuant to the Joinder Agreements, the Purchasers became “Holders” under the Registration Rights Agreement and shares owned by the Purchasers, including shares of Common Stock acquired under the Investment Agreements, became subject to the Registration Rights Agreement. The Registration Rights Agreement provides for, among other things, certain registration rights for shares of Common Stock that the Purchasers acquired pursuant to the Investment Agreements.

The foregoing description of the Joinder Agreements does not purport to be complete and is qualified in its entirety by reference to the Joinder Agreements, which are filed as Exhibits 4.2 and 4.3 to this Current Report on Form 8-K and are incorporated by reference herein.

On January 17, 2014, the Company issued a press release announcing the closing of the Rights Offering and the transactions contemplated by the Investment Agreements. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

 

2

Section 3 – Securities and Trading Markets

Item 3.02 Unregistered Sales of Equity Securities.

The issuances of shares of Common Stock to the Purchasers pursuant to their respective Investment Agreements were effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended (the “ Securities Act ”) and pursuant to Rule 506 of Regulation D of the Securities Act.

The information set forth in Item 1.01 is hereby incorporated by reference into this Item 3.02.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.

  

Description

4.1    First Amended and Restated Registration Rights Agreement, dated as of December 30, 2005, by and among EXCO Holdings Inc. and the Initial Holders (as defined therein), filed as Exhibit 10.47 to EXCO’s Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-129935), filed on January 6, 2006 and incorporated by reference herein.
4.2    Joinder Agreement to Registration Rights Agreement, dated January 17, 2014, by and among EXCO Resources, Inc. and WLR IV Exco AIV One, L.P., WLR IV Exco AIV Two, L.P., WLR IV Exco AIV Three, L.P., WLR IV Exco AIV Four, L.P., WLR IV Exco AIV Five, L.P., WLR IV Exco AIV Six, L.P., WLR Select Co-Investment XCO AIV, L.P., WLR/GS Master Co-Investment XCO AIV, L.P. and WLR IV Parallel ESC, L.P.
4.3    Joinder Agreement to Registration Rights Agreement, dated January 17, 2014, by and among EXCO Resources, Inc. and Advent Syndicate 780, Clearwater Insurance Company, Northbridge General Insurance Company, Odyssey Reinsurance Company, Clearwater Select Insurance Company, Riverstone Insurance Limited, Zenith Insurance Company and Fairfax Master Trust Fund.
99.1    Press release, dated January 17, 2014, issued by EXCO Resources, Inc.

 

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    EXCO RESOURCES, INC.
Date: January 21, 2014     By:   /s/ Mark F. Mulhern
      Name: Mark F. Mulhern
     

Title:   Executive Vice President, Chief

            Financial Officer and Interim Chief

            Accounting Officer

 

4

EXHIBIT INDEX

 

Exhibit No.

  

Description

4.1    First Amended and Restated Registration Rights Agreement, dated as of December 30, 2005, by and among EXCO Holdings Inc. and the Initial Holders (as defined therein), filed as Exhibit 10.47 to EXCO’s Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-129935), filed on January 6, 2006 and incorporated by reference herein.
4.2    Joinder Agreement to Registration Rights Agreement, dated January 17, 2014, by and among EXCO Resources, Inc. and WLR IV Exco AIV One, L.P., WLR IV Exco AIV Two, L.P., WLR IV Exco AIV Three, L.P., WLR IV Exco AIV Four, L.P., WLR IV Exco AIV Five, L.P., WLR IV Exco AIV Six, L.P., WLR Select Co-Investment XCO AIV, L.P., WLR/GS Master Co-Investment XCO AIV, L.P. and WLR IV Parallel ESC, L.P.
4.3    Joinder Agreement to Registration Rights Agreement, dated January 17, 2014, by and among EXCO Resources, Inc. and Advent Syndicate 780, Clearwater Insurance Company, Northbridge General Insurance Company, Odyssey Reinsurance Company, Clearwater Select Insurance Company, Riverstone Insurance Limited, Zenith Insurance Company and Fairfax Master Trust Fund.
99.1    Press release, dated January 17, 2014, issued by EXCO Resources, Inc.

 

5

Exhibit 4.2

JOINDER AGREEMENT

TO

REGISTRATION RIGHTS AGREEMENT

This Joinder Agreement to Registration Rights Agreement is made and entered into as of January 17, 2014 (the “ Agreement ”) by and between EXCO Resources, Inc., a Texas corporation and successor to EXCO Holdings II, Inc., a Delaware corporation (the “ Company ”), and the persons listed on the signature page hereto under the heading “Holders” (such persons being referred to collectively as the “ Holders ”).

WHEREAS, the Company and the Initial Holders specified on the signature pages thereto have executed that certain First Amended and Restated Registration Rights Agreement dated as of December 30, 2005 (the “ 2005 Registration Rights Agreement ”) relating to such Initial Holders’ registration rights with respect to the Company’s common stock, par value $.001 per share (the “ Common Stock ”);

WHEREAS, pursuant to Section 6.6 of the 2005 Registration Rights Agreement, the Company may consent to and permit, without any further action of the Initial Holders, any person who subsequently acquires Common Shares to become a “Holder” under the 2005 Registration Rights Agreement by executing a Joinder Agreement, in substantially the form attached thereto as Exhibit A ; and

WHEREAS, the undersigned desire to become parties to the 2005 Registration Rights Agreement and the Company has agreed to execute a Joinder Agreement relating thereto.

NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements contained herein and other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, each of the undersigned Holders and the Company hereby agree as follows:

1. The undersigned Holder hereby executes this Agreement for the purpose of becoming a “Holder” under the 2005 Registration Rights Agreement. Holder hereby assumes all of the duties, obligations and liabilities of a “Holder” under the 2005 Registration Rights Agreement and shall be designated as an “Investor Holder” thereunder.

2. The undersigned Holder shall be deemed a “Holder” for all purposes under the 2005 Registration Rights Agreement, and shall be subject to and shall benefit from all of the rights and obligations of a “Holder” thereunder. All references in the 2005 Registration Rights Agreement to “Holder,” “Investor Holder” or “Initial Holder” shall mean and be a reference to Holder. The 2005 Registration Rights Agreement is hereby amended by deeming the signature of Holder hereto as a signature to the 2005 Registration Rights Agreement.

3. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law.

[ Signature Pages Follow ]

IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date above first written.

 

EXCO RESOURCES, INC.
By:   /s/ William L. Boeing
Name:   William L. Boeing
Title:   Vice President and General Counsel

[ Signature Page to WLR Registration Rights Joinder Agreement ]

HOLDERS:
WLR IV EXCO AIV ONE, L.P.
By:   WLR Recovery Associates IV LLC,
  its General Partner
By:   WL Ross Group, L.P.,
  its Managing Member
By:   El Vedado, LLC,
  its General Partner
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person
WLR IV EXCO AIV TWO, L.P.
By:   WLR Recovery Associates IV LLC,
  its General Partner
By:   WL Ross Group, L.P.,
  its Managing Member
By:   El Vedado, LLC,
  its General Partner
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person
WLR IV EXCO AIV THREE, L.P.
By:   WLR Recovery Associates IV LLC,
  its General Partner
By:   WL Ross Group, L.P.,
  its Managing Member
By:   El Vedado, LLC,
  its General Partner
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person

[ Signature Page to WLR Registration Rights Joinder Agreement ]

WLR IV EXCO AIV FOUR, L.P.
By:   WLR Recovery Associates IV LLC,
  its General Partner
By:   WL Ross Group, L.P.,
  its Managing Member
By:   El Vedado, LLC,
  its General Partner
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person
WLR IV EXCO AIV FIVE, L.P.
By:   WLR Recovery Associates IV LLC,
  its General Partner
By:   WL Ross Group, L.P.,
  its Managing Member
By:   El Vedado, LLC,
  its General Partner
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person
WLR IV EXCO AIV SIX, L.P.
By:   WLR Recovery Associates IV LLC,
  its General Partner
By:   WL Ross Group, L.P.,
  its Managing Member
By:   El Vedado, LLC,
  its General Partner
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person

[ Signature Page to WLR Registration Rights Joinder Agreement ]

WLR SELECT CO-INVESTMENT XCO AIV, L.P.
By:   WLR Select Associates LLC,
  its General Partner
By:   WL Ross Group, L.P.,
  its Managing Member
By:   El Vedado, LLC,
  its General Partner
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person
WLR/GS MASTER CO-INVESTMENT XCO AIV, L.P.
By:   WLR Master Co-Investment GP, LLC,
  its General Partner
By:   WL Ross Group, L.P.,
  its Managing Member
By:   El Vedado, LLC,
  its General Partner
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person
WLR IV PARALLEL ESC, L.P.
By:   INVESCO WLR IV Associates LLC,
  its General Partner
By:   INVESCO Private Capital, Inc.,
  its Managing Member
By:   /s/ Michael J. Gibbons
  Name: Michael J. Gibbons, authorized person

[ Signature Page to WLR Registration Rights Joinder Agreement ]

Exhibit 4.3

JOINDER AGREEMENT

TO

REGISTRATION RIGHTS AGREEMENT

This Joinder Agreement to Registration Rights Agreement is made and entered into as of January 17, 2014 (the “ Agreement ”) by and between EXCO Resources, Inc., a Texas corporation and successor to EXCO Holdings II, Inc., a Delaware corporation (the “ Company ”), and the persons listed on the signature page hereto under the heading “Holders” (such persons being referred to collectively as the “ Holders ”).

WHEREAS, the Company and the Initial Holders specified on the signature pages thereto have executed that certain First Amended and Restated Registration Rights Agreement dated as of December 30, 2005 (the “ 2005 Registration Rights Agreement ”) relating to such Initial Holders’ registration rights with respect to the Company’s common stock, par value $.001 per share (the “ Common Stock ”);

WHEREAS, pursuant to Section 6.6 of the 2005 Registration Rights Agreement, the Company may consent to and permit, without any further action of the Initial Holders, any person who subsequently acquires Common Shares to become a “Holder” under the 2005 Registration Rights Agreement by executing a Joinder Agreement, in substantially the form attached thereto as Exhibit A ; and

WHEREAS, the undersigned desire to become parties to the 2005 Registration Rights Agreement and the Company has agreed to execute a Joinder Agreement relating thereto.

NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements contained herein and other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, each of the undersigned Holders and the Company hereby agree as follows:

1. The undersigned Holder hereby executes this Agreement for the purpose of becoming a “Holder” under the 2005 Registration Rights Agreement. Holder hereby assumes all of the duties, obligations and liabilities of a “Holder” under the 2005 Registration Rights Agreement and shall be designated as an “Investor Holder” thereunder.

2. The undersigned Holder shall be deemed a “Holder” for all purposes under the 2005 Registration Rights Agreement, and shall be subject to and shall benefit from all of the rights and obligations of a “Holder” thereunder. All references in the 2005 Registration Rights Agreement to “Holder,” “Investor Holder” or “Initial Holder” shall mean and be a reference to Holder. The 2005 Registration Rights Agreement is hereby amended by deeming the signature of Holder hereto as a signature to the 2005 Registration Rights Agreement.

3. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law.

[ Signature Pages Follow ]

IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date above first written.

 

EXCO RESOURCES, INC.
By:   /s/ William L. Boeing
Name:   William L. Boeing
Title:   Vice President and General Counsel

[ Signature Page to Registration Rights Joinder Agreement ]

HOLDERS:
ADVENT SYNDICATE 780
CLEARWATER INSURANCE COMPANY
NORTHBRIDGE GENERAL INSURANCE COMPANY
ODYSSEY REINSURANCE COMPANY
CLEARWATER SELECT INSURANCE COMPANY
RIVERSTONE INSURANCE LIMITED
ZENITH INSURANCE COMPANY
FAIRFAX MASTER TRUST FUND
By:   Hamblin Watsa Investment Counsel Ltd., as investment manager
By:   /s/ Roger Lace
  Name: Roger Lace
  Title:   President

[ Signature Page to Registration Rights Joinder Agreement ]

Exhibit 99.1

 

   LOGO     

EXCO Resources, Inc.

12377 Merit Drive, Suite 1700, Dallas, Texas 75251

(214) 368-2084 FAX (972) 367-3559

EXCO RESOURCES, INC. ANNOUNCES CLOSING OF RIGHTS OFFERING

DALLAS, TEXAS, January 17, 2014…EXCO Resources, Inc. (NYSE:XCO) (“EXCO” or the “Company”) today announced the closing of its previously announced $273 million rights offering and related transactions under exercise commitment agreements with certain shareholders of the Company (the “Investment Agreements”).

Of the approximately 54.5 million total shares of common stock issued, approximately 28.2 million shares were issued in the rights offering and approximately 19.6 million shares and 6.7 million shares were issued to affiliates of WL Ross & Co. LLC and affiliates of Hamblin Watsa Investment Counsel Ltd., respectively, under their respective Investment Agreements. After giving effect to the rights offering and the Investment Agreements, EXCO has 272,820,969 shares of common stock outstanding.

Jeffrey D. Benjamin, EXCO’s Non-Executive Chairman of the Board, commented, “We are very pleased by the support of our existing shareholders and their participation has helped strengthen EXCO.”

The largest three shareholders of EXCO common stock, directly or through certain affiliates, after giving effect to the rights offering and the related transactions under the Investments Agreements are:

 

     Common Stock
Ownership 		 
     Shares      %  

WL Ross & Co. LLC

     51,104,050         18.7   

Oaktree Capital Group Holdings GP, LLC

     45,173,682         16.6   

Hamblin Watsa Investment Counsel Ltd.

     17,538,912         6.4   

EXCO received net proceeds of approximately $272 million, after deducting estimated expenses. The Company used approximately $28.9 million of the proceeds to fully repay indebtedness related to the Asset Sale Requirement under the EXCO Resources Credit Agreement and approximately $243.2 million of the proceeds to repay indebtedness related to the revolving commitment under the EXCO Resources Credit Agreement. Elimination of the Asset Sale Requirement reduced the interest rate on the revolving commitment by 1%.

After giving effect to the rights offering and the related transactions under the Investment Agreements, the available borrowing base on the revolving commitment under the EXCO Resources Credit Agreement is $900.0 million with approximately $491.8 million of outstanding indebtedness and approximately $401.4 million of unused borrowing base, net of letters of credit.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any offer, solicitation or sale of the securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of the securities under the securities laws of such state or jurisdiction.

EXCO Resources, Inc. is an oil and natural gas exploration, exploitation, development and production company headquartered in Dallas, Texas with principal operations in Texas, North Louisiana and Appalachia.

Additional information about EXCO may be obtained by contacting Chris Peracchi, Director of Finance and Investor Relations and Treasurer, at EXCO’s headquarters, 12377 Merit Drive, Suite 1700, Dallas, TX 75251, telephone number (214) 368-2084, or by visiting EXCO’s website at www.excoresources.com. EXCO’s SEC filings and press releases can be found under the Investor Relations tab.

###

This release may contain forward-looking statements relating to future financial results, business expectations and business transactions. There can be no assurance that this transaction will proceed as described in this release. Actual results may differ materially from those predicted as a result of factors over which EXCO has no control. Such factors include, but are not limited to: the completion of the rights offering and transactions contemplated thereby, the estimates of reserves, commodity price changes, regulatory changes and general economic conditions. These risk factors are included in the Company’s final prospectus included as a part of the registration statement, and additional information and risk factors are included in EXCO’s reports on file with the Commission. Except as required by applicable law, EXCO undertakes no obligation to publicly update or revise any forward-looking statements.