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): December 20, 2016

 

 

APPROACH RESOURCES INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-33801   51-0424817

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

One Ridgmar Centre

6500 West Freeway, Suite 800

Fort Worth, Texas 76116

(Address of principal executive offices)

(817) 989-9000

(Registrant’s telephone number, including area code)

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:

 

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))

 

 

 


Item 1.01. Entry into a Material Definitive Agreement.

On December 20, 2016, Approach Resources Inc. (the “ Company ) entered into a Second Supplemental Indenture (the “ Second Supplemental Indenture ”) by and among the Company, the guarantors named therein (the “ Guarantors ”) and Wilmington Trust, National Association, as successor trustee under the Indenture (as defined below) (the “ Trustee ”). The Second Supplemental Indenture is a supplement to the Indenture, dated as of June 11, 2013 (the “ Base Indenture ”), by and among the Company, the guarantors party thereto and the Trustee, as supplemented by the First Supplemental Indenture, dated as of June 11, 2013 (the “ First Supplemental Indenture ” and together with the Base Indenture, the “ Indenture ”), which governs the Company’s 7.00% Senior Notes due 2021 (the “ Notes ”).

The Second Supplemental Indenture was entered into in connection with the Exchange Agreement (the “ Exchange Agreement ”), dated as of November 2, 2016, by and between the Company and Wilks Brothers, LLC, a Texas limited liability company (“ Wilks ”), and SDW Investments, LLC, a Texas limited liability company (“ SDW ”, and collectively with Wilks, the “ Noteholders ”) (previously reported in the Company’s Current Report on Form 8-K dated November 2, 2016 and incorporated by reference herein), pursuant to which the Noteholders (representing in excess of a majority of the outstanding Notes) consented to certain amendments (the “ Amendments ”) to the Indenture which will, among other things, effective upon and subject to the occurrence of the “Closing,” as defined in the Exchange Agreement (the “ Operative Time ”), (i) eliminate certain definitions and references to definitions contained in Section 201 of the First Supplemental Indenture; (ii) eliminate and revise, as applicable, certain Events of Default contained in Section 601 of the First Supplemental Indenture; (iii) eliminate certain conditions to consolidation, merger, conveyance, transfer or lease contained in Section 901 of the First Supplemental Indenture; (iv) eliminate certain covenants contained in Article XI of the First Supplemental Indenture, including substantially all of the restrictive covenants set forth therein; and (v) supplement and amend the Notes and the Securities Guarantees, as and to the same extent as the Indenture has been amended and supplemented in accordance with the preceding clauses (i), (ii), (iii) and (iv). In the event that the Exchange Agreement is terminated without the Closing having occurred, the Amendments will not become effective and operative, and the Second Supplemental Indenture shall immediately upon such termination be of no further force or effect.

The foregoing description of the Second Supplemental Indenture is only a summary of, and is qualified in its entirety by reference to, the full text of the Second Supplemental Indenture, a copy of which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated into this Item 1.01 by reference.

 

Item 3.03. Material Modification to Rights of Securityholders.

The information set forth under Item 1.01 of this report is incorporated by reference into this Item 3.03.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is included as a part of this Current Report on Form 8-K:

 

Exhibit No.

  

Description

4.1    Second Supplemental Indenture, dated as of December 20, 2016, by and among Approach Resources Inc., the guarantors named therein and Wilmington Trust, National Association, as successor trustee under the Indenture.


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.

 

    APPROACH RESOURCES INC.
Date: December 22, 2016         By:  

/s/ Josh E. Dazey

      Name:   Josh E. Dazey
      Title:   Vice President, General Counsel


EXHIBIT INDEX

 

Exhibit No.

  

Description

4.1    Second Supplemental Indenture, dated as of December 20, 2016, by and among Approach Resources Inc., the guarantors named therein and Wilmington Trust, National Association, as successor trustee under the Indenture.

Exhibit 4.1

SECOND SUPPLEMENTAL INDENTURE

SECOND SUPPLEMENTAL INDENTURE (this “ Second Supplemental Indenture ”), dated as of December 20, 2016, between Approach Resources, Inc., a Delaware corporation (the “ Company ”), the Guarantors (as hereinafter defined) and Wilmington Trust, National Association, as successor trustee under the Indenture referred to below (the “ Trustee ”).

W I T N E S S E T H

WHEREAS, the Company and the guarantors party thereto (the “ Guarantors ”) delivered to the Trustee a base indenture, dated as of June 11, 2013 (the “ Base Indenture ”), by and among the Company, the guarantors party thereto and the Trustee, as supplemented by the First Supplemental Indenture dated as of June 11, 2013 (the “ First Supplemental Indenture ” and, together with the Base Indenture, the “ Indenture ”) providing for the issuance by the Company of a series of senior notes designated as 7.00% Senior Notes due 2021 (the “ Notes ”);

WHEREAS, pursuant to that certain Exchange Agreement, dated as of the date hereof (the “ Exchange Agreement ”), by and between the Company and Wilks Brothers, LLC, a Texas limited liability company, and SDW Investments, LLC, a Texas limited liability company (the “ Noteholders ”), the Company and the Noteholders have reached an agreement pursuant to which, amongst other things, upon satisfaction of the conditions to closing set forth therein, the Noteholders will transfer to the Company, and the Company shall acquire, directly or indirectly, all of the Notes held by the Noteholders in exchange for, shares of Common Stock (as defined in the Exchange Agreement) of the Company (the “ Exchange ”);

WHEREAS, in connection with the Exchange Agreement, the Noteholders have delivered one or more consent letters executed by Cede & Co, the registered Holder of the Notes, on behalf of the Noteholders (collectively, the “ Noteholder Consents ”) to supplement the Indenture to effect the amendments set forth in Sections 2, 3, 4 and 5 hereof (collectively, the “ Amendments ”) on the terms set forth herein, including that this Second Supplemental Indenture shall be in full force and effect on the date first written above and such Amendments shall become operative with respect to the Indenture only if the Closing (as defined in the Exchange Agreement) shall occur (such Closing, the “ Operative Time ”);

WHEREAS, subject to certain exceptions, Section 1002 of the First Supplemental Indenture provides, among other things, that the Company, the Guarantors and the Trustee may amend or supplement the Indenture, the Securities Guarantees and the Notes (and the Company and the Guarantors desire to amend and supplement the Indenture, the Securities Guarantees and the Notes as provided herein) with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding voting as a single class;

WHEREAS, the Noteholders beneficially own $130,552,000, or 56.7% of the $230,200,000 aggregate principal amount of the issued and outstanding Notes, Cede & Co. has executed the Noteholder Consents in respect of such aggregate principal amount, and accordingly the Holder of at least a majority in aggregate principal amount of the outstanding Notes for the purposes of Section 1002 of the First Supplemental Indenture has duly consented to this Second Supplemental Indenture; and

WHEREAS, all conditions necessary to authorize the execution and delivery of this Second Supplemental Indenture and to make this Second Supplemental Indenture valid and binding have been complied with or performed.

 

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NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Guarantors, and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows:

1. C APITALIZED T ERMS . Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. A MENDMENTS TO S ECTION  201 OF THE F IRST S UPPLEMENTAL I NDENTURE . Section 201 of the First Supplemental Indenture is hereby amended at the Operative Time by deleting those definitions and cross references that, by virtue of the amendments effected in Sections 3, 4 and 5 hereof, are no longer used in the Indenture or the Notes.

3. A MENDMENTS TO S ECTION  601 OF THE F IRST S UPPLEMENTAL I NDENTURE .

(a) Each of the following clauses of Section 601 of the First Supplemental Indenture is hereby deleted in their entirety at the Operative Time and each such clause is replaced at such time with the following: “[Intentionally Omitted]” (and all references thereto in the Indenture are hereby deleted in their entirety) at such time:

 

    clause (4) (failure to comply with the incurrence of indebtedness, restricted payments, change of control or asset sale covenants);

 

    clause (5) (default with respect to agreements under the Indenture other than those specified in clauses (1) through (4));

 

    clause (6) (payment default or cross-acceleration with respect to other material debt); and

 

    clause (7) (failure to pay judgments).

(b) (i) Clause (3) of Section 601 of the First Supplemental Indenture is hereby amended at the Operative Time to delete the phrase “or to consummate a purchase of Notes when required pursuant to Section 1110 or Section 1115 of this Supplemental Indenture”; and (ii) each of clause (9) and clauses (10)(a), (b), and (c) of Section 601 of the First Supplemental Indenture is hereby amended at the Operative Time to delete the following phrase, each time it appears therein: “, any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary,”.

4. A MENDMENTS TO S ECTION  901 OF THE F IRST S UPPLEMENTAL I NDENTURE .

Each of clauses (3) and (4) of Section 901 of the First Supplemental Indenture is hereby deleted in its entirety at the Operative Time and each such clause is replaced at such time with the following: “[Intentionally Omitted]” (and all references thereto in the Indenture are hereby deleted in their entirety at such time), and the proviso at the end of the first paragraph of Section 901 is hereby deleted in its entirety at such time.

 

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5. A MENDMENTS TO A RTICLE 11 OF THE F IRST S UPPLEMENTAL I NDENTURE . Each of the following sections of the First Supplemental Indenture is hereby deleted in its entirety at the Operative Time and each such section is replaced at such time with the following: “[Intentionally Omitted]” (and all references thereto in the Indenture are hereby deleted in their entirety at such time):

 

    Section 1106 “Reports”

 

    Section 1107 “Payment of Taxes”

 

    Section 1110 “Repurchase of Notes Upon a Change of Control”

 

    Section 1111 “Incurrence of Indebtedness and Issuance of Preferred Stock”

 

    Section 1112 “Restricted Payments”

 

    Section 1113 “Limitation on Liens”

 

    Section 1114 “Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries”

 

    Section 1115 “Asset Sales”

 

    Section 1116 “Transactions with Affiliates”

 

    Section 1117 “Future Subsidiary Guarantees”

6. N EW Y ORK L AW TO G OVERN . THE LAWS OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

7. C OUNTERPARTS . The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

8. E FFECT OF H EADINGS . The Section headings herein are for convenience only and shall not affect the construction hereof.

9. I NCORPORATION OF I NDENTURE . All the provisions of this Second Supplemental Indenture shall be deemed to be incorporated in, and made a part of, the Indenture; and the Indenture, as supplemented and amended by this Agreement, shall be read, taken and construed as one and the same instrument.

10. T HE T RUSTEE . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or for or in respect of the recitals contained herein.

11. E FFECTIVENESS OF T HIS S ECOND S UPPLEMENTAL I NDENTURE . Upon the execution of this Second Supplemental Indenture by the Company, the Guarantors, and the Trustee, the Indenture shall

 

3


be amended and supplemented in accordance herewith, and this Second Supplemental Indenture shall form a part of the Indenture for all purposes, and the parties hereto and every Holder of Notes shall be bound hereby; provided, however , that the Amendments will not become effective and operative unless and until the Operative Time shall have occurred, at which time such Amendments shall immediately become effective and operative for all purposes of the Indenture without further action by any Person, and simultaneously therewith the Notes and the Securities Guarantees shall be deemed supplemented and amended for all purposes, as and to the same extent as the Indenture has been supplemented and amended hereby. In the event that the Exchange Agreement is terminated without the Closing having occurred, the Amendments will not become effective and operative, and this Supplemental Indenture shall immediately upon such termination be of no further force or effect. The Company shall give the Trustee prompt written notice of the occurrence of the Operative Time or the termination of the Exchange Agreement. For the avoidance of doubt, nothing in this Second Supplemental Indenture shall effect in any way the deletion and replacement, or intentional omission, of any Article, Section, clause or other provision of the Base Indenture specified in Section 102 of the First Supplemental Indenture, which Section 102 shall remain in full force and effect subject only to the amendments specified in this Second Supplemental Indenture, or amend the Base Indenture as it may apply to any Securities other than the Notes.

[ Signature pages follow ]

 

4


IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed and delivered, all as of the date first above written.

 

THE COMPANY
APPROACH RESOURCES INC.
By:  

/s/ J. Curtis Henderson

  Name:   J. Curtis Henderson
  Title:   Chief Administrative Officer
GUARANTORS
APPROACH OIL & GAS INC.
APPROACH SERVICES, LLC
APPROACH OPERATING, LLC
APPROACH DELAWARE, LLC
APPROACH MIDSTREAM HOLDINGS, LLC
By:  

/s/ J. Curtis Henderson

  Name:   J. Curtis Henderson
  Title:   Chief Administrative Officer
APPROACH RESOURCES I, LP
By:   Approach Operating, LLC, its general partner
By:  

/s/ J. Curtis Henderson

  Name:   J. Curtis Henderson
  Title:   Chief Administrative Officer

[S IGNATURE P AGE TO S ECOND S UPPLEMENTAL I NDENTURE ]


IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed and delivered, all as of the date first above written.

 

TRUSTEE
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
By:  

/s/ Shawn Goffinet

  Name:   Shawn Goffinet
  Title:   Authorized Signatory

[S IGNATURE P AGE TO S ECOND S UPPLEMENTAL I NDENTURE ]