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): February 7, 2008
ENCORE ACQUISITION COMPANY
(Exact name of registrant as specified in its charter)
| |
|
|
|
|
Delaware
(State or other jurisdiction
of incorporation)
|
|
001-16295
(Commission
File Number)
|
|
75-2759650
(IRS Employer
Identification No.) |
| |
|
|
777 Main Street, Suite 1400, Fort Worth, Texas
(Address of principal executive offices)
|
|
76102
(Zip Code) |
Registrant’s telephone number, including area code: (817) 877-9955
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:
| |
|
|
| o |
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
|
| o |
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
|
| o |
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
|
| o |
|
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.
Effective February 7, 2008, Encore Acquisition Company (“EAC”) amended its Amended and
Restated Credit Agreement, dated as of March 7, 2007 (the “Credit Agreement”), by and among EAC,
Encore Operating, L.P. (“Encore Operating”), a wholly owned subsidiary of EAC, Bank of America,
N.A., as administrative agent, and the lenders party thereto (such amendment being hereinafter
referred to as the “First Amendment”). The First Amendment provides, among other things, that
certain negative covenants in the Credit Agreement restricting hedge transactions do not apply to
any oil and natural gas hedge transaction that is a floor or put transaction not requiring any
future payments or delivery by EAC or any of its restricted subsidiaries. In addition, the First
Amendment provides that, after giving effect to the sale by Encore Operating of the oil and natural
gas properties described in Item 8.01 below, the borrowing base under the Credit Agreement is $870
million.
This report contains only a summary of the First Amendment. The summary does not purport to
be a complete summary of the First Amendment and is qualified in its entirety by reference to the
First Amendment, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by
reference.
Bank of America, N.A., the other lenders under the Credit Agreement and their affiliates or
predecessors have in the past performed, and may in the future from time to time perform,
investment banking, advisory, general financial and commercial services for EAC and its
subsidiaries for which they have in the past received, and may in the future receive, customary
fees and reimbursement of expenses.
Item 8.01 Other Events.
On February 7, 2008, Encore Operating completed the sale of oil and natural gas producing
properties in the Permian and Williston Basins (the “Subject Properties”) to Encore Energy Partners
Operating LLC (“OLLC”), a wholly owned subsidiary of Encore Energy Partners LP (the “Partnership”),
pursuant to the terms and conditions of a Purchase and Investment Agreement (the “Purchase
Agreement”) among OLLC, the Partnership and Encore Operating.
The purchase price for the Subject Properties was approximately $250.4 million, consisting of
approximately $125.4 million in cash and 6,884,776 common units representing limited partner
interests in the Partnership (“Common Units”). OLLC financed the cash portion of the purchase
price through additional borrowings under its revolving credit facility. The Common Units were
issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933,
as amended.
Each of the parties to the Purchase Agreement is a direct or indirect subsidiary of EAC. As a
result, certain officers of EAC serve as officers and/or directors of more than one of such
entities. After the transaction, EAC and its affiliates, including Encore Operating, own
approximately 20.92 million of the Partnership’s outstanding Common Units, or approximately 67
percent of Common Units outstanding. EAC, through its indirect ownership of the Partnership’s
general partner, also holds 504,851 general partner units in the Partnership.
The Board of Directors of the Partnership’s general partner approved the transaction based on
a recommendation from its Conflicts Committee, which consists entirely of independent directors.
Simmons & Company International and Griffis & Associates, LLC acted as financial advisors to the
Conflicts Committee of the Board of Directors of the Partnership’s general partner and delivered a
fairness opinion in connection with the transaction.
Lehman Brothers Inc. acted as financial advisor and rendered a fairness opinion to EAC’s Board
of Directors in connection with the transaction.