Item 1.01. Entry into a Material Definitive Agreement.
On June 11, 2014, Penn Virginia Corporation (the "Company") entered into a
purchase agreement (the "Purchase Agreement") with RBC Capital Markets, LLC, as
representative of the several initial purchasers named therein (the "Initial
Purchasers"), to sell an aggregate of 2,750,000 depositary shares (the "Series B
Depositary Shares"), each representing a 1/100th ownership interest in a share
of its 6.00% Convertible Perpetual Preferred Stock, Series B, with a liquidation
preference of $10,000 per share (the "Series B Convertible Preferred Stock")
(equivalent to $100 per Series B Depositary Share), to the Initial Purchasers at
an offering price of $100.00 per Series B Depositary Share, plus accrued
dividends, if any, from June 16, 2014 (the "Private Offering"). Pursuant to the
Purchase Agreement, the Company granted the Initial Purchasers an option to
purchase up to an additional 500,000 Series B Depositary Shares (together with
the Series B Depositary Shares, the "Shares") solely to cover over-allotments,
if any, which the Initial Purchasers exercised in full on June 11, 2014. The
Private Offering settled and closed on June 16, 2014.
The Purchase Agreement contains customary representations, warranties and
agreements by the Company and customary conditions to closing, obligations of
the parties and termination provisions. A copy of the Purchase Agreement is
attached hereto as Exhibit 1.1, is incorporated herein by reference and is
hereby filed. The description of the Purchase Agreement in this report is a
summary and is qualified in its entirety by the terms of the Purchase Agreement.
The Shares were sold to the Initial Purchasers in a private placement exempt
from the registration requirements under the Securities Act of 1933, as amended
(the "Securities Act"). The Shares have not been registered under the Securities
Act or any state securities laws, and unless so registered, the Shares may not
be offered or sold in the United States except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the Securities
Act and applicable state securities laws. The Shares were resold by the Initial
Purchasers to qualified institutional buyers pursuant to Rule 144A under the
The Company intends to use the net proceeds from the Private Offering of
approximately $312.5 million (after deducting underwriting discounts and
commissions and estimated expenses) to finance the acceleration of its
development program in the Eagle Ford Shale with the remainder being used to
increase its lease acquisition effort in the Eagle Ford Shale. The Company
intends to add another rig in the Eagle Ford Shale in July of 2014, which the
Company expects will enable it to drill an additional 8 gross (7.6 net) wells in
the remainder of 2014. In the near term, the Company intends to use the net
proceeds to pay down a portion of the outstanding borrowings under its revolving
credit facility and for general corporate purposes. The Company intends to
reborrow such amounts, as needed, to fund the use of proceeds described above.
Certain of the Initial Purchasers and their respective affiliates perform
various financial advisory, investment banking and commercial banking services
from time to time for the Company and its affiliates, for which they received or
will receive customary fees and expense reimbursement. The Initial Purchasers
and their affiliates may provide similar services in the future. Affiliates of
certain of the Initial Purchasers are lenders under the Company's revolving
credit facility. Because the Company intends to use the net proceeds from the
Private Offering to reduce outstanding borrowings under the Company's revolving
credit facility, RBC Capital Markets, LLC
, Wells Fargo Securities, LLC
Suisse Securities (USA
) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated
Scotia Capital (USA
) Inc. and SunTrust Robinson Humphrey, Inc.
. . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K
related to the Sixth Amendment to the Credit Agreement is incorporated by
reference into this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities
On June 11, 2014
, June 12, 2014
and June 13, 2014
, the Company entered into
separate, privately negotiated conversion agreements with certain holders of the
Company's depositary shares (the "Series A Depositary Shares") representing the
Company's 6.00% Convertible Perpetual Preferred Stock, Series A (the "Series A
Convertible Preferred Stock"). The conversion agreements provide for the
conversion of the Series A Depositary Shares into shares of the Company's common
stock, par value $0.01
per share (the "Common Stock"), pursuant to the terms of
the Series A Convertible Preferred Stock, and for the payment of a cash
inducement by the Company to such holders. The Company will issue a total of
4,321,039 shares of its Common Stock upon conversion of the Series A Depositary
Shares and will pay an aggregate cash payment of approximately $3.8 million
pursuant to the conversion agreements. The number of shares of Common Stock
issued pursuant to the conversion agreements was no more than the holders of the
Series A Convertible Preferred Stock are currently entitled to upon conversion.
Such shares of Common Stock being issued in exchange for the Series A Depositary
Shares were issued in reliance on an exemption from the registration
requirements of the Securities Act, under Section 4(a)(2) thereof. Consummation
of these transactions was conditioned on customary closing conditions and on the
closing of the Private Offering. These transactions were completed on June 16,
Item 3.03. Material Modification to Rights of Security Holders.
On June 13, 2014
, the Company filed Articles of Amendment (the "Articles of
Amendment") with the Office of the Clerk of the State Corporation Commission of
the Commonwealth of Virginia
amending its Restated Articles of Incorporation to
establish the Series B Convertible Preferred Stock and the number, relative
rights, preferences and limitations thereof, which Articles of Amendment became
effective as of 9:00 a.m.
on June 16, 2014
. Pursuant to the Articles of
Amendment, each share of Series B Convertible Preferred Stock is convertible, at
the option of the holder, into a number of shares of Common Stock equal to the
liquidation preference of $10,000
divided by the conversion price, which is
per share and is subject to specified adjustments (the
"Conversion Price"). The initial conversion rate is equal to 5.4517 shares of
Common Stock for each share of Series B Convertible Preferred Stock. In
addition, in certain circumstances the Company may, at its option, cause shares
of the Series B Convertible Preferred Stock to be converted into shares of
Common Stock. Based on the initial Conversion Price, approximately 17,718,025
shares of Common Stock would be issuable upon conversion of all of the
outstanding shares of the Series B Convertible Preferred Stock.
The annual dividend on each share of Series B Convertible Preferred Stock is
6.00% per annum on the liquidation preference of $10,000
per share and is
payable quarterly, in arrears, on each of January 15
, April 15
, July 15
of each year, commencing on October 15, 2014
. Dividends will accrue
and cumulate from June 16, 2014
. The Company may, at its option, pay dividends
in cash, Common Stock or a combination thereof. The Company will be unable to
pay dividends on the Series B Convertible Preferred Stock in shares of Common
Stock without the approval of the holders of a majority of the shares of its
outstanding Common Stock.
Except as required by law or the Company's Articles of Incorporation, as amended
by the Articles of Amendment, holders of the Series B Convertible Preferred
Stock will have no voting rights unless dividends fall into arrears for six or
more quarterly periods (whether or not consecutive). Until such arrearage is
paid in full, the holders will be entitled to elect two directors and the number
of directors on the Company's Board will increase by that same number.
At any time on or after July 15, 2019
, the Company may at its option cause all
outstanding shares of the Series B Convertible Preferred Stock to be
automatically converted into Common Stock at the then-applicable conversion
price if the amendment effective date or the shareholder approval date has
occurred prior to the Company's issuance of a press release announcing the
mandatory conversion and the closing sale price of the Common Stock exceeds 130%
of the then-applicable conversion price for a specified period prior to the
If a holder elects to convert shares of Series B Convertible Preferred Stock
upon the occurrence of certain specified fundamental changes, the Company may be
obligated to deliver an additional number of shares above the applicable
conversion rate to compensate the holder for lost option value.
The terms of the Series B Convertible Preferred Stock are more fully set forth
in the Articles of Amendment described in Item 5.03 and attached as Exhibit 3.1
to this Current Report on Form 8-K, the terms of which are incorporated into
this Item 3.03 by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Articles of Amendment
The information contained in Item 3.03 is hereby incorporated by reference. The
Articles of Amendment became effective as of 9:00 a.m.
on June 16, 2014
. A copy
of the Articles of Amendment is filed as Exhibit 3.1 to this Current Report on
Form 8-K and is incorporated herein by reference.
Effective June 16, 2014
, the Company amended its Amended and Restated Bylaws to
provide that notwithstanding any other provision of the bylaws, so long as the
Series A Convertible Preferred Stock or the Series B Convertible Preferred Stock
of the Company remains outstanding, in the event that dividends on either or
both of the Series A Convertible Preferred Stock or the Series B Convertible
Preferred Stock are in arrears and unpaid for six or more quarterly periods
(whether or not consecutive), the holders of the series on which dividends are
in arrears, voting as a single class with any series of Parity Stock (as defined
in the Company's Restated Articles of Incorporation) upon which like voting
rights have been conferred and are then exercisable, will be entitled at the
Company's next regular or special meeting of shareholders to elect two
additional directors to the Board (the "Increase Triggering Event"). Immediately
upon the occurrence of the Increase Triggering Event, the size of the Board
shall automatically increase by two without further action by the Board.
A copy of the Company's Amended and Restated Bylaws, as amended, is filed as
Exhibit 3.2 to this Current Report on Form 8-K and is incorporated herein by
Item 7.01. Regulation FD Disclosure.
On June 11, 2014
, the Company issued a press release announcing the pricing of
the Private Offering. A copy of the press release is furnished as Exhibit 99.1
to this Current Report on Form 8-K and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information
contained in this Item 7.01 and the press release are being furnished under
Item 7.01 of Form 8-K and shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that section, nor shall such information
and exhibits be incorporated by reference into any filing under the Securities
Act or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
1.1 Purchase Agreement, dated June 11, 2014, between Penn Virginia Corporation
and RBC Capital Markets, LLC, as the representative of the several initial
purchasers named therein.
3.1 Articles of Amendment of the Restated Articles of Incorporation of Penn
3.2 Amended and Restated Bylaws of Penn Virginia Corporation.
4.1 Deposit Agreement, dated June 16, 2014, among Penn Virginia Corporation,
American Stock Transfer & Trust Company, LLC and the holders from time to
time of the depositary receipts described therein.
4.2 Form of depositary receipt (included as Exhibit A to Exhibit 4.1).
10.1 Sixth Amendment to Credit Agreement dated as of June 16, 2014 by and among
Penn Virginia Holding Corp., as borrower, Penn Virginia Corporation, as
parent, the lenders party thereto and Wells Fargo Bank, National
Association, as administrative agent.
99.1 Press release of Penn Virginia Corporation dated June 11, 2014.