History
Athlon, a Midland Basin oil producer, listed in 2013, spent 2014 on acquisitions funded by shares and notes, then was bought by Encana for $58.50 a share and delisted.
2013: Listing and a bigger credit line
The record begins in July 2013, when the New York Stock Exchange certified Athlon Energy Inc.'s securities for listing, clearing them to begin trading. In November 2013 Athlon amended its bank credit agreement, with Bank of America as agent. The borrowing base, the amount lenders would let it borrow against its oil and gas reserves, rose from $320 million to $525 million. Nothing was borrowed at that point. The facility was secured by substantially all of its proved reserves and ran to March 2018.
2014: Buying acreage in the Midland Basin
Athlon spent 2014 adding to its Midland Basin acreage in West Texas. In February it paid about $88 million in cash for properties from Midenergy Partners and related sellers, using cash on hand and credit line borrowings. That month, Apollo-affiliated stockholders also sold 14,000,000 shares at $32.00 in a public offering. Athlon received no proceeds, and no new shares were created.
In April Athlon agreed to buy properties and undeveloped acreage in the northern Midland Basin from five sellers for $873 million in cash, in three deals. The properties had about 23,500 net acres and 4,800 barrels of oil equivalent a day of net production. To pay for them, Athlon sold 12,875,000 new shares at $40.00, with an option for more, and its subsidiaries sold $650 million of 6.000% senior notes due 2022, which closed on May 1. The stock offering totalled 14,806,250 shares, which accounts for much of the rise in shares on issue, from 82,129,089 at the end of 2013 to 98,459,476 at the end of 2014.
The Hibernia purchase closed on June 2 for about $383.7 million and Piedra on June 3 for about $291.4 million. On August 28 Athlon closed a further purchase of about $204.4 million, next to its existing acreage in Midland and Martin Counties, paid from cash and credit line borrowings. In early August Apollo's holding entities sold another 12,500,000 shares at $46.25 in a further offering that brought Athlon no proceeds.
2014: The Encana takeover
On September 29, 2014 Encana announced it would buy all of Athlon for $58.50 a share in cash, about $5.93 billion, and take on Athlon's $1.15 billion of senior notes. The merger agreement had been signed on September 27. Apollo, officers and independent directors, holding about 35.8% of fully diluted shares, agreed to tender. Athlon's board unanimously recommended the offer, and a termination fee of $207.5 million applied in certain cases.
The tender offer opened on October 10. On October 14 the US Federal Trade Commission ended the antitrust waiting period early. Two shareholder lawsuits, in Texas and Delaware, alleged the price was inadequate and the sale process unfair. On November 3 the offer was extended to November 12, and a memorandum of understanding to settle certain lawsuits was signed. The merger agreement was amended to cut the termination fee to $59.3 million and to remove Athlon's duty to negotiate on a rival bid.
The offer expired on November 12 with 88,025,770 shares tendered, about 86.9% of fully diluted shares, plus 4,487,330 more under guaranteed delivery. The deal closed on November 13 for about $5.9 billion, paid from Encana's cash. Remaining shares were converted into $58.50 cash, except those with appraisal rights. The Bank of America credit agreement was repaid and ended, directors resigned, and the executives were replaced.
2014: Debt cleared and deregistration
Trading on the NYSE was suspended on November 14, and the exchange filed to remove the shares from listing. In December Athlon's debt was cleared. On December 12 the parent paid Athlon Holdings LP $1,277,000,000 for 20 new partnership units. On December 15 the issuers redeemed 35% of each note series early, and on December 16 they redeemed the rest of the $500 million 2021 notes and $650 million 2022 notes. The trustee discharged both indentures on December 17. The filings do not say where the $1,277,000,000 came from or what the redemptions cost in total.
As of December 17, 2014 Athlon was an indirect wholly owned subsidiary of Encana with no debt, and its securities were deregistered. The outcome of the shareholder litigation settlement was not visible in the record.
Written from the 22 story beats below (2013 to 17 Dec 2014), which come from the company's own announcements and filings.