Bronco Drilling Company, Inc.

Bronco Drilling Company, Inc. deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

Bronco reports the Chesapeake deal closed. Nomac Acquisition merged into Bronco on June 6, 2011, with Bronco surviving as an indirect wholly owned Chesapeake subsidiary, and each remaining share converted into the right to receive $11.00 cash (except appraisal-rights holders). Former holders no longer have any interest in Bronco's future earnings. The Inbursa warrant was cashed out for $21,763,080 and the Inbursa credit agreement was repaid and terminated from Bronco's cash. NASDAQ trading ended after June 6, and a Form 25 delisting was filed with a Form 15 deregistration to follow. This ends the open threads of the tender offer, merger and settlement approval.

business combination

Bronco Drilling Company, Inc.'s exchange filed to remove a class of its securities from listing.

listing compliance notice

Chesapeake reports the tender offer expired June 3, 2011 with about 24,959,224 shares tendered (about 86.7% of shares outstanding, or 84.3% excluding shares tendered by guaranteed delivery), and all were accepted for payment at $11.00. Chesapeake then used a 'top-up' option to buy 63,550,899 new shares and passed 90%, so it plans a short-form merger without a shareholder vote. Remaining shares convert to $11.00 cash (except where appraisal rights are properly exercised), and Bronco shares will no longer be listed on NASDAQ. This resolves the open question of the tender offer's outcome.

business combination

Bronco reports that on May 17, 2011 it amended the Chesapeake merger agreement: the offer is extended from May 23 to May 31, 2011, and the period after a termination in which a termination fee may be payable drops from 12 to 9 months. This came with a memorandum of understanding to settle the Delaware shareholder suits, which needs Delaware court approval and is contingent on the merger closing. On May 20 the Delaware court certified a class of holders from April 14, 2011 to the merger's completion. If the settlement is not approved, Bronco will keep defending. The $11.00 cash price is unchanged and the outcome is not yet final.

business combination

Chesapeake's third amendment to its tender offer says the parties to the Delaware shareholder suits reached an agreement in principle on May 17, 2011 to settle. In return, the fee Bronco would owe Chesapeake if it later does a rival deal shrinks from a 12-month to a 9-month window, Bronco will add disclosures, and the offer is extended from May 23 to May 31, 2011. The $11.00 cash price is unchanged. It also adds detail on the 2010 contacts leading to the offer (including Jefferies' October 2010 approach and Chesapeake's $11.00 letter of April 4, 2011), says a preliminary injunction hearing was set for May 19, and notes one Oklahoma suit remains, stayed. The settlement needs court approval, so the suits are not yet resolved.

business combination

Bronco filed a preliminary proxy for a special stockholder meeting (date not yet set) to vote on adopting the Chesapeake merger agreement and on an advisory vote on executive merger pay. The board unanimously recommends FOR. If the tender offer completes, Chesapeake's majority stake would guarantee approval; holders who don't tender get $11.00 cash in the merger unless they exercise appraisal rights. This is the back-end merger step; the filing is a draft, and the outcome is not final until the deal closes.

business combination

Bronco's own amendment to its response to the tender offer repeats the same two updates: early termination of the antitrust waiting period on May 2, 2011 (one offer condition now met), and ten shareholder class actions (one Oklahoma suit dismissed) seeking to block the $11.00 cash deal. Bronco says the suits are entirely without merit and will defend them. The majority-tender condition and the lawsuits remain open, so the shareholder outcome is not final.

business combination

Chesapeake's tender-offer amendment says the US antitrust waiting period for the $11.00 cash offer was ended early on May 2, 2011, satisfying one of the offer's conditions. It also says the shareholder lawsuits have grown to ten (six in Oklahoma County, one since dismissed, and four in Delaware Chancery), seeking to block the deal; one Delaware suit was amended April 29 to add claims that the offer documents inadequately described the process and the Johnson Rice fairness opinion. Chesapeake calls the suits without merit. The offer is not yet complete.

business combination

Bronco filed its formal response to Chesapeake's tender offer. The offer is $11.00 cash per share, initially open until midnight New York time on Monday, May 23, 2011, and may be extended. Shares not tendered would be converted into the same $11.00 in the merger, except for holders who properly exercise appraisal rights. Directors and executive officers own 498,114 shares (worth about $5.48M at the offer price) and hold 1,046,088 unvested restricted shares (about $11.5M) that vest at the merger. Executives get severance of three times salary plus bonus (plus tax gross-up) if they leave within two years after a change of control. This is the filed text only; the board's recommendation section is cut off in the excerpt provided, though earlier filings say the board unanimously recommends the offer.

business combination

Chesapeake's subsidiary Nomac Acquisition formally launched its tender offer on April 26, 2011 at $11.00 cash per share, as the earlier announcement said it would. The fee table values it at about $376.6M, counting 28,800,059 shares outstanding as of April 13, 2011 plus 5,440,770 warrant shares. The filing lists the shareholder lawsuits among its exhibits. The offer is not yet complete, so the shareholder outcome remains open until shares are accepted and the merger closes.

business combination

Filed as a Schedule 14D-9 pre-commencement communication, this repeats Bronco's April 22 8-K. Three purported shareholder class actions (two in Oklahoma County, served April 18 and 19; one in Delaware Chancery, served April 20) name Bronco, its directors including the CEO, and Chesapeake (and Nomac in the Delaware suit). They allege the board breached its duties and that the deal undervalues Bronco, and seek to block the deal plus fees and damages or rescission. Bronco says the suits are without merit and will defend them. This is a new legal risk to the pending Chesapeake deal; no ruling or injunction is reported.

business combination

The formal merger agreement with Chesapeake (via Nomac Acquisition), dated April 14, 2011, is now filed. Chesapeake will tender for all shares at $11.00 cash, then merge Bronco into a wholly owned Chesapeake subsidiary. The offer needs a majority of shares tendered (fully diluted) and US antitrust waiting-period expiry. The Inbursa warrant ends at closing and is paid out in cash (offer price minus exercise price, times the shares it covered). Unvested restricted stock vests and is cashed out. Third Avenue and Carso (about 32%) agreed to tender. Bronco owes Chesapeake a $13M termination fee plus up to $1.5M expenses in certain cases, such as accepting a superior proposal. This confirms the terms announced on April 15 and resolves the open question on warrant treatment, but the shareholder outcome is not final until closing.

business combination

On April 15, 2011 Chesapeake Energy, through its subsidiary Nomac Acquisition, announced a definitive agreement to buy Bronco for $11.00 per share in cash (about $315M including debt, net working capital and warrants), via a tender offer followed by a merger for any remaining shares. Bronco's board unanimously recommends acceptance, and Third Avenue Management and Inmobiliaria Carso (about 32% combined) have committed to tender; closing is expected in Q2 2011. This replaces Bronco's independent path; the offer had not yet started, and is conditioned on a majority of shares tendering and regulatory clearances.

business combination

Sept 21-23, 2010 Bronco auctioned substantially all of its discontinued well servicing segment, plus drilling rigs 2, 9, 52, 70, 75 and 94 and ancillary equipment, for expected net proceeds of about $20.8M, and separately sold rigs 41 and 42 to Windsor Permian LLC for about $6.5M. The filing says the rigs sold were not being used in the business, and both sets of proceeds are meant to pay down the Inbursa revolving credit facility.

asset acquisition disposition

On Feb 9, 2010 Banco Inbursa waived Bronco's compliance with the maximum debt-to-EBITDA covenant (3.5x) under the Sept 2009 credit agreement through the quarter ended June 30, 2010, and any default arising from it. The filing does not say why the waiver was needed; it follows the new Inbursa facility, so the lender is giving temporary relief but the covenant itself is unchanged after June 2010.

material agreement

On Sept 18, 2009 Bronco sold 60% of a new Mexican rig venture, Bronco MX, to Carso Infraestructura y Construccion for US$30.0M (plus 60% reimbursement of import VAT), keeping 40% after contributing six rigs; three more rigs are to follow when their leases end. It also replaced the Fortis revolver with a new $75M revolver from Banco Inbursa (matures Sept 17, 2014; Eurodollar rate + 5.80%; max debt-to-EBITDA 3.5x) and issued Inbursa a three-year warrant for up to 5,440,770 shares at $6.50-$7.50. Carso's partner in Bronco MX shares a Mexican-group link with the Slim-family holders in earlier notices (inference from names); the warrant could dilute existing shareholders if exercised, capped at 19.99% of shares outstanding.

capital raising announcement

On September 29, 2008 Bronco and its domestic subsidiaries signed an Amended and Restated Credit Agreement with Fortis Bank-led lenders for a revolving facility of up to $150 million, maturing September 29, 2013. It carries interest of 4% over LIBOR or 3% over prime, a 0.5% unused fee, a first lien on substantially all assets, and covenants including a minimum fixed charge ratio (1.05 rising to 1.15) and maximum total leverage of 2.00. This replaces the January 2006 Fortis facility (same $150M size, maturing 2009) on a longer term but at a higher stated rate than the earlier LIBOR+2.0-3.0% range.

debt financing

On August 8, 2008 Bronco and Allis-Chalmers mutually terminated their merger agreement (as amended June 1, 2008), because it was determined unlikely that Bronco's stockholders would adopt it by the required vote. Bronco will pay Allis-Chalmers $4.5 million and both sides release all claims. This ends the buyout, so Bronco stays an independent listed company and holders do not receive the merger consideration.

material agreement termination

Bronco and Allis-Chalmers amended their January 2008 merger agreement on June 1, 2008. Consideration is now $200.0M cash plus a fixed 16,846,500 Allis-Chalmers shares, worth $18.25 per Bronco share at the May 30 close, and the stock part is expected to be tax-free. Bronco holders would own about 32% of the combined company (up from 27.9%), and the share number no longer adjusts with price. The deal still needs Bronco and Allis-Chalmers shareholder and regulatory approvals.

business combination

On January 23, 2008 Bronco agreed to be acquired by Allis-Chalmers Energy in a deal valued at about $437.8 million: $280.0M cash plus about $157.8M of Allis-Chalmers stock, or $16.33 per Bronco share, a 21.8% premium to the January 23 close. It needs approval from both companies' shareholders and regulators; Bronco owes a $10.0M termination fee in specified circumstances, and the receipt would be taxable to Bronco holders. Bronco holders would own about 27.9% of the combined company.

material agreement

On November 15, 2007 Bronco's subsidiary agreed to take a 25% stake in Challenger Limited (Isle of Man) in exchange for 6 drilling rigs and $5 million cash, with closing expected in Q4 2007 subject to conditions and satisfactory due diligence. Bronco also expects to sell Challenger four other rigs and equipment for $12 million in installments, and to provide Challenger with operational and management support. This is a new international move, separate from the Eagle Well diversification into well services.

material agreement

On January 9, 2007 Bronco acquired Eagle Well Services, Inc. by merger for $2.5 million cash (with $1 million held in escrow), 1,070,390 Bronco shares, and assumed debt net of working capital of about $3.0 million. The press release says it brings 31 workover rigs, 24 currently working, and calls it the first step in a diversification strategy beyond contract drilling. Bronco agreed to register the shares for resale by the Eagle holders, and the new shares dilute existing holders. This is a different company from the Eagle Drilling assets bought in 2005.

business combination

On March 23, 2006 Bronco priced a third share offering: 3,000,000 shares at $22.75, of which Bronco sells 1,700,000 and Bronco Drilling Holdings sells 1,300,000, with a 450,000-share over-allotment option granted by Holdings. Bronco gets no proceeds from Holdings' shares and says its own proceeds will repay borrowings under its revolving credit facility. New shares dilute existing holders, and Bronco, its officers and directors and Holdings agreed to a 90-day lock-up.

material agreement

Bronco closed the Big A Drilling purchase on January 18, 2006, resolving the deal announced in December: six operating rigs plus heavy haul trucks and excess equipment for $16.3 million cash and 72,571 shares (the earlier figure was 72,570). It also leased the Woodward, Oklahoma refurbishment yard ($5,000 a month, six-month initial term, option to extend three years, option to buy for $200,000). Separately, on January 13, 2006 it signed a new revolving credit facility of up to $150 million with Fortis Capital Corp. and a lender group, maturing January 13, 2009, at LIBOR plus 2.0%-3.0%, secured by substantially all assets. The filing does not say what the facility replaces or how much was drawn; it is an inference that it succeeds the Merrill Lynch term loan.

asset acquisition disposition

Bronco agreed on December 16, 2005 to buy six operating rigs, heavy haul trucks and excess equipment from Big A Drilling, L.C. for $16.3 million cash plus 72,570 Bronco shares worth $1,815,000, expected to close in the first quarter of 2006 subject to due diligence. It also plans to lease a Woodward, Oklahoma refurbishment yard from an affiliate of Big A at $5,000 a month, with an option to buy it for $200,000. Per the press release, the operating fleet would rise to 37 rigs with 27 inventoried. This is another fleet expansion following Thomas and Eagle.

material agreement

Bronco filed the financial statements for the Eagle Drilling acquisition and confirmed it closed October 3, 2005 for about $50.0 million, resolving the pending Eagle deal from September. The filing says it covered five operating rigs and seven inventoried rigs (the September announcement said one rig being refurbished and six inventoried) plus equipment and parts. Eagle's statements show 2004 revenue of $1.0 million and nine-month 2005 revenue of $10.0 million.

asset acquisition disposition

Bronco signed an underwriting agreement on October 27, 2005 for a second share offering: 3,500,000 new shares at $23.00 to the public ($21.735 to underwriters), with a 30-day option for 525,000 more. The press release says about $50.0 million of the proceeds will repay borrowings from the Thomas Drilling acquisition, with the rest going to rig refurbishment and general purposes. Existing shareholders face dilution from the new shares, and the original IPO lock-up (ending February 12, 2006) is restated, now also covering COO Karl Benzer.

material agreement

On September 19, 2005 Bronco signed a term loan with Merrill Lynch Capital for up to $50.0 million (advances available until December 31, 2005) and immediately borrowed $43.0 million. It pays LIBOR plus 271 basis points, is secured by a first lien on substantially all assets and guaranteed by principal subsidiaries, and is due January 1, 2011. Proceeds are for working capital, rig refurbishment and buying more rigs. This replaces the GE facility repaid weeks earlier. It is inference, not stated, that it may help fund the pending rig acquisitions.

debt financing

Bronco agreed on September 15, 2005 to buy five operating rigs, one rig being refurbished and six inventoried rigs from Eagle Drilling, L.L.C. and affiliates for $50 million cash, expected to close in Q4 2005 subject to due diligence. Per the press release, together with the pending Thomas deal the fleet would reach 62 rigs, 30 operating, and the five operating rigs all work in the Barnett Shale. This builds on the Thomas acquisition announced earlier in September.

material agreement

Bronco agreed on September 2, 2005 to buy the assets of Thomas Drilling Co. for $68 million cash: nine operating rigs, two rigs under construction, two inventoried rigs, plus excess equipment and parts. Closing is expected within about 30 days, subject to due diligence and Hart-Scott-Rodino antitrust clearance. Per the press release, this takes the operating fleet to 25 rigs and opens the Barnett Shale and East Texas.

material agreement

Bronco repaid in full its General Electric Capital Corporation loan facility on August 29, 2005: $22,235,141 of principal plus interest and fees, including a $643,500 prepayment fee, using IPO proceeds. The facility (up to $25.5 million, LIBOR plus 5.0%, maturing October 1, 2010) is now terminated, along with its covenants and security over company assets. This continues the use of IPO money to pay down debt.

material agreement termination

The IPO closed on August 19, 2005 with 5,865,000 shares sold at $17.00 (5,715,000 by Bronco, 150,000 by the controlling stockholder), after the over-allotment option was exercised in full. Bronco received about $90.4 million in net proceeds and on August 22 used $13.2 million to repay in full the loan from Theta Investors, LLC (controlled by Wexford Capital, manager of the controlling stockholder), which had funded the Strata acquisition and was required to be repaid on IPO completion.

debt financing

Bronco signed the underwriting agreement for its IPO: 5,100,000 new shares priced at $17.00 each (underwriters pay $15.81), with an option for 765,000 more (615,000 from Bronco, 150,000 from the controlling stockholder). The company says it will use proceeds to repay about $18.1 million of borrowings, including $13.0 million tied to the recent Strata acquisitions, and put the rest toward refurbishing rigs and general purposes. Officers, directors and the selling stockholder agreed to a 180-day lock-up on selling shares.

material agreement