Each one in plain English, with the numbers worked through for a shareholder.
27 May 2010business combination● NeutralMajor
CONSOL's final tender offer amendment says the offer expired May 26, 2010 with about 24,006,706 shares validly tendered (including about 1,255,062 under guaranteed delivery), satisfying the minimum condition; CONSOL accepted all of them. With the shares CONSOL already owned, it holds about 99.16% of CNX Gas, and it will promptly complete the merger converting remaining shares into $38.25 cash each (appraisal rights for those who properly exercise them), after which the shares stop trading on the NYSE. This resolves the open question of whether the offer would meet the minimum and close.
CONSOL reported that the Delaware court denied the shareholders' request to block the $38.25 offer and merger on May 25, 2010, so the offer was not stopped (this resolves the May 24 injunction hearing thread). The judge said a stricter 'entire fairness' standard will apply to the damages suit because the special committee did not recommend tendering and plaintiffs showed a reasonable basis to challenge the majority-of-the-minority condition. On May 26 he certified the standard-of-review question for the Delaware Supreme Court but denied an injunction pending appeal, and plaintiffs withdrew their emergency appeal application.
CNX Gas updated its response to the CONSOL offer only to add the litigation developments: on May 18, 2010 plaintiffs filed a consolidated class action against CONSOL, CNX Gas and certain officers and directors, alleging breach of fiduciary duties to public shareholders. Defendants' opposition is due May 21 and the preliminary injunction hearing is May 24, 2010. No change to the offer terms is stated.
CONSOL amended its offer again: it estimates about $966.5 million is needed to buy the shares it does not own (plus about $25 million to cancel vested options), funded by cash, credit facility borrowings and/or a recently completed share offering. It says the minimum tender condition cannot be waived, intends to merge CNX Gas immediately after the offer, and expects to end CNX Gas's SEC reporting. It also reports that plaintiffs filed a consolidated class action on May 18, 2010 alleging breach of duty to public holders, with the injunction hearing set for May 24.
CNX Gas added to its response to the CONSOL offer that on May 13, 2010 CONSOL's senior management decided not to recommend that its board raise the $38.25 price. An attached employee-plan letter states the special committee chose to remain neutral, neither recommending nor opposing tendering, which resolves the open question about its recommendation; it also notes that the plan's tender deadline is May 25, 2010.
CONSOL amended its tender offer filing: as of May 13, 2010 there were 151,069,930 CNX Gas shares outstanding, so the offer covers 25,269,863 shares (about $966.6 million at $38.25). Because insiders hold shares too, at least 12,506,316 shares must be tendered by other holders for the offer to succeed. It also discloses that Lazard told the special committee the price is fair to unaffiliated holders, that shareholder lawsuits seek to block the offer with a hearing set for May 24, 2010, and that CNX Gas closed at $38.17 on May 13.
13 May 2010asset acquisition disposition● NeutralMajor
On May 7, 2010 CNX Gas signed a new secured revolving credit facility of up to $700 million, replacing its existing $200 million facility from October 2005. It runs to May 6, 2014, is secured by substantially all of CNX Gas's and its subsidiaries' assets (which also ratably secure CONSOL's 2012 Notes), and requires a leverage ratio of no more than 3.5 to 1.0 and interest coverage of at least 3.0 to 1.0. This appears alongside CONSOL's own credit agreement of the same date, which the tender offer financing depends on; the filing does not say what the new facility will be drawn for beyond general purposes.
CNX Gas filed its formal response to CONSOL's $38.25 per share cash tender offer. It states that if CONSOL buys shares in the offer it will merge CNX Gas into a wholly owned CONSOL subsidiary, with remaining shares converted into $38.25 cash each. It also states that vested options would be cashed out and unvested options converted into CONSOL options. The portion shown does not include the special committee's recommendation.
CONSOL formally filed its tender offer and going-private statement on April 28, 2010, offering $38.25 cash per share for all CNX Gas shares it does not own. On April 26, 2010, 151,021,770 shares were outstanding, of which CONSOL owned 125,800,067, so the offer covers 25,221,703 shares, valued at about $964.7 million. This turns the March announcement into a live offer.
CNX Gas's special committee announced that CONSOL formally launched its $38.25 per share cash tender offer on April 28, 2010, and asked shareholders to wait before deciding whether to tender until the committee states its position, which it said would come within ten business days. The filing itself carries no recommendation.
On April 15, 2010 CNX Gas's board formed a special committee made up of John R. Pipski, its only independent director, to evaluate CONSOL's planned tender offer and decide what the company recommends to shareholders. CONSOL told the board it is unwilling to consider selling its own CNX Gas shares; the committee hired Skadden Arps as legal counsel and Lazard as financial advisor, and Pipski was approved a $150,000 fee that does not depend on the outcome.
CONSOL Energy, which owns about 83.3% of CNX Gas, announced an agreement with T. Rowe Price, whose clients hold about 9.47 million CNX Gas shares (roughly 37% of the shares CONSOL does not own). CONSOL agreed to start a tender offer by May 5, 2010 to buy all remaining CNX Gas shares for $38.25 cash each (a 24% premium to the March 19 close), and T. Rowe Price agreed to tender its shares. This identifies the bidder and price in the long-open tender offer thread; the offer is conditional, including on CONSOL raising $4.5 billion, closing its Dominion Resources purchase agreement, and increasing credit facilities to $2.0 billion in aggregate, and the filing says there is no assurance it will be completed.
Consolidation Coal Company IRS Id. No. reported a CNX Gas Corp shareholding of 125,800,067 shares (83.33% of votes) in a periodic institutional filing.
