LONESTAR RESOURCES U

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LONESTAR RESOURCES US INC. : Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Material Modification to Rights of Security Holders, Changes in Control or Registrant, Change in Directors or Principal Officers, Amendments to Articles of Inc. or Bylaws; Change in Fiscal Year, Financial Statements (form 8-K)

12/01/2020 | 06:07am

Item 1.01 Entry into a Material Definitive Agreement.



Exit Facility Credit Agreement



On the Effective Date, the Company and Lonestar Resources America Inc. entered
into a new first-out senior secured revolving credit facility with Citibank,
N.A
., as administrative agent, and the other lenders from time to time party
thereto (the "Revolving Credit Facility") and a second-out senior secured term
loan credit facility (the "Term Loan Facility" and, together with the Revolving
Credit Facility, the "Credit Facilities") by amending and restating the
company's existing credit agreement (as so amended and restated, the "Amended
and Restated Credit Agreement"). The Revolving Credit Facility provides for
revolving loans in an aggregate amount of up to $225 million, subject to
borrowing base capacity. Letters of credit will be available up to the lesser of
(a) $2.5 million and (b) the aggregate unused amount of commitments under the
Revolving Credit Facility then in effect. On the Effective Date, Lonestar
Resources America Inc.
will borrow $60 million in term loans under the Term Loan
Facility. The Credit Facilities will mature on November 30, 2023. The term loans
under the Term Loan Facility amortize on a quarterly basis in an amount equal to
$5.0 million. Our obligations under the Credit Facilities will be guaranteed by
all of the Company's direct and indirect subsidiaries (subject to certain
permitted exceptions) and will be secured by a lien on substantially all of the
Company's, Lonestar Resources America Inc.'s and the guarantors' assets (subject
to certain exceptions).



Borrowings and letters of credit under the Revolving Credit Facility will be
limited by borrowing base calculations set forth therein. The initial borrowing
base is $225 million, subject to redetermination. The borrowing base will be
redetermined semiannually on or around May 1 and November 1 of each year, with
one interim "wildcard" redetermination available between scheduled
redeterminations. The first scheduled redetermination will be on or around
February 1, 2021.



Borrowings under the Credit Facilities will bear interest at a floating rate at
our option, which can be either an adjusted Eurodollar rate plus an applicable
margin of 3.50% per annum or a base rate plus an applicable margin of 4.50% per
annum.



Our Credit Facilities will contain customary covenants, including, but not
limited to, restrictions on our ability and that of our subsidiaries to merge
and consolidate with other companies, incur indebtedness, grant liens or
security interests on assets, make acquisitions, loans, advances or investments,
pay dividends, sell or otherwise transfer assets, or enter into transactions
with affiliates.



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The Credit Facilities will provide that, upon the occurrence of certain events
of default, our obligations thereunder may be accelerated and the lending
commitments terminated. Such events of default include payment defaults to the
lenders thereunder, material inaccuracies of representations and warranties,
covenant defaults, cross-defaults to other material indebtedness, voluntary and
involuntary bankruptcy proceedings, material money judgments, certain change of
. . .



Item 1.02 Termination of Material Definitive Agreement.



Equity Interests



On the Effective Date, by operation of the Plan and the Confirmation Order, all
agreements, instruments, and other documents evidencing, relating to or
connected with any equity interests of the Company, issued and outstanding
immediately prior to the Effective Date, and any rights of any holder in respect
thereof, were deemed cancelled, discharged and of no force or effect.



Senior Notes



On the Effective Date, by operation of the Plan and the Confirmation Order, all
outstanding obligations under the 11.25% senior notes due 2023 (the "Prepetition
Notes"), issued under that certain Indenture, dated as of January 4, 2018, by
and among the Lonestar Resources America Inc., the subsidiary guarantors party
thereto and UMB Bank N. A., as trustee, as amended, restated, modified,
supplemented, or replaced from time to time, were cancelled and the applicable
agreements governing such obligations were terminated, subject to the terms of
the Plan.



Item 2.01 Termination of Existing Equity Interests.



The description of the Equity Interests set forth in Item 1.02 of this Current
Report on Form 8-K is incorporated herein by reference into this Item 2.01.



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 above relating to the Exit Facility
Credit Agreement is incorporated herein by reference into this Item 2.03.



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Item 3.02 Unregistered Sales of Equity Securities



Upon the Effective Date of the Plan, all previously issued and outstanding
equity interests in the Company were cancelled and the Company issued 10,000,000
shares of New Common Stock to holders of Prepetition Notes and the Company's old
common shares and old preferred shares. In addition, the Company issued 555,555
Tranche 1 Warrants and 555,555 Tranche 2 Warrants to holders of Allowed
Prepetition RBL Claims (as defined in the Plan) or their permitted designees, as
applicable.



The New Common Stock and the Warrants described above were exempt from
registration under the Securities Act of 1933, as amended, pursuant to
Section 1145 of the Bankruptcy Code (which generally exempts from such
registration requirements the issuance of securities under a plan of
reorganization).



The information regarding the terms governing the exercise of the Warrants set
forth in Item 1.01 above is incorporated herein by reference into this Item
3.02.



Item 3.03 Material Modification to Rights of Security Holders.



The information set forth under the Introductory Note and Items 1.01, 1.02, 5.01
and 5.03 of this Current Report on Form 8-K is incorporated herein by reference
into this Item 3.03.



Item 5.01 Changes in Control of the Registrant.



As previously disclosed, on the Effective Date, all previously issued and
outstanding equity interests in the Company were cancelled. The Company issued
New Common Stock to holders of Prepetition Notes and the Company's old common
shares and old preferred shares, in each case, pursuant to the Plan. For further
information, see items 1.01, 1.02 and 3.03 of this Current Report on Form 8-K,
which are incorporated herein by reference into this Item 5.01.



Item 5.02 Departure of Directors or Certain Officers; Election of Directors;



Appointment of Certain Officers; Compensatory Arrangements of Certain



Officers.



Departure and Appointment of Directors



Pursuant to the Plan and the Confirmation Order, as of the Effective Date, the
following directors ceased to serve on the Company's board of directors: John
Pinkerton
, Henry Ellis, Daniel R. Lockwood, Matthew B. Ockwood, Stephen H.
Oglesby
, Philip Z. Pace and Randy L. Wolsey.



Pursuant to the Plan and the Confirmation Order, the Company's new board of
directors shall consist of five members, including Frank D. Bracken, III, as
chief executive officer, and the four members listed below, who were appointed
as of the Effective Date:






Richard Burnett




Gary D. Packer




• Andrei Verona




Eric Long



As of the Effective Date of the Plan, other than as set forth in the Plan and
the Plan Supplement (as defined in the Plan), there are no arrangements or
understandings between any of the listed directors and any other persons
pursuant to which such director was selected as a director and there are no
transactions in which any of the listed directors has an interest in which
requires disclosure under Item 404(a) of Regulation S-K.



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Employment Agreement



The Company entered into an executive employment agreement (the "Employment
Agreement") with Frank D. Bracken, III ("Executive"), the Company's chief
executive officer, effective November 30, 2020. The Employment Agreement has a
two year term (unless earlier terminated per the terms of the Employment
Agreement) and may be renewed for additional periods upon mutual written
agreement of Executive and the Board. Notwithstanding the foregoing, in the case
of a Change in Control (as defined in the Employment Agreement, a "Change in
Control"), the term of the agreement shall automatically renew until the second
anniversary of the effective date of such Change in Control, subject to earlier
termination.



The Employment Agreement provides for a base salary of $525,000 and eligibility
to participant in the company's annual bonus program. Executive's annual
incentive compensation under such incentive program for calendar years 2021 and
thereafter will be targeted at 100% of his base salary and which will not exceed
200% of such target. Executive shall also be eligible to participate in employee
benefit plans, programs and arrangements of the Company and a management
incentive plan to be implemented by the Company.



Under the terms of the Employment Agreement, Executive is entitled to certain
severance payments and other benefits upon a qualifying termination of
employment. Upon termination of Executive's employment due to death or
disability, the Executive (or his estate) shall receive an amount of cash equal
to a pro-rata portion of his annual bonus for the year in which termination
occurs determined by multiplying (A) the annual bonus based on actual
performance and (B) a fraction with the number of full months of the year
elapsed prior to the date of termination in the numerator and 12 as the
denominator, payable when bonuses for such year are paid to actively employed
senior executive of the Company. Upon termination without cause or due to
Executive's resignation for good reason, in either case, which termination does
not occur within twenty-four months following date of a Change in Control, then,
subject to certain conditions, Executive shall receive (A) cash equal to 1.5
times the sum of his (x) annual salary and (y) target annual bonus and (B) if
Executive elects, the Company shall directly pay for certain healthcare payments
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, for the following 18-month period, or such shorter period as provided
in the Employment Agreement (such payments "COBRA Benefits").



If Executive is terminated by the Company without cause or due to Executive's
resignation for good reason, in either case, on or within twenty-four months
following the date of a Change in Control, then, subject to certain conditions,
including the Executive signing a release, the Executive shall receive (A) an
amount in cash equal to 2.0 times the sum of his (x) annual salary and
(y) target annual bonus and (B) cash in the amount of the COBRA Benefits, for
the following 24-month period.



The foregoing description of the Employment Agreement is qualified in its
entirety by reference to the full text of the Employment Agreement, a copy of
which is attached hereto as Exhibit 10.5 and is incorporated herein by
reference.



Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal



Year.



On the Effective Date, pursuant to the terms of the Plan and the Confirmation
Order, the Company filed the Amended and Restated Certificate of Incorporation
of Lonestar Resources US Inc. (the "Certificate of Incorporation") with the
office of the Secretary of State of Delaware. Also on the Effective Date, and
pursuant to the terms of the Plan and the Confirmation Order, the Company
adopted the Second Amended and Restated Bylaws of Lonestar Resources US Inc.
(the "Bylaws").



Pursuant to the Certificate of Incorporation, the authorized capital stock of
the Company consists of 90,000,000 shares of New Common Stock and 10,000,000
shares of preferred stock, par value $0.001 per share.



Each holder of shares of New Common Stock, as such, shall be entitled to one
vote for each share of New Common Stock held of record by such holder on all
matters submitted for a vote of the stockholders of the Company, in addition to
any other vote required by law. Except as otherwise required by law or provided
in the Certificate of Incorporation, at any annual or special meeting of
stockholders the New Common Stock shall have the right to vote for the election
of directors and on all other matters properly submitted to a vote of the
stockholders.



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Subject to the rights of any then-outstanding shares of preferred stock, the
holders of New Common Stock may receive such dividends as the board of directors
of the Company ("Board") may declare in its discretion out of legally available
funds. Holders of New Common Stock will share equally in the Company's assets
upon liquidation after payment or provision for all liabilities and any
preferential liquidation rights of any preferred stock then outstanding. Shares
of New Common Stock are not subject to any redemption provisions and are not
convertible into any of the Company's other securities.



Preferred Stock



Shares of preferred stock may be issued in one or more series from time to time,
with each such series to consist of such number of shares and to have such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, as shall be stated in
the resolution or resolutions providing for the issuance of such series adopted
by the Board.



It is not possible to state the actual effect of the issuance of any shares of
preferred stock upon the rights of holders of our common stock until the Board
determines the specific rights of the holders of the preferred stock. However,
these effects might include:






• restricting dividends on the common stock;




• diluting the voting power of the common stock;




• impairing the liquidation rights of the common stock; and




• delaying or preventing a change in control of our company.



Anti-Takeover Provisions



Some provisions of Delaware law, the Certificate of Incorporation and the Bylaws
summarized below could make certain change of control transactions more
difficult, including acquisitions of the Company by means of a tender offer,
proxy contest or otherwise, as well as removal of the incumbent directors. These
provisions may have the effect of preventing changes in management. It is
possible that these provisions would make it more difficult to accomplish or
deter transactions that a stockholder might consider in his or her best
interest, including those attempts that might result in a premium over the
market price for the New Common Stock.



Business Combinations under Delaware Law



The Company expressly elects not to be governed by, or subject to, Section 203
of the Delaware General Corporation Law ("DGCL"). In general, the statute
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination or the transaction by which the
person became an interested stockholder is approved by the corporation's board
of directors and/or stockholders in a prescribed manner or the person owns at
least 85% of the corporation's outstanding voting stock after giving effect to
the transaction in which the person became an interested stockholder. The term
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
the corporation's voting stock. A Delaware corporation may "opt out" from the
application of Section 203 through a provision in its certificate of
incorporation or by-laws. The Company has "opted out" from the application of
Section 203.



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Number and Election of Directors



As of the Effective Date of the Plan, the Board shall consist of not less than
five nor more than eleven members, the exact number of which shall be determined
from time to time exclusively by resolution adopted by directors representing at
least a majority of the Board.



Calling of Special Meeting of Stockholders



The Bylaws provide that special meetings of stockholders may be called only by
(i) the chairman of the Board, (ii) the chief executive officer of the Company
or (iii) the secretary of the Company (a) at the request of a majority of the
members of the Board then in office or (b) at the written request of one or more
holders who own, in the aggregate, at least 25 % in total voting power of the
outstanding shares of New Common Stock and any other class or series of stock
entitled to vote together with the New Common Stock at the annual meeting. With
respect to any special meeting called by the Secretary at the written request of
one or more stockholders, such notice shall include the business proposed in
such stockholder request except to the extent the Board determines in good faith
that such proposed business does not constitute a proper matter for stockholder
action. In which case, for the avoidance of doubt, there shall be no special
meeting of stockholders.



The Board shall have the sole power to determine the time, date and place,
either within or without the State of Delaware, for any special meeting of
stockholders. Provided, that a special meeting requested by one or more
stockholders shall, if applicable, be held on the date specified in such
stockholder request or as promptly as reasonably possible thereafter. Following
such determination, it shall be the duty of the Secretary to cause notice to be
given to the stockholders entitled to vote at such meeting that a meeting will
be held at the time, date and place and in accordance with the record date
determined by the Board.



Preemptive Rights



The Certificate of Incorporation provides for preemptive rights to Significant
Stockholders (as defined in the Certificate of Incorporation) for any new equity
securities in the Company, or any of its subsidiaries, that the Company or any
of its subsidiaries proposes to sell or issue for cash, other than as set forth
below. Such Significant Stockholder shall have a right to purchase such new
equity securities up to such stockholder's pro rata portion (based on the number
of shares of New Common Stock beneficially owned by such stockholder as of the
close of business on such record date, as a percentage of the total number of
then-outstanding shares of New Common Stock). The preemptive rights do not apply
to the following issuances of new equity securities, among others, (1) to
employees, officers, directors or consultants pursuant to any equity-based
compensation or incentive plan approved by the Board or provided for under the
Plan, (2) in connection with a stock split, payment of dividends or any similar
recapitalization approved by the Board, (3) pursuant to the Plan, (4) as merger
or purchase price consideration in any business combination, consolidation,
merger or acquisition transaction or joint venture that is approved by the
Board, (5) subject to certain dollar thresholds and other conditions, a bona
fide, marketed underwritten public offering of New Common Stock after the
closing of which the New Common Stock is listed or quoted on the New York Stock
Exchange
, the NASDAQ Stock Market or any other national securities exchange,
(6) a "direct listing" of the New Common Stock on any such exchange mentioned in
clause (5), (7) upon the conversion or exercise of securities convertible or
exercisable for shares or securities of (i) New Common Stock, preferred stock or
other equity securities of the Company and (ii) equity securities of any
. . .



Item 9.01 Financial Statements and Exhibits.







(d) Exhibits




Exhibit
No. Description

2.1 Joint Prepackaged Plan of Reorganization for Lonestar Resources US
Inc.
and Its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code
(incorporated by reference to Exhibit 2.1 of the Company's Current
Report on Form 8-K filed on November 12, 2020).

3.1* Amended and Restated Certificate of Incorporation of Lonestar
Resources US Inc.


3.2* Second Amended and Restated Bylaws of Lonestar Resources US Inc.

10.1*# Amended and Restated Credit Agreement, dated as of November 30,
2020
, among Lonestar Resources America Inc., as borrower, Lonestar
Resources US Inc.
, as parent, Citibank, N.A. as administrative agent
and an issuing lender, and the lenders named therein.

10.2* Registration Rights Agreement dated as of November 30, 2020, among
Lonestar Resources US Inc. and the holders party thereto.



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10.3* Tranche 1 Warrant Agreement, dated November 30, 2020, by and between
Lonestar Resources US Inc., Computershare Inc. and Computershare Trust
Company, N.A.
, as warrant agent.

10.4* Tranche 2 Warrant Agreement, dated November 30, 2020, by and between
Lonestar Resources US Inc., Computershare Inc. and Computershare Trust
Company, N.A.
, as warrant agent.

10.5* Employment Agreement, dated November 30, 2020, by and between Lonestar
Resources US Inc.
and Frank D. Bracken, III.

99.1* Notice of Effective Date.




* Filed herewith.



# Certain schedules and similar attachments have been omitted. The Company agrees



to furnish a supplemental copy of any omitted schedule or attachment to the SEC



upon request.



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