Introductory Note
On April 1, 2024, pursuant to the Agreement and Plan of Merger, dated as of January 3, 2024 (the “Merger Agreement”), by and among APA Corporation, a Delaware corporation (“APA”), Astro Comet Merger Sub Corp., a Delaware corporation and a wholly owned subsidiary of APA (“Merger Sub”) and Callon Petroleum Company, a Delaware corporation (“Callon” or the “Company”), Merger Sub was merged with and into Callon (the “Merger”), with Callon surviving the Merger as a wholly owned, direct subsidiary of APA.
| Item 1.02 |
Termination of a Material Definitive Agreement. |
The information set forth in the “Introductory Note” and in Item 2.01 is incorporated by reference into this Item 1.02.
Termination of Credit Agreement
On April 1, 2024, concurrently and in connection with the Merger, Callon will have terminated all commitments, and caused to be repaid in full all indebtedness, liabilities and other obligations, under that certain Amended and Restated Credit Agreement, dated as of October 19, 2022 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Callon Credit Agreement”), among Callon, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders party thereto from time to time. Upon consummation of the Merger and receipt of the payoff amount, Callon, together with its subsidiaries, will be released from any and all obligations and guarantees under the Callon Credit Agreement.
Redemption of 2026 Notes
On March 1, 2024, Callon directed U.S. Bank Trust Company, National Association, as trustee (the “Trustee”) of Callon’s 6.375% Senior Notes due 2026 (the “2026 Notes”), to deliver a conditional notice of full redemption with respect to all $320,783,000 aggregate principal amount of its 2026 Notes to the respective holders, with such redemption conditioned upon the closing of the Merger. On April 1, 2024, the Merger was completed, and APA, on behalf of Callon, deposited with the Trustee cash in an amount sufficient to pay and discharge the principal amount outstanding on the 2026 Notes (which occurred at 101.063% of such principal amount), plus accrued and unpaid interest on the 2026 Notes up to but excluding the redemption date of April 1, 2024. Concurrently therewith, Callon elected to satisfy and discharge the indenture governing the 2026 Notes with respect to the 2026 Notes in accordance with its terms and the Trustee acknowledged such satisfaction and discharge. As a result of the satisfaction and discharge of the indenture governing the 2026 Notes with respect to the 2026 Notes, Callon and the guarantors of the 2026 Notes have been released from their obligations under the indenture governing the 2026 Notes with respect to the 2026 Notes.
| Item 2.01 |
Completion of Acquisition or Disposition of Assets. |
The disclosure set forth in the “Introductory Note” above is incorporated into this Item 2.01 by reference. Pursuant to the Merger, each share of common stock of Callon, par value $0.01 per share (“Callon Common Stock”) issued and outstanding (other than the Excluded Shares (as defined in the Merger Agreement), which were canceled and retired and ceased to exist, and no consideration was delivered in exchange therefor), was automatically converted into the right to receive, without interest, 1.0425 (the “Exchange Ratio”) shares of common stock, par value $0.625 per share, of APA (“APA Common Stock”). No fractional shares of APA Common Stock were issued in the Merger, and holders of shares of Callon Common Stock will, instead, receive cash in lieu of fractional shares of APA Common Stock, if any.
At the effective time of the Merger (“Effective Time”), outstanding Callon equity-based awards were treated as follows: (1) each restricted stock unit (each, a “Callon RSU”) that was vested or that vested by its terms solely as a result of the consummation of the transactions contemplated by the Merger Agreement (each, a “Vested Callon RSU”) was cancelled and converted into the right to receive (without interest) a number of shares of APA Common Stock equal to the product of the number of shares of Callon Common Stock subject to such Vested Callon RSU immediately prior to the Effective Time, multiplied by the Exchange Ratio; (2) each Callon RSU that was not a Vested Callon RSU and each Callon market stock unit was assumed by APA and converted into a number of restricted stock units with respect to shares of APA Common Stock equal to the product of the number of shares of Callon Common Stock subject to such award immediately prior to the Effective Time (in the case of a market stock unit, determined based on the greater of actual and target performance), multiplied by the Exchange Ratio; (3) each Callon cash-settled stock appreciation right was converted into an award of APA cash-settled stock appreciation rights (a) with the number of
