Tudor, Pickering, Holt & Co. acted as financial advisor to Bill Barrett and Wachtell, Lipton, Rosen & Katz acted as legal advisor to Bill Barrett. Credit Suisse acted as financial advisor to Fifth Creek and Vinson & Elkins LLP acted as legal advisor to Fifth Creek.
Bill Barrett Corporation (the “Company” or “Bill Barrett”) (NYSE: BBG) announced today that it has agreed to a strategic business combination with Fifth Creek Energy Company, LLC (“Fifth Creek”), a portfolio company of NGP, in a transaction valued at approximately $649 million. The transaction creates a premier exploitation and production company exclusively focused on oil-weighted rural areas in the Denver-Julesburg (“DJ”) Basin. The combined company will possess significant size, scale, and balance sheet flexibility allowing it to economically develop a combined acreage position of approximately 151,100 net acres and an inventory of 2,865 highly-economic future drilling locations, nearly all of which are suitable for extended reach lateral (“XRL”) development. The transaction is expected to close late in the first quarter or early in the second quarter of 2018, and is subject to customary conditions, including approval of the Company’s stockholders.
Under the terms of the transaction, Bill Barrett and Fifth Creek will each become subsidiaries of a newly formed holding company (“New BBG”), which will become the publicly listed and traded holding company for the combined Bill Barrett and Fifth Creek. In the transaction, Bill Barrett’s stockholders will exchange their Bill Barrett common stock for New BBG common stock on a 1-for-1 basis, and Fifth Creek’s current sole owner will receive 100 million shares of the New BBG’s common stock. Based on the Company’s closing stock price as of December 4, 2017, the consideration being delivered to Fifth Creek’s owner implies a total transaction value of approximately $649 million on an enterprise value basis, which includes the shares plus the assumption of up to $54 million of debt.
Concurrent with the transaction, the Company also announced that it has agreed to a privately negotiated exchange with a holder of the Company’s 7.0% Senior Notes due 2022 (the “Notes”), in which the holder has agreed to exchange $50 million aggregate principal amount of the Notes for newly issued shares of the Company’s common stock plus the cash payment of accrued and unpaid interest. The number of shares exchanged will be calculated based on the volume-weighted average price of trading on December 6, 2017 and the value of the bonds will be at 102% of par.
Holders of the Senior Notes that hold a majority of the outstanding aggregate principal amount of each series of Senior Notes have agreed to deliver consents pursuant to which the proposed transaction with Fifth Creek will not be considered a change of control for purposes of the Company’s Senior Notes.
The Board of Directors of both companies have unanimously approved the terms of the agreement. The completion of the transaction is subject to approval of the Bill Barrett stockholders, any regulatory approvals and customary conditions. The transaction is expected to close late in the first quarter or early in the second quarter of 2018.
Vinson & Elkins advised Fifth Creek Energy Company with a team including Doug McWilliams (Picture) and Jeff Floyd and senior associate Shamus Crosby, with assistance from associates Bobak Fatemizadeh, Aaron Carpenter, Jane Ehinmoro and Key Hemyari. Also advising were partner John Lynch, senior associate Lina Dimachkieh and associate Curt Wimberly; partner David D’Alessandro and senior associate Melissa Spohn; partner Sean Becker and senior associate Christie Alcalá; partner Larry Nettles and associate Jennifer Cornejo; partner Neil Imus and associate John Andren; and partners David Stone and David Wicklund.
Involved fees earner: Douglas McWilliams – Vinson & Elkins LLP; Jeffery Burton Floyd – Vinson & Elkins LLP; Shamus Crosby – Vinson & Elkins LLP; Bobak Fatemizadeh – Vinson & Elkins LLP; Aaron Carpenter – Vinson & Elkins LLP; Jane Ehinmoro – Vinson & Elkins LLP; Keyavash Hemyari – Vinson & Elkins LLP; John Edward Lynch – Vinson & Elkins LLP; Lina Dimachkieh – Vinson & Elkins LLP; Curt Wimberly – Vinson & Elkins LLP; David D’Alessandro – Vinson & Elkins LLP; Melissa Jester Spohn – Vinson & Elkins LLP; Sean Becker – Vinson & Elkins LLP; Christie Alcalá – Vinson & Elkins LLP; Larry Nettles – Vinson & Elkins LLP; Jennifer Cornejo – Vinson & Elkins LLP; Neil Imus – Vinson & Elkins LLP; John Andren – Vinson & Elkins LLP; David Stone – Vinson & Elkins LLP; David Wicklund – Vinson & Elkins LLP;
Law Firms: Vinson & Elkins LLP;
Clients: Fifth Creek Energy Company;