AXAS Abraxas Petroleum Corporation (CE)

Item. 1.02         Termination of a Material Definitive Agreement.

 

As previously reported in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 26, 2020, on June 25, 2020, Abraxas Petroleum Corporation (“Abraxas”) entered into a Waiver and Second Amendment to Term Credit Loan Agreement (the “2L Agreement”) and a Fee Letter (the “Fee Letter”) with Angelo Gordon Energy Servicer, LLC (“Angelo Gordon”) and certain lenders thereto. In accordance with the terms of the 2L Agreement and the Fee Letter and to induce Angelo Gordon and the lenders to enter into those agreements, Abraxas issued a Warrant to Purchase Common Stock (the “Warrant”), pursuant to which Abraxas granted warrants having an exercise price of $0.01 (the “Warrants”) in an amount equal to approximately 19.9% of the fully diluted common equity of Abraxas (the “Common Stock”) to Angelo Gordon’s designee, AG Energy Funding, LLC on behalf of Series 17 and Series 20 (“AGEF”).

 

As previously reported in a Current Report on Form 8-K filed with the SEC on August 13, 2020, in accordance with the terms of the 2L Agreement and the Fee Letter, Abraxas and AGEF entered into a Registration Rights Agreement dated August 11, 2020 (the “Registration Rights Agreement”) and a Governance Agreement dated August 11, 2020 (the “Governance Agreement”), pursuant to which AGEF was given certain governance rights and benefits in Abraxas. Section 3.01 of the Governance Agreement provided for its termination upon the earliest of: (1) AGEF or any of its Affiliates (as defined in the Governance Agreement) ceasing to beneficially own greater than 5% of the Common Stock outstanding; (2) the Exercise Period (as defined in the Warrant) expiring without any Warrants having been exercised; and (3) AGEF agreeing to the termination in writing.

 

Pursuant to a waiver letter dated November 22, 2021 from AGEF to Abraxas, which is attached to this Current Report as Exhibit 99.1 and incorporated herein by reference, AGEF waived, relinquished, and abandoned all of its rights, title, and interest to the Warrant, any Common Stock underlying the Warrant, and the Governance Agreement for no consideration and thereby terminated the Governance Agreement effective November 22, 2021 (such actions, the “Abandonment and Waiver”). In accordance with Section 11 of the Registration Rights Agreement, the Registration Rights Agreement was concurrently terminated on November 22, 2021, because AGEF no longer held any Registrable Securities (as defined in the Registration Rights Agreement) upon the occurrence of the Abandonment and Waiver.

 

A special committee of Abraxas’ Board continues to negotiate with Angelo Gordon regarding, among other things, a potential debt-for-equity exchange, which may be out-of-court.  If consummated, the debt-for-equity exchange would likely result in substantial dilution of Abraxas’ stockholders or potentially the cancellation of Abraxas other equity securities and may result in the spinning off or disposition of certain assets. There is no assurance that Abraxas and Angelo Gordon will reach an out-of-court agreement.