Magnolia Oil & Gas Corporation filed SEC Form 8-K: Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
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| Item 1.01. | Entry into a Material Definitive Agreement. |
Indenture and New Notes
On November 26, 2024, Magnolia Oil & Gas Operating LLC (“Magnolia Operating”) and Magnolia Oil & Gas Finance Corp. (“Finance Corp.” and, together with Magnolia Operating, the “Issuers”) closed the previously announced private offering of $400.0 million aggregate principal amount of 6.875% senior notes due 2032 (the “New Notes”). The New Notes were issued under the Indenture, dated as of November 26, 2024 (the “Closing Date”) (the “Indenture”), by and among the Issuers, Magnolia Oil & Gas Corporation (“Magnolia”), Magnolia Oil & Gas Parent LLC (“Magnolia LLC”), Magnolia Oil & Gas Holdings LLC (“Magnolia Holdings”) and Magnolia Oil & Gas Intermediate LLC (“Magnolia Intermediate,” and together with Magnolia, Magnolia LLC and Magnolia Holdings, the “Guarantors”) and Regions Bank, as trustee (the “Trustee”). The New Notes are the general unsecured, senior obligations of the Issuers. The New Notes are guaranteed on a senior unsecured basis by the Guarantors and may be guaranteed by certain future subsidiaries of the Issuers.
The New Notes will mature on December 1, 2032. The New Notes bear interest at the rate of 6.875% per annum, payable semi-annually in arrears on each June 1 and December 1, commencing June 1, 2025.
At any time prior to December 1, 2027, the Issuers may redeem up to 40% of the aggregate principal amount of the New Notes, with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 40% of the aggregate principal amount of the New Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if at least 50% of the aggregate principal amount of the New Notes originally issued under the Indenture on the Closing Date remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering.
At any time prior to December 1, 2027, the Issuers may, on any one or more occasions, redeem all or a part of the New Notes at a redemption price equal to 100.00% of the principal amount of the New Notes redeemed, plus a “make whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption.
On or after December 1, 2027, the Issuers may redeem the New Notes, in whole or in part, at the redemption prices set forth in the Indenture, together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.
If the Issuers experience certain kinds of changes of control, each holder of the New Notes may require the Issuers to repurchase all or a portion of its New Notes for cash at a price equal to 101% of the aggregate principal amount of such New Notes, plus accrued and unpaid interest, if any, to the date of repurchase.
The Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, limit the ability of the Issuers and of their restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends on capital stock or redeem, repurchase or retire its capital stock or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from its restricted subsidiaries to the Issuers or any of their restricted subsidiaries; (vii) consolidate, merge or transfer all or substantially all of its assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.
Upon an Event of Default (as defined in the Indenture), the Trustee or holders of at least 30% in aggregate principal amount of the New Notes then outstanding may declare the principal of and accrued and unpaid interest on the New Notes to be due and payable immediately, except that a default resulting from certain events of bankruptcy or insolvency with respect to Magnolia Operating, or any restricted subsidiary of Magnolia Operating that is a significant subsidiary or any group of restricted subsidiaries of Magnolia Operating that, taken together, would constitute a significant subsidiary, will cause the principal of and accrued and unpaid interest on all outstanding New Notes to become due and payable immediately without further action or notice.
The foregoing description of the Indenture is a summary only and is qualified in its entirety by reference to the Indenture, a copy of which is attached as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 1.02. | Termination of a Material Definitive Agreement. |
On November 26, 2024, in connection with the closing of the sale of the New Notes and pursuant to a notice of redemption delivered on November 14, 2024, the Issuers redeemed all of the outstanding 6.00% senior notes due 2026 (the “2026 Notes”) at a redemption price of 101.000% of the principal amount thereof, plus accrued and unpaid interest (the “Redemption”), in accordance with that certain Indenture, dated as of July 31, 2018 (as amended, supplemented or otherwise modified, the “2026 Notes Indenture”), among the Issuers, the guarantors from time to time party thereto and Deutsche Bank Trust Company Americas, as trustee. In connection with the Redemption, the Issuers satisfied and discharged the 2026 Notes Indenture in accordance with its terms and, as a result, the Issuers and the guarantors of the 2026 Notes have been released from their remaining obligations under the 2026 Notes Indenture.
This Current Report on Form 8-K is not an offer to buy, or a notice of redemption with respect to, the 2026 Notes or any other securities.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information required by Item 2.03 relating to the New Notes and the Indenture is contained in Item 1.01 of this Current Report on Form 8-K above and is incorporated into this Item 2.03 by reference.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit No. |
Description |
| 4.1* | Indenture, dated as of November 26, 2024, by and among Magnolia Oil & Gas Operating LLC, Magnolia Oil & Gas Finance Corp., the Guarantors named therein and Regions Bank, as trustee. |
| 4.2* | Form of 6.875% Senior Notes due 2032 (included as Exhibit A in Exhibit 4.1 hereto). |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL). |
* Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MAGNOLIA OIL & GAS CORPORATION | ||
| Date: November 26, 2024 | ||
| By: | /s/ Timothy D. Yang | |
| Name: | Timothy D. Yang | |
| Title: | Executive Vice President, General Counsel, Corporate Secretary and Land | |