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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 Date of Report (Date
of earliest event reported): May 2, 1996
PATINA OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-14344 75-2629477
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1625 Broadway
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 592-4600
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Item 2. Acquisition or Disposition of Assets.
As announced on May 2, 1996, the merger (the "Merger") of Gerrity Oil &
Gas Corporation ("Gerrity") into a wholly-owned subsidiary of Patina Oil & Gas
Corporation ("Patina") occurred on May 2, 1996 following approval of the Merger
by Gerrity's common shareholders. As a result of the Merger, Gerrity became a
wholly-owned subsidiary of Patina. Simultaneously with the Merger, Snyder Oil
Corporation ("SOCO") contributed all its assets and operations, subject to
certain limitations, in the Wattenberg Field of Colorado ("Wattenberg") to
Patina (the "Contribution"). In connection with the Contribution, Patina assumed
$75 million of bank debt from SOCO.
With the closing of the transaction, Patina holds interests in over
3,600 Wattenberg wells. As of December 31, 1995, Patina has net proved reserves
of 82 million barrels of oil equivalent ("BOE"), over two-thirds of which were
natural gas. Patina's production currently exceeds 20,000 BOE per day.
SOCO owns an aggregate of 14,000,000 shares of common stock of Patina,
of which 12,000,000 are common stock, par value $.01 per share ("Patina Common
Stock"), and 2,000,000 are Series A Common Stock. The Series A Common Stock is a
special series of common stock of Patina having three votes per share, and will
convert automatically into ordinary Patina Common Stock (i.e., shares with one
vote per share) upon transfer of those shares by SOCO to a non-affiliate or if
Patina ceases to be included in the consolidated financial statements of SOCO.
Thus, SOCO owns 70% of the outstanding shares of the common stock of Patina and
holds 75% of the voting power of Patina's common stock.
Pursuant to the terms of the Merger, the shares of common stock of
Gerrity issued and outstanding immediately prior to the effective time of the
Merger were converted into an aggregate of 6,000,000 shares of Patina Common
Stock and 3,000,000 five-year warrants initially to purchase one share of Patina
Common Stock at an exercise price of $12.50 per share (the "Patina Warrants").
In addition, pursuant to an exchange offer, approximately 75.3% of the
depositary shares representing Gerrity's $12 convertible preferred stock were
accepted by Patina for exchange into approximately 1.2 million shares of
Patina's 7 1/8% convertible preferred stock (the "Patina Preferred Stock"). The
Patina Preferred Stock has a liquidation preference of $25.00 per share, pays
quarterly dividends at the rate of 7 1/8% per year and is convertible into
Patina Common Stock at a conversion price of $12.30, which conversion price is
subject to downward adjustment after the Merger to equal 123% of the average
closing price of the Patina Common stock for the ten trading days immediately
following the 60th day after the Merger, subject to a minimum conversion price
of $8.61.
Patina also issued a five-year warrant for 500,000 shares of Patina
Common Stock, at a price equal to the average closing price during the 10-day
period following the Merger, to Robert W. Gerrity, who resigned as an officer
and director of Gerrity in connection with the transaction.
Patina's long-term debt, after all transaction costs, is expected to
approximate $215 million initially. Patina has entered into a $240 million
credit facility with Texas Commerce Bank National Association, which serves as
Administrative Agent, NationsBank of Texas, N.A., Documentation
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Agent, and CIBC, Inc., Credit Lyonnais New York Branch and Wells Fargo Bank,
N.A., as co- agents. The facility will be used to refinance debt to be assumed
in the transaction, including approximately $100 million of bank debt assumed
from SOCO and Gerrity and up to $100 million of Gerrity's senior subordinated
notes if the holders exercise their right to put the notes to Gerrity. $87
million of the facility may be used only to repurchase Gerrity's senior
subordinated notes. The balance of the facility will be available for working
capital.
The Amended and Restated Agreement and Plan of Merger dated as of
January 16, 1996 as amended and restated as of March 20, 1996 (the "Merger
Agreement"), which was negotiated between representatives of SOCO and Gerrity,
provides that any contracts or transactions (other than transactions
contemplated by the Merger Agreement) involving Patina or any of its
subsidiaries in which SOCO or any of its subsidiaries has any interest (other
than an interest solely as a stockholder of Patina) shall be approved by either
(a) a majority of the disinterested directors of Patina or (b) a majority of any
committee established by the Patina Board of Directors that consists solely of
directors that are disinterested. In addition, in accordance with the Merger
Agreement, SOCO and Patina have entered into certain agreements, including a
Business Opportunity Agreement, Corporate Services Agreement,
Cross-Indemnification Agreement and Registration Rights Agreement, that will
govern the relationship between SOCO and Patina following the Merger.
The descriptions of the Merger Agreement, Business Opportunity
Agreement, Corporate Services Agreement, Cross-Indemnification Agreement and
Registration Rights Agreement included in this Report are summaries and are
qualified in their entirety by the respective terms of such agreements, which
are filed as exhibits to this Report and are incorporated herein by reference.
