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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
SEPTEMBER 22, 2000
(DATE OF REPORT) (DATE OF EARLIEST EVENT REPORTED)
EXCO RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-9204 74-1492779
(COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.)
5735 PINELAND DRIVE
SUITE 235
DALLAS, TEXAS 75231
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 368-2084
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 22, 2000, EXCO Resources, Inc. ("EXCO") completed the acquisition
of certain oil and natural gas properties located in various counties in West,
South, North and Central Texas; Southeast and Northwest New Mexico; Southern
Louisiana; Northeastern Colorado; Western Nebraska; Clarke, Jones, and Perry
Counties in Mississippi; Beaver and Cleveland Counties in Oklahoma; Meade County
in Kansas; and Campbell, Converse, and Niobrara Counties in Wyoming (the
"Central Properties") from Central Resources, Inc. (the "Seller"). The
properties consist of 1,890 producing oil and natural gas wells. Under terms of
the acquisition, EXCO became operator of 217 of the wells effective October 1,
2000. As of June 1, 2000, estimated total proved reserves net to EXCO's interest
included 8.3 million barrels (Bbl) of oil and natural gas liquids and 37.3
billion cubic feet (Bcf) of natural gas. Production for August 2000, net to
EXCO's interest was approximately 1,440 Bbl of oil per day and 5.2 million cubic
feet (Mmcf) of natural gas per day.
The purchase price consisted of $48.0 million cash ($44.9 million after
contractual adjustments) and warrants to purchase 200,000 shares of EXCO common
stock at $11.00 per share. The cash consideration was paid from existing working
capital and borrowings of $39.4 million under EXCO's amended and restated credit
agreement. The effective date of the acquisition was June 1, 2000. The purchase
price was determined through arms-length negotiations between the parties taking
into account reserve estimates and other items customarily considered in
acquisitions of this type.
Purchase and Sale Agreement. The Central Properties were acquired
pursuant to the terms of a Purchase and Sale Agreement (the "Purchase
Agreement") dated as of August 31, 2000, entered into between the Seller and
EXCO. The Purchase Agreement includes representations, warranties, covenants,
indemnities and closing conditions customary for transactions of this type.
Warrant Agreement and Form of Registration Rights Agreement. As part of
the consideration paid for the acquisition of the Central Properties, EXCO (the
"Issuer") issued a warrant to Central Resources, Inc. (the "Registered Holder")
to purchase 200,000 shares of EXCO common stock for $11.00 per share. This
warrant expires on September 22, 2003. Under terms of a Registration Rights
Agreement, a Registered Holder may make one written demand registration request
to the Issuer to file a Form S-3 registration statement for the resale of any
securities purchased under terms of the warrant agreement. A Registered Holder
may also elect to have the securities included in a registration statement when
the Issuer files a public offering of equity securities solely for cash,
referred to as piggyback registration rights.
Amended and Restated Credit Agreement. On September 22, 2000, EXCO
entered into an Amended and Restated Credit Agreement (the "Credit Agreement")
with Bank of America, N.A., as administrative agent, Bank One, Texas, N.A., as
syndication agent, and a syndicate of banks as lenders. The Credit Agreement
provides for borrowings up to $150 million, subject to borrowing base
limitations. The banks have sole discretion to determine the borrowing base
based on their valuation of EXCO's reserves valued semi-annually.
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The Credit Agreement consists of a regular revolver, which on September
22, 2000, had a borrowing base of $45.0 million. At September 30, 2000, EXCO had
approximately $5.0 million available for borrowing under the Credit Agreement. A
portion of the borrowing base is available for the issuance of letters of
credit. All borrowings under the Credit Agreement are secured by a first lien
mortgage providing a security interest in 80% of the oil and natural gas
properties owned by EXCO including mineral interests. Under the Credit
Agreement, EXCO is required to pay a fee equal to .25% on any accepted increase
in the borrowing base in excess of the previously determined borrowing base and
an unused commitment fee of .30% to .425% based on the ratio of outstanding
credit to the borrowing base.
The Credit Agreement provides that if the aggregate outstanding
indebtedness of EXCO is less than 50% of the borrowing base, then advances will
bear interest at 1.0% over LIBOR. If the borrowing base usage equals or exceeds
50% but is less than or equal to 70%, then advances will bear interest at 1.25%
over LIBOR. If the borrowing base usage is greater than 70% but is less than or
equal to 90%, then advances will bear interest at 1.5% over LIBOR. If the
borrowing base usage exceeds 90%, then advances will bear interest at 1.75%.
The Credit Agreement matures on September 22, 2003. There are no
scheduled principal payments due on the Credit Agreement until maturity. The
next borrowing base redetermination is scheduled for April 30, 2001, and on or
about each October 31 and April 30, thereafter. A borrowing base deficiency is
created in the event that the outstanding loan balances exceed the borrowing
base. If a borrowing base deficiency were to exist after giving effect to a
redetermination, then EXCO would have to do one of the following:
o make a lump sum payment equal to the deficiency;
o make six consecutive mandatory prepayments of principal on the
revolving loan each of which shall be in the amount of one sixth
(1/6th) of the amount of the borrowing base deficiency; or
o provide additional collateral acceptable to the banks in their
sole discretion sufficient to increase the borrowing base and
eliminate the deficiency.
Under the terms of the Credit Agreement, EXCO must not permit its
consolidated current assets to consolidated current liabilities to be less than
1.0 to 1.0 at any time. Furthermore, EXCO must maintain a minimum consolidated
tangible net worth equal to $35 million plus (i) subsequent to June 30, 2000,
50% of consolidated cumulative net income and (ii) an amount equal to 75% of the
net proceeds received from the issuance of any equity securities after June 30,
2000. Additionally, the Credit Agreement contains a number of other covenants
regarding the liquidity and capital resources of EXCO, including restrictions on
the ability to incur indebtedness at any time in an amount exceeding $500,000,
restrictions to pledge assets outside of the Credit Agreement, and currently
prohibits the payment of dividends on our capital stock. The Credit Agreement
also requires that EXCO hedge at least 75% but not more than 80% of projected
oil production from the existing proved producing mineral interests of EXCO in
addition to the acquired proved producing mineral interests for not less than 30
months following the closing date.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
As permitted by Form 8-K, the required historical financial
statements in respect of the Central Properties will be filed
by amendment to this Form 8-K no later than December 6, 2000.
(b) Pro Forma Financial Information.
Pro Forma Combined Condensed Financial Statements of EXCO
Resources, Inc. for the year ended December 31, 1999 and the
six months ended June 30, 2000 with respect to the acquisition
of the Central Properties will be filed by amendment to this
Form 8-K no later than December 6, 2000.
(c) Exhibits.
Number Document
10.1 Purchase and Sale Agreement between Central
Resources, Inc., as seller, and EXCO Resources, Inc.,
as buyer, dated August 31, 2000.
10.2 Amended and Restated Credit Agreement among EXCO
Resources, Inc., as borrower, Bank of America, N.A.,
as administrative agent, Bank One, Texas, N.A., as
syndication agent and the financial institutions
listed on Schedule I, dated September 22, 2000.
10.3 Warrant Agreement including Exhibit 3, the Form of
Registration Rights Agreement among EXCO Resources,
Inc., as issuer , and Central Resources, Inc., as
registered holder, dated September 22, 2000, as
Exhibit E to the Purchase and Sale Agreement between
Central Resources, Inc., as seller, and EXCO
Resources, Inc., as buyer, dated August 31, 2000.
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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.
EXCO RESOURCES, INC.
By: /s/ J. Douglas Ramsey
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J. Douglas Ramsey, Vice President and Chief
Financial Officer
Dated: October 2, 2000
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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10.1 Purchase and Sale Agreement between Central Resources, Inc.,
as seller, and EXCO Resources, Inc., as buyer, dated August
31, 2000.
10.2 Amended and Restated Credit Agreement among EXCO Resources,
Inc., as borrower, Bank of America, N.A., as administrative
agent, Bank One, Texas, N.A., as syndication agent and the
financial institutions listed on Schedule I, dated September
22, 2000.
10.3 Warrant Agreement including Exhibit 3, the Form of
Registration Rights Agreement among EXCO Resources, Inc., as
issuer , and Central Resources, Inc., as registered holder,
dated September 22, 2000, as Exhibit E to the Purchase and
Sale Agreement between Central Resources, Inc., as seller, and
EXCO Resources, Inc., as buyer, dated August 31, 2000.
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