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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
SECURITIES EXCHANGE ACT OF 1934
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DATE OF EARLIEST EVENT REPORTED: DECEMBER 22, 1997
OCEAN ENERGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-25058 72-1277752
(STATE OR OTHER JURISDICTION (COMMISSION FILE NO.) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
8440 JEFFERSON HIGHWAY, SUITE 420
BATON ROUGE, LA 70809
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (504) 927-1450
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ITEM 5. OTHER EVENTS
(a) MERGER AGREEMENT WITH UNITED MERIDIAN CORPORATION
On December 22, 1997, Ocean Energy, Inc. (the "Company") entered into
an Agreement and Plan of Merger (the "Merger Agreement") with United Meridian
Corporation and OEI Holding Corporation. The press release issued in
connection with the Merger Agreement on December 22, 1997 is filed as Exhibit
99.1 to this Current Report on Form 8-K, and the contents of such Exhibit are
incorporated herein by reference.
(b) RIGHTS AGREEMENT
On December 22, 1997, the Board of Directors of Ocean Energy, Inc.
(the "Company") declared a dividend distribution of one preferred stock
purchase right (a "Right") for each outstanding share of common stock, par
value $0.01 per share ("Common Stock"), of the Company. The distribution is
payable on January 9, 1998 (the "Record Date") to the stockholders of record on
that date. Each Right entitles the registered holder thereof to purchase from
the Company one-hundredth of a share of Series A Junior Participating Preferred
Stock, par value $0.01 per share, of the Company (the "Preferred Stock") at a
price of $240, subject to adjustment. The following is a summary of the
Rights; the full description and terms of the Rights are set forth in a
Stockholder Rights Agreement (the "Rights Agreement") between the Company and
Harris Trust and Savings Bank, as Rights Agent (the "Rights Agent").
Copies of the Rights Agreement and the Certificate of Designation are
available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation, including the definitions therein of certain
terms, which Rights Agreement and Certificate of Designation are incorporated
herein by reference.
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock
and the Distribution Date will occur upon the earlier of (i) 10 days following
the date of public announcement that a person or group of persons has become an
Acquiring Person (as hereinafter defined) or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to
the time a person becomes an Acquiring Person) following the commencement of,
or the announcement of an intention to make, a tender offer or exchange offer
upon consummation of which the offeror would, if successful, become an
Acquiring Person (the earlier of such dates being called the "Distribution
Date").
The term "Acquiring Person" means any person who or which, together
with all of its affiliates and associates, shall be the beneficial owner of 15%
or more of the outstanding Common Stock, but shall not include (i) the Company
or any Subsidiary of the Company or any employee benefit plan of the Company or
(ii) James C. Flores, his spouse, lineal descendants and ascendants, heirs,
executors or other legal representatives and any trusts established for the
benefit of the foregoing, or any other person or entity in which the foregoing
persons or entities are at the time of determination the direct record and
beneficial owners of all outstanding voting securities.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.
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The Rights are not exercisable until the Distribution Date. The
Rights will expire on December 22, 2007 (the "Expiration Date").
The Purchase Price payable, and the number of one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to in (ii) above).
The number of outstanding Rights and the number of one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Shares Acquisition Date (the date of
public announcement that an Acquiring Person has become such) the Company is
acquired in a merger or other business combination transaction or more than 50%
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of
the Right (the "Flip-Over Right").
In the event that an Acquiring Person becomes the beneficial owner of
15% or more of the outstanding shares of Common Stock, proper provision shall
be made so that each holder of a Right (other than the Acquiring Person and its
affiliates and associates) will thereafter have the right to receive upon
exercise that number of shares of Common Stock (or, under certain
circumstances, cash, other equity securities or property of the Company) having
a market value equal to two times the Purchase Price of the Rights (the
"Flip-In Right"). Upon the occurrence of the foregoing event giving rise to
the exercisability of the Rights, any Rights that are or were at any time owned
by an Acquiring Person shall become void.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are integral
multiples of one-hundredth of a share of Preferred Stock; cash will be paid in
lieu of fractional shares of Preferred Stock that are not integral multiples of
one-hundredth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston,
Texas time on the 10th day after the Shares Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in whole, but not
in part, at a price of $0.001 per Right (the "Redemption Price"); provided,
that (i) if the Board of Directors authorizes redemption on or after the time a
person becomes an Acquiring Person, then such authorization must be by Board
Approval (as hereinafter defined) and (ii) the period for redemption may, upon
Board Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company.
Immediately upon any redemption of the Rights described in this paragraph, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights at any time and from time to
time provided that such amendment does not adversely affect the interests of
the holders of the Rights. In addition, during any time that the Rights are
subject to redemption, the terms of the Rights may be amended by Board
Approval, including an amendment that adversely affects the interests of the
holders of the Rights, without the consent of the holders of Rights.
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Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Preferred Stock (or other consideration).
DESCRIPTION OF PREFERRED STOCK
Each one-hundredth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may
be issued by the Company.
Each Preferred Share Fraction will have a minimum preferential
quarterly dividend rate of $0.01 per Preferred Share Fraction but will, in any
event, be entitled to a dividend equal to the per share dividend declared on
the Company Common Stock.
In the event of liquidation, the holder of a Preferred Share Fraction
will receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
Each Preferred Share Fraction will have one vote, voting together with
the Company Common Stock. The holders of Preferred Share Fractions, voting as
a separate class, shall be entitled to elect two directors if dividends on the
Preferred Stock are in arrears for six fiscal quarters.
In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Preferred Share
Fraction will be entitled to receive the per share amount paid in respect of
each share of Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Preferred Share Fraction that may
be acquired upon the exercise of each Right should approximate the economic
value of one share of the Company's Common Stock.
Additional information regarding the Rights is set forth in the Rights
Agreement, including the summary thereof, which is filed herewith as Exhibit
4.1 and incorporated herein by reference.
The press release issued in connection with the Rights Agreement on
December 22, 1997 is filed as Exhibit 99.3 to this Current Report on Form 8-K,
and the contents of such Exhibit are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4.1 Rights Agreement dated as of December 22, 1997 (incorporated
by reference to Exhibit 1 to the Form 8-A of Ocean Energy, Inc. filed on
December 23, 1997).
99.1 Press Release, dated December 22, 1997, with respect to the
Merger Agreement.
99.2 Agreement and Plan of Merger, dated December 22, 1997, among
Ocean Energy, Inc., United Meridian Corporation and OEI Holding Corporation
(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of
United Meridian Corporation filed on December 23, 1997).
99.3 Press Release, dated December 22, 1997, with respect to the
Rights Agreement.
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SIGNATURE
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 thereunto duly authorized.
OCEAN ENERGY, INC.
By: /s/ ROBERT K. REEVES
---------------------------------
Robert K. Reeves
Executive Vice President,
General Counsel and Secretary
Date: December 22, 1997
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
4.1 Rights Agreement dated as of December 22, 1997 (incorporated
by reference to Exhibit 1 to the Form 8-A of Ocean Energy,
Inc. filed on December 23, 1997).
99.1 Press Release, dated December 22, 1997, with respect to the
Merger Agreement.
99.2 Agreement and Plan of Merger, dated December 22, 1997, among
Ocean Energy, Inc., United Meridian Corporation and OEI
Holding Corporation (incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K of United Meridian
Corporation filed on December 23, 1997).
99.3 Press Release, dated December 22, 1997, with respect to the
Rights Agreement.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contacts:
Ocean Energy, Inc.: United Meridian Corporation:
Michael O. Aldridge (504) 927-1450 Jeanne Buchanan (713) 653-5095
OCEAN ENERGY, INC. AND UNITED MERIDIAN CORPORATION
TO MERGE CREATING $3.1 BILLION ENERGY COMPANY
Merger of Equals Results in High Growth Domestic & International
Exploration and Exploitation Portfolio
Baton Rouge, LA and Houston, TX, (December 23, 1997) - Ocean Energy, Inc.
(NYSE: OEI) ("OEI") and United Meridian Corporation (NYSE: UMC) ("UMC") today
announced that their respective boards of directors have unanimously approved a
definitive merger agreement for a tax-free, stock-for-stock transaction
creating an oil and gas company with pro forma total market capitalization of
approximately $3.1 billion based upon yesterday's closing price of each
company's shares on the New York Stock Exchange. On this basis, the combined
company will be the ninth largest oil and gas independent. The new company
will be named Ocean Energy, Inc.
The merger combines high impact prospects in West Africa and the Asian basins
and long-lived gas reserves in North America with geographically concentrated,
high-working-interest producing properties, and exceptional shelf and deepwater
Gulf of Mexico exploration prospects.
On a combined basis, current daily production rates are approximately 58,000
barrels of oil and 350 million cubic feet of gas, for a total of 116,000
barrels of oil equivalent. The combined proved reserve base would be
approximately 250 million barrels of oil equivalent.
John B. Brock, Chairman and Chief Executive Officer of UMC, will become
Chairman of the Board of the combined company. James C. Flores, Chairman,
President and Chief Executive Officer of OEI, will be President and Chief
Executive Officer.
"This merger brings together two companies strong in their own right and
formidable when combined," said Mr. Brock. "What these two organizations have
accomplished in a short time is truly remarkable. UMC has enjoyed an average
30% increase in production growth over the last five years, and still possesses
numerous internal growth opportunities. OEI has grown even faster than we have
and their portfolio contains significant upside. The combined company will
leverage both companies' considerable
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strengths in exploration and exploitation and create new opportunities for
strategic expansion. Our larger size will better enable us to diversify our
risk and at the same time retain a greater proportion of large-scale
exploration and development projects, in the United States and West Africa, on
the Continental Shelf and in deepwaters," Brock continued. "We are convinced
that the new company will realize growth potential well beyond what either
company could achieve on a stand-alone basis. I am really excited about
working with Jim and the outstanding management team, strong technical group,
and employees of this unmatched new company."
"This combination allows us to expand on John Brock's vision and many years of
leadership in our industry," said Mr. Flores. "OEI's strengths complement the
long-term strategy that UMC has developed. We each have high quality,
concentrated assets, which together establish an excellent balance between
international and domestic reserves. The new OEI's growth profile will be
enhanced by substantial economies of scale, both operationally and financially.
We will be combining the best management and business opportunities from both
sides to create an even better company."
Following the planned merger, the combined company will have a concentrated
critical mass, domestically and internationally:
o The combined reserve base will be well balanced, with oil representing
48% of proved reserves. Approximately 80% of the proved reserves will
be in North America with the remaining 20% located internationally.
Given pro forma production, the combined company will have an
aggregate reserve life index of approximately seven and one half
years.
o The combined company will have a significant presence in the Gulf of
Mexico, where it will leverage its operating infrastructure and
substantial leasehold position to continue its high production growth.
Its leasehold interests in the shallow Gulf of Mexico include 185
blocks, 75% of which will be operated, with an average working
interest of 60%. In addition, the combined company will have
significant deepwater Gulf of Mexico reserve exposure including 34
blocks with an average working interest of 48%. Deepwater efforts in
the Gulf will benefit from existing in-house deepwater expertise
developed internationally, as evidenced by success offshore West
Africa, where the combined company will hold a substantial acreage
position.
o The combined company's proven ability and experience in its
international exploration and production efforts is evidenced by its
significant Zafiro Field discovery and development in Equatorial
Guinea. Building upon this success, it will hold production sharing
contracts (PSC) covering 15 blocks: five in Cote d'Ivoire, four in
Equatorial Guinea, five in Pakistan and one in Bangladesh. In total,
the PSCs comprise some 15 million gross acres, with efforts currently
underway toward increasing the size of the international inventory.
Under the merger agreement, each common share of UMC will be converted into
1.30 shares of common stock of the combined company. Holders of OEI common
stock will
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receive 2.34 shares of the new company. Total shares outstanding will be
approximately 100 million, of which approximately 53.6% will be owned by OEI
shareholders and 46.4% by UMC shareholders. This ownership ratio approximates
the ratio at which the stocks have traded on a relative basis during the last
60 days. Management will own approximately 15% of the common stock of the
combined company (including approximately 11% beneficially owned by Mr.
Flores), which will be headquartered in Houston, Texas. Pursuant to the terms
of the merger agreement and as a condition of closing, Messrs. Brock and Flores
will enter into long-term employment agreements. The merger, which will be
accounted for as a pooling-of-interests, is expected to close by the end of
March 1998. It is subject to approval by the shareholders of both companies,
and to customary regulatory approvals.
The Board of Directors will be comprised of 14 individuals, with seven each
coming from the boards of UMC and OEI. Mr. Brock and Mr. Flores have
committed to vote in favor of the merger. Other key executives of both
companies will continue forward in significant roles as follows:
James L. Dunlap - Vice Chairman and Chairman of United Meridian
International Corporation
Robert L. Belk - Executive Vice President - Administration
Jonathan M. Clarkson - Executive Vice President - Chief Financial
Officer
Robert K. Reeves - Executive Vice President - General Counsel
James E. Smitherman III - Executive Vice President - International
Richard G. Zepernick, Jr. - Executive Vice President - North America
Lehman Brothers acted as financial advisor to OEI and Merrill Lynch & Co. acted
as financial advisor to UMC.
Certain statements in this news release regarding future expectations,
potential results of the business combination, plans for acquisitions,
dispositions, and oil and gas exploration, development, production and pricing
may be regarded as "forward looking statements" within the meaning of the
Securities Litigation Reform Act. They are subject to various risks, such as
operating hazards, drilling risks, and the inherent uncertainties in
interpreting engineering data relating to underground accumulations of oil and
gas, as well as other risks discussed in detail in the SEC filings of UMC and
OEI, including the Annual Reports on Form 10-K for the year ended December 31,
1996. Actual results may vary materially.
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FOR IMMEDIATE RELEASE EXHIBIT 99.2
Contact: Michael O. Aldridge (504)927-1450
OCEAN ENERGY, INC.
ADOPTS SHAREHOLDER RIGHTS PLAN
Baton Rouge, Louisiana -- December 22, 1997
Ocean Energy, Inc. (NYSE:OEI) today announced that its Board of Directors has
adopted a shareholder rights plan whereby preferred stock purchase rights will
be distributed to holders of the Company's common stock. The Rights Plan is
designed to deter coercive takeover tactics and to prevent an acquiror from
attempting to gain control of the Company without negotiating with the Board of
Directors. The Board of Directors unanimously approved the Plan. The Company
said it is not aware of any effort to acquire control of the Company, but
adopted the Plan concurrently with its execution of a Merger Agreement with
United Meridian Corporation, which was also announced today.
The Rights will expire on December 22, 2007. The Rights will be exercisable
only if a person acquires beneficial ownership of 15 percent or more of the
Company's common stock (an "Acquiring Person"), or commences a tender offer
which would result in ownership of 15 percent or more of such stock. Under the
Plan, one Right to purchase one one-hundredth of a share of a new series of
junior preferred stock of the Company at an exercise price of $240.00 per one
one- hundredth of a share (subject to adjustment) will be issued for each
outstanding share of the Company's common stock held at the close of business
on January 9, 1998 (the "Record Date").
Under certain circumstances the Rights "flip in" and enable the holders (other
than an Acquiring Person) to buy the Company's common stock at a 50 percent
discount. Under other circumstances, the Rights "flip over" and entitle the
holders (other than an Acquiring Person) to buy shares of the acquiror's common
stock at a 50 percent discount.
The Company will generally be entitled to redeem the Rights in whole, but not
in part, at $0.001 per Right payable in cash or common stock, subject to
adjustment, at any time until 10 business days (subject to extension) after the
first public announcement that an Acquiring Person has become such. Details of
the shareholder rights plan are outlined in a letter that will be mailed to
shareholders following the Record Date.
Ocean Energy, Inc. is an independent energy company engaged in the exploration,
development, production, and acquisition of crude oil and natural gas. For
further information, please contact Investor Relations at 504/928-6222 or mail
requests to 8440 Jefferson Highway, Suite 420, Baton Rouge, LA 70809.
Additional information on OEI is located in the "Corporate News on the Net"
section of Business Wire's home page (http://www.businesswire.com).
