Item 1.01 Entry into a Material Definitive Agreement.
On September 16, 2022, Abraxas Petroleum Corporation (the "Company") filed a
Current Report on Form 8K to disclose that a private sale of the Company's
Series A Preferred Stock, par value $0.01 per share (the "Preferred Stock"),
occurred on September 14, 2022 in which Biglari Holdings Inc. ("Holdings"), an
Indiana corporation with shares registered for trading on the New York Stock
Exchange, (i) purchased from AG Energy Funding, LLC ("AGEF") the 685,505 shares
of Preferred Stock (the "Preferred Shares") that the Company issued to AGEF
pursuant to an exchange agreement between AGEF and the Company dated January 3,
2022 (the "Prior Agreement"), and (ii) assumed all of AGEF's rights, titles, and
interests in, and obligations and duties under, the Prior Agreement. Owning the
Preferred Shares entitles Holdings to vote approximately 82.5% of the total
voting power of the Company's outstanding capital stock. Subsequent to the
private sale, Holdings proposed an exchange of the Preferred Shares for the
Company's common stock, par value $0.01 per share (the "Common Stock") pursuant
to which the Company would issue Holdings 90,631,287 shares of Common Stock (the
"Stock Consideration") in exchange for the Preferred Shares (such transaction,
the "Exchange").
To issue the Stock Consideration to Holdings as contemplated by the Exchange, an
amendment to the Company's Articles of Incorporation, as amended, is needed to
increase the number of shares of Common Stock authorized for the Company's
issuance from 20,000,000 shares to 150,000,000 shares. The proposed amendment
(the "Amendment") is discussed in greater detail in the preliminary proxy
statement on Form PRE 14A that the Company filed on September 26, 2022, in which
the Board is soliciting proxies to vote shares of Preferred Stock and Common
Stock at a Special Meeting of Stockholders (the "Special Meeting") for the
purpose of approving and adopting the Amendment.
On September 23, 2022, the Company's board of directors (the "Board") approved
the Company's entry into an exchange agreement with Holdings that defines the
terms of the Exchange (the "Exchange Agreement"). The Company and Holdings
entered into the Exchange Agreement on September 27, 2022. Subject to the
approval of the Company's stockholders to the Amendment and the acceptance of
the Amendment by the Nevada Secretary of State, the Exchange Agreement requires
the Company to cause the shares of Stock Consideration to be registered in
Holdings' name with the Company's transfer agent in book-entry form, and for
Holdings to assign and transfer all of the Preferred Shares to the Company by
delivering a Stock Power and Assignment. The closing of the Exchange will occur
as soon as reasonably practicable after the conclusion of the Special Meeting or
at some other time as the Company and Holdings agree. Upon consummation of the
Exchange, the Company will cancel the Preferred Shares and the Preferred Stock
Certificate of Designation setting forth the terms of the Series A Preferred
Stock so that only Common Stock will remain outstanding. Holdings' ownership of
the Stock Consideration will represent the right to vote 90% of the total voting
power of the Company's outstanding Common Stock.
The foregoing description of the Exchange Agreement is a summary only, does not
purport to be complete, and is qualified in its entirety by reference to the
complete text of the Exchange Agreement, which is filed herewith as Exhibit10.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
10.1 Exchange Agreement between the Company and Holdings dated September
27, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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