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UNITED STATES
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
Date of report (Date of earliest event reported): December 19, 2008
The Meridian Resource Corporation
(Exact Name of Registrant as Specified in Charter)
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Texas
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1-10671
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76-0319553 |
(State or Other Jurisdiction
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(Commission File Number)
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(IRS Employer |
of Incorporation)
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Identification No.) |
1401 Enclave Parkway, Suite 300
Houston, Texas 77077
(Address of Principal Executive Offices) (Zip Code)
281-597-7000
(Registrants telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2 below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d- 2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e- 4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
On December 19, 2008, The Meridian Resource Corporation (the Company, we or our) entered into
the Second Amendment to Credit Agreement (the Second Amendment), which amends the Amended and
Restated Credit Agreement, dated December 23, 2004 (as amended by the First Amendment to Credit
Agreement, dated February 21, 2008), among the Company, the several banks, financial institutions
and other entities from time to time parties thereto (collectively, the Lenders) and Fortis
Capital Corp., as administrative agent for the Lenders (the Credit Facility).
Prior to the effectiveness of the Second Amendment, the borrowing base under the Credit Facility
had been established at $110 million. Among other things, the Second Amendment redetermines the
borrowing base at $95 million, based primarily on reduced commodity price lending grids, and limits
our borrowings under the Credit Facility to the $95 million currently borrowed.
We cannot provide any assurance that the borrowing base will not be further reduced nor can we give
any assurance that we would be able to obtain alternate borrowing sources at reasonable rates if we
are required to repay debt under our Credit Facility due to a further downward borrowing base
redetermination. In the event of a further downward borrowing base redetermination, we will be
required to repay the deficit within a 90-day period. The next borrowing base redetermination is
scheduled for April 30, 2009.
The Second Amendment also amends the Credit Facility to provide that we may secure either (i) an
alternative base rate loan that bears interest at a rate per annum equal to the greater of (a) the
administrative agents prime rate; or (b) federal funds-based rate plus 1/2 of 1%; or (c) a
one-month Eurodollar rate; plus in each case an additional 1.25% to 2.50% depending on the ratio of
the aggregate outstanding loans and letters of credit to the borrowing base or; (ii) a Eurodollar
base rate loan that bears interest, generally, at a rate per annum equal to the London interbank
offered rate (LIBOR) plus 2.0% to 3.25%, depending on the ratio of the aggregate outstanding
loans and letters of credit to the borrowing base. As of December 19, 2008, the effective
three-month LIBOR rate was 1.50% and, accordingly, our indebtedness is currently accruing interest
at an annual rate of 4.75%, up from an annual rate of 4.00% in effect immediately prior to the
effectiveness of the Second Amendment.
Although we currently expect to meet our debt service obligations, our ability to meet such
obligations and to reduce total indebtedness will depend on our future performance and our ability
to maintain or increase cash flows from operations. These outcomes are subject to general economic
conditions and to financial, business and other factors affecting our operations, many of which we
do not control, including the prevailing market prices for oil and natural gas.
For a discussion of these and other risk factors related to our indebtedness, see Item 1A. Risk
Factors, in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2007.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard;
Transfer of Listing.
As described under Item 5.02 below, on December 22, 2008, the Board of Directors of the Company
appointed Paul D. Ching to serve as interim Chief Executive Officer (CEO) and President of the
Company, effective December 30, 2008, until June 30, 2009 or such earlier time that the Board
appoints permanent replacements for the positions of CEO and President. During the interim period
that Mr. Ching serves as CEO and President, he may be deemed not to be an independent board member.
As a result, during that time the Company may be deemed to be in violation of Rule 303A.01 of the
New York Stock Exchanges Listed Company Manual, which requires listed companies to have a majority
of
independent directors. In accordance with Rule 303A.02, however, at the end of Mr. Chings tenure
as interim CEO and President, he will return to his status as an independent director. We intend
to cure the noncompliance as soon as practicable.
Item 5.02. Departure of Directors or Principal Officers; Elections of Directors; Appointment of
Principal Officers; Compensatory Arrangements of Certain Officers.
As previously reported, our employment agreements with Joseph A. Reeves, Jr., our current CEO, and
Michael J. Mayell, our current President and Chief Operating Officer (COO), terminate on December
29, 2008, at which time Mr. Reeves will cease to serve as our CEO and Mr. Mayell will cease to
serve as our President and COO. In accordance with their employment agreements, upon termination
of such agreements, each of Messrs. Reeves and Mayell will enter into a consulting agreement. Each
consulting agreement will commence on December 30, 2008, after termination of their respective
employment agreements, and will extend through April 2009. The Company will pay each of them a
consulting fee of $50,000 per month. Their consulting agreements are attached to this Form 8-K as
Exhibits 10.2 and 10.3, respectively, and are incorporated herein by reference. Both Mr. Reeves
and Mr. Mayell will remain on the Board of Directors.
At a meeting held December 22, 2008, the Board of Directors of the Company appointed Mr. Ching to
serve as interim CEO and President of the Company effective December 30, 2008, until June 30, 2009,
or such earlier time that the Board appoints permanent replacements for the positions of CEO and
President. During the time he serves as interim CEO and President, Mr. Ching will receive a salary
of $41,667 per month. He will also be eligible for a bonus at the sole discretion of the Board in
an amount up to the equivalent of the salary earned during Mr. Chings tenure as interim CEO and
President. The Board also agreed to grant Mr. Ching options to purchase 250,000 shares of common
stock of the Company at an exercise price equal to the closing market price of the stock on January
2, 2009. Mr. Ching will not participate in any of the Companys employee benefit plans. When a
written employment agreement with Mr. Ching has been finalized, it will be filed as an exhibit to
an amendment to this Form 8-K.
Also effective December 30, 2008, the Board appointed Lloyd V. DeLano as corporate Secretary of the
Company, in addition to his current titles of Senior Vice President and Chief Accounting Officer.
Mr. DeLano replaces Mr. Mayell as corporate Secretary.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
In connection with the events described in Item 5.02 above, at the meeting held on December 22,
2008, the Board of Directors approved and adopted an amendment to the Companys Bylaws. As amended,
Article IV, Section 5 of the Bylaws provides that the Chairman of the Board may simultaneously hold
the position of CEO. Before the amendment, the Bylaws provided that the Chairman of the Board
shall not be the CEO of the Company. The full text of the amendment is attached hereto as Exhibit
3.1 and is incorporated herein by reference.
At such time that the Board appoints permanent replacements for the positions of CEO and President,
the Board intends to amend our Bylaws again to provide that the Chairman of the Board shall not
simultaneously hold the position of CEO.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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3.1 |
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Amendment No. 3 to Amended and Restated Bylaws of The Meridian Resource
Corporation, adopted December 22, 2008. |
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10.1 |
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Second Amendment to Credit Agreement, dated as of December 19, 2008, among the
Company, the several banks, financial institutions and other entities from time to time
parties to the Credit Agreement (collectively, the Lenders), and Fortis Capital
Corp., as administrative agent for the Lenders. |
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10.2 |
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Consulting Agreement, dated effective as of December 30, 2008, between the
Company and Joseph A. Reeves, Jr. |
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10.3 |
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Consulting Agreement, dated effective as of December 30, 2008, between the
Company and Michael J. Mayell. |
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 hereunto duly authorized.
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The Meridian Resource Corporation
(Registrant)
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By: |
/s/ Lloyd V. DeLano
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Lloyd V. DeLano |
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Senior Vice President
and Chief Accounting Officer |
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Date: December 29, 2008