Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. FX ENERGY INC (907649) 10-Q published on Nov 06, 2015 at 4:02 pm
Reporting Period: Sep 29, 2015
Subsequent to our announcement, and as of a recent practicable date before filing of this document, five putative class action lawsuits on behalf of our shareholders were filed in various jurisdictions against us, each member of our board, ORLEN Upstream, and Kiwi Acquisition Corp. The lawsuits generally allege, among other things, that the members of our board breached their fiduciary duties of loyalty and care by agreeing to sell FX Energy without first taking steps to ensure that our shareholders would obtain adequate and fair consideration and by engineering the transaction to benefit themselves and or ORLEN Upstream without regard to our shareholders. The lawsuits further allege that the transaction is structured with deal protection devices that preclude other bidders from making successful competing offers. The lawsuits contend that we, ORLEN Upstream, and Kiwi Acquisition Corp. knowingly assisted the board in breaching its fiduciary duties. The lawsuits seek a declaration that the action is a proper class action and an order requiring the board to cooperate fully with any entity or person having a bona fide interest in proposing any alternative transactions and to ensure that no conflicts of interests exist between the directors’ own interests and their fiduciary duties. The lawsuits further seek an award of the plaintiffs’ damages, costs, and reasonable attorneys’ and experts’ fees and enjoinment of the acquisition of FX Energy by Kiwi Acquisition Corp. or, alternatively, rescission of the transaction in the event it is consummated.
The Merger Agreement provides that, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will commence a tender offer (the “Offer”) to purchase all of the outstanding shares of our common stock (the “Common Stock”), at a price of $1.15 per share (the “Offer Price”), without interest and subject to any required withholding taxes. The Merger Agreement further provides that, on the terms and subject to the conditions set forth in the Merger Agreement, following completion of the Offer, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and as a wholly owned subsidiary of ORLEN Upstream (the “Merger”). In the Merger, each outstanding share of Common Stock (other than shares of Common Stock held by us, ORLEN Upstream, or Merger Sub and, if dissenters’ rights are available with respect to the Merger under Nevada law, shares of Common Stock held by stockholders who are entitled to assert, and who properly assert, such dissenters’ rights) will be converted into the right to receive cash in an amount equal to the Offer Price, subject to any required withholding of taxes and without interest.
Following the Offer, if ORLEN Upstream and Merger Sub own at least 90% of the outstanding shares of Common Stock, including through the exercise of a “top-up” option granted to Merger Sub, the Merger will be effected through a “short-form” merger without further action by our shareholders. We have granted Merger Sub a “top-up” option to acquire directly from us after completion of the Offer the number of shares required to effect the “short-form” merger at a price per share equal to the Offer Price, subject to the availability of sufficient authorized and unissued shares of Common Stock. If, after completion of the Offer, ORLEN Upstream and Merger Sub own less than 90% of the outstanding shares of Common Stock and the “top-up” option is not exercised, we will convene a meeting of the holders of our Common Stock to approve the Merger. ORLEN Upstream and Merger Sub have agreed that they will vote all shares of Common Stock owned by them in favor of approval of the Merger.
A copy of the Merger Agreement was filed as Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on October 14, 2015. The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to and qualified in its entirety by the full text of the Merger Agreement. The Merger Agreement was filed to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about us, ORLEN Upstream, or Merger Sub or to modify or supplement any factual disclosures about us in our public reports filed with the SEC. The Merger Agreement includes representations, warranties, and covenants made by us, ORLEN Upstream, and Merger Sub made solely for purposes of the Merger Agreement and which may be subject to important qualifications and limitations agreed to by us, ORLEN Upstream, and Merger Sub in connection with the negotiated terms of the Merger Agreement. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to our SEC filings, or may have been used for purposes of allocating risk among the us, ORLEN Upstream, and Merger Sub rather than establishing matters as facts.
This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements involve significant risks and uncertainties. All statements contained in this report, other than statements of historical fact, are statements that could be deemed forward-looking statements, including: any statements regarding the anticipated timing of filings and approvals relating to the Offer and the Merger; any statements regarding the expected timing of the completion of the Offer and the Merger; any statements regarding the ability to complete the Offer or the Merger considering the various closing conditions, including that Merger Sub must have accepted for payment all shares of Common Stock that Merger Sub becomes obligated to purchase pursuant to the Offer; any statements of expectation or belief; any statement regarding our future financial or operating performance; and any statements of assumptions underlying any of the foregoing. Forward-looking statements speak only as of the date they were made, and except to the extent required by law, we undertake no obligation to update or review any forward-looking statement because of new information, future events, or other factors. The words “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “would,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on management’s current expectations, estimates, and assumptions about future events. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions that may cause actual performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by those statements. Such risks and uncertainties include those related to the Offer and the Merger, including: uncertainties as to the timing of the Offer and the Merger; uncertainties as to how many of the holders of shares of Common Stock will tender their shares into the Offer; the possibility that various closing conditions for the Offer or the Merger may not be satisfied or waived, including that a governmental entity may prohibit, delay, or refuse to grant approval for the consummation of the Offer or the Merger; the effects of disruption from the Offer and the Merger making it more difficult for us to maintain relationships with employees (including potential difficulties in employee retention), collaboration parties, other business partners, or governmental entities; legal proceedings that are instituted against us and others following announcement of the Merger Agreement; other business effects, including the effects of industrial, economic, or political conditions outside of our control; transaction costs; and actual or contingent liabilities. Such risks and uncertainties also include those related to our business and operations described in this report and other documents filed with the SEC by us, such as the future timing and results of drilling individual wells and other exploration and development activities; future variations in well performance as compared to initial test data; the possible impairment of capitalized drilling costs if no recoverable reserves are established; future events that may result in the need for additional capital; the prices at which we may be able to sell oil or gas; fluctuations in prevailing prices for oil and gas; our ability to complete the acquisition of targeted new or expanded exploration or development prospects; uncertainties of certain terms to be determined in the future relating to our oil and gas interests, including exploitation fees, royalty rates, and other matters; future drilling and other exploration schedules and sequences for various wells and other activities; uncertainties regarding future political, economic, regulatory, fiscal, taxation, and other policies in Poland; the cost of additional capital that we may require and possible related restrictions on our future operating or financing flexibility; our future ability to attract strategic participants to share the costs of exploration, exploitation, development, and acquisition activities; and future plans and the financial and technical resources of strategic participants.