New Capital to Strengthen Balance Sheet, Reduce Leverage and
Enhance Growth
Company Expanding Board and Filling Senior Management Positions
Clayton Williams Energy, Inc. (the “Company”) (NYSE:CWEI) announced
today the sale of 5,051,100 shares of common stock to funds managed by
Ares Management, L.P. (NYSE: ARES) for cash proceeds of $150 million, or
approximately $29.70 per share.
Proceeds from this sale will provide additional liquidity for potential
debt reduction transactions related to its 2019 Senior Notes and for
developmental drilling on its 65,000 net acre position in the core of
the southern Delaware Basin.
“This equity raise significantly strengthens our balance sheet and
provides funds to reduce leverage and possibly accelerate our drilling
activities in the Delaware Basin,” said Mel Riggs, President of Clayton
Williams Energy. “We welcome Ares as a significant stockholder and look
forward to working together to enhance shareholder value.”
“This transaction marks the second significant investment by Ares in
Clayton Williams, demonstrating our confidence in the Company and the
strength of its high quality assets,” said Nate Walton, Partner at Ares
Management.
In connection with the transaction, lenders under the Company’s term
loan credit facility waived certain restrictions to enable the Company
to use proceeds from equity issuances and specified asset sales for debt
reduction and capital expenditures.
The Company announced that its Board of Directors will be expanded from
seven to nine directors. Ares will have the right to nominate one of the
two new directors, subject to approval by the Board’s Nominating and
Governance Committee.
The transaction was approved by the Board of Directors upon the
recommendation of a Transaction Committee of the Board of Directors. The
transaction is expected to close during the third quarter and remains
subject to customary regulatory approvals as well as compliance with
notice requirement to file an Information Statement with the Securities
and Exchange Commission reporting that stockholders representing more
than 50% of the Company’s common stock approved the transaction by
written consent.
The Company also announced that it has engaged an executive search firm
to assist in recruiting executives to fill two senior management
positions. The Company is seeking a candidate to fill the position of
Chief Operating Officer that was vacated in March 2015 when Mel Riggs
assumed the position of President of the Company. In addition, the
Company is seeking a successor to Michael Pollard, Chief Financial
Officer, who has announced his desire to step down as CFO upon the
employment of his successor.
The Company will file a Form 8-K with the Securities and Exchange
Commission today regarding this transaction and also plans to provide an
update on its operations in connection with the release of its second
quarter 2016 financial results in August 2016.
Vinson & Elkins L.L.P. served as legal advisor to the Company, and
Kirkland & Ellis LLP served as legal advisor to Ares. Advisors to the
Transaction Committee of the Board of Directors were Goldman, Sachs &
Co. as financial advisor and Potter Anderson & Corroon LLP as legal
advisor.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities of Clayton Williams
Energy, Inc. nor shall there be any sale of securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of any such state or jurisdiction.
The securities to be sold in the private placement have not been
registered under the Securities Act of 1933 or applicable state
securities laws and may not be offered or sold in the United States
absent registration under the Securities Act or an applicable exemption
from such registration requirements. The Company has agreed to file a
registration statement with the Securities and Exchange Commission
covering the resale of the shares of common stock sold in the private
placement.
About Clayton Williams Energy, Inc.
Clayton Williams Energy, Inc. is an independent energy company located
in Midland, Texas.
About Ares Management
Ares Management, L.P. is a publicly traded, leading global alternative
asset manager with approximately $94 billion of assets under management
as of March 31, 2016 and more than 15 offices in the United States,
Europe and Asia. Since its inception in 1997, Ares has adhered to a
disciplined investment philosophy that focuses on delivering strong
risk-adjusted investment returns throughout market cycles. Ares believes
each of its three distinct but complementary investment groups in
Credit, Private Equity and Real Estate is a market leader based on
assets under management and investment performance. Ares was built upon
the fundamental principle that each group benefits from being part of
the greater whole. For more information, visit www.aresmgmt.com.
This release 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. All statements, other than
statements of historical or current facts, that address activities,
events, outcomes and other matters that we plan, expect, intend, assume,
believe, budget, predict, forecast, project, estimate or anticipate (and
other similar expressions) will, should or may occur in the future are
forward-looking statements. These forward-looking statements are
based on management's current belief, based on currently available
information, as to the outcome and timing of future events. The
Company cautions that its future natural gas and liquids production,
revenues, cash flows, liquidity, plans for future operations, expenses,
outlook for oil and natural gas prices, timing of capital expenditures
and other forward-looking statements are subject to all of the risks and
uncertainties, many of which are beyond our control, incident to the
exploration for and development, production and marketing of oil and gas.
These risks include, but are not limited to, the possibility of
unsuccessful exploration and development drilling activities, our
ability to replace and sustain production, commodity price volatility,
domestic and worldwide economic conditions, the availability of capital
on economic terms to fund our capital expenditures and acquisitions, our
level of indebtedness, the impact of the current economic recession on
our business operations, financial condition and ability to raise
capital, declines in the value of our oil and gas properties resulting
in a decrease in our borrowing base under our credit facility and
impairments, the ability of financial counterparties to perform or
fulfill their obligations under existing agreements, the uncertainty
inherent in estimating proved oil and gas reserves and in projecting
future rates of production and timing of development expenditures,
drilling and other operating risks, lack of availability of goods and
services, regulatory and environmental risks associated with drilling
and production activities, the adverse effects of changes in applicable
tax, environmental and other regulatory legislation, and other risks and
uncertainties are described in the Company's filings with the Securities
and Exchange Commission. The Company undertakes no obligation to
publicly update or revise any forward-looking statements.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160725005342/en/
Copyright Business Wire 2016