8-KMaterial AgreementsSecurities & ListingExhibits & Filings

EQT Corp 8-K Report, Material Agreement (Dec 27, 2022)

Filed December 27, 2022For Securities:EQT

Summary

This Form 8-K filing by EQT Corporation (EQT) on December 27, 2022, primarily details significant amendments to the previously announced acquisition of assets from THQ Appalachia I, LLC and THQ-XcL Holdings I, LLC. The most critical change is the extension of the outside termination date for the purchase agreement from December 30, 2022, to December 29, 2023. This extension provides EQT with additional time to navigate regulatory approvals, specifically addressing a second request for information from the U.S. Federal Trade Commission (FTC) related to the Hart-Scott-Rodino antitrust review. Furthermore, the filing outlines a change in how the initial $150.0 million escrow deposit will be handled. Instead of being held in escrow and applied towards the purchase price or returned, the escrowed amount has been released to the sellers to pay down their existing indebtedness. In exchange, EQT has received an unsecured promissory note from the Upstream Seller equal to the escrowed amount. This note accrues 0% interest for one year and then escalates to 10.0% annually. This structure impacts the immediate cash outlay and introduces a new financial instrument related to the acquisition. Additionally, EQT has amended its Term Loan Credit Agreement, extending the lender commitments to June 30, 2023. The company also terminated its remaining commitments under a $1.25 billion Bridge Loan Facility, deeming it no longer necessary for financing the acquisition following its prior issuance of senior notes. These updates collectively provide a revised timeline and financial structure for the ongoing acquisition, emphasizing the company's commitment to closing the deal despite regulatory hurdles.

Key Highlights

  • 1EQT Corporation has amended its Purchase Agreement for the acquisition of upstream and midstream assets from THQ Appalachia I, LLC and THQ-XcL Holdings I, LLC.
  • 2The closing deadline for the acquisition has been extended from December 30, 2022, to December 29, 2023, to accommodate the ongoing FTC review and a Second Request for information.
  • 3The initial $150.0 million escrow deposit has been released to the sellers for debt repayment, and EQT has received an unsecured promissory note from the Upstream Seller equal to this amount.
  • 4The promissory note accrues 0% interest for one year, then escalates to 10.0% annually, impacting the financing structure of the acquisition.
  • 5EQT amended its Term Loan Credit Agreement to extend lender commitments until June 30, 2023.
  • 6Remaining commitments under the $1.25 billion Bridge Loan Facility have been terminated as they are no longer deemed necessary for acquisition financing.

Frequently Asked Questions

The closing date has been extended primarily to allow EQT more time to address a 'Second Request' for information and documentation issued by the U.S. Federal Trade Commission (FTC). This request is part of the FTC's ongoing review of the acquisition under the Hart-Scott-Rodino Antitrust Improvements Act. The extension provides ample time for EQT to comply with the FTC's information requests and secure necessary regulatory approvals.

The $150.0 million escrowed amount has been released to the sellers to be used exclusively for paying down the Upstream Seller's existing indebtedness. In return, EQT has received an unsecured promissory note from the Upstream Seller for the same amount. This note accrues no interest for the first year (until one year after the termination date of the agreement), after which it begins accruing interest at 10.0% per annum, increasing quarterly. Upon closing the acquisition, the outstanding loans under this note will be applied towards the cash consideration.

EQT has amended its Term Loan Credit Agreement, extending the commitments from lenders to June 30, 2023. Importantly, EQT has also terminated its remaining commitments under a $1.25 billion Bridge Loan Facility, indicating that this facility is no longer required for acquisition financing, likely due to prior senior note issuances and updated funding plans.