The closing of the transaction was subject to a minimum threshold for participation in EPL's exchange offer to HHOC's debtholders of 80% of the $80.2 million of debt outstanding. At closing earlier today, 96% of the total HHOC debt outstanding was tendered in exchange for a combination of $38.4 million in newly-issued EPL 11% Senior Subordinated Notes and $38.4 million in newly-issued EPL Convertible Preferred Stock. The balance of the non-tendered debt of $3.4 million was retired in cash.
HHOC preferred and common stockholders and holders of the affiliated interests received approximately $1.7 million in cash, 574,931 shares of EPL common stock and warrants to purchase four million EPL common shares. Of these warrants, one million have a strike price of $9.00 per share and three million have a strike price of $11.00 per share. Also, preferred stockholders of HHOC will have the right to receive contingent consideration related to future proved reserve additions from exploratory prospect acreage held by HHOC as of the closing date.
The cash portions of the transaction were funded by bank debt. The Company has arranged an increase in its existing credit facility from $65 million to $100 million.
The Company also announced that Gary Hall, HHOC's founder, will be named Vice-Chairman of EPL and elected a Director by EPL's Board of Directors. Bruce Sidner, HHOC's Vice President of Exploration will be named EPL's Executive Vice President of Exploration and John Peper, HHOC's Senior Vice President and General Counsel will be named Executive Vice President of Law and Business Development.
Richard A. Bachmann, EPL's Chairman, President and Chief Executive Officer commented, "When we announced this transaction in December, Gary and I discussed in detail the benefits of integrating our teams into a strengthened EPL. We also made a commitment to fast-track our deal so that we could immediately get to work on our expanded exploration and development plans for 2002. The fact that we were able to close this transaction in less than thirty days from the day it was announced is a very good indication of how well our combined organization will be able to work together. We welcome all of Hall-Houston's management and employees to the EPL family."
Gary Hall added, "The strength of the combined company offers us the chance to capitalize on the opportunities for growth we believe are available in the current market for our industry. We are excited about becoming a part of EPL and are ready to hit the ground running in pursuing those opportunities as well as exploiting the Company's combined property base."
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