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Pure Acquisition Corp. Finalizes Business Combination Merger Consideration With HighPeak Energy

Pure Acquisition Corp. ("Pure") (NASDAQ: PACQ, PACQU, PACQW), an oil and gas exploration and production focused special purpose acquisition entity, today announced that it has amended its business combination agreement (the "HPK Business Combinatio

Benzinga · -
Pure Acquisition Corp. ("Pure") (NASDAQ: PACQ, PACQU, PACQW)), an oil and gas exploration and production focused special purpose acquisition entity, today announced that it has amended its business combination agreement (the "HPK Business Combination Agreement") with, among others, HighPeak Energy, Inc. ("HighPeak Energy" or the "Company") and certain affiliates of HighPeak Energy Partners, LP (the "HighPeak Funds") to finalize the merger consideration for those Pure stockholders who participate in the business combination. Each Pure stockholder who participates in the HighPeak Energy business combination will receive the following consideration: One share of HighPeak Energy common stock; plus A cash payment equal to the amount, if any, by which the per-share redemption value of Pure's Class A common stock exceeds $10.00 per share at the closing of the business combination and which is estimated to be approximately $0.63 per share; plus One contingent value right ("CVR") at the closing of the business combination in exchange for each share of Pure Class A common stock; plus  One full warrant to purchase HighPeak Energy common stock for $11.50 per share. Pure also announced that it has received written commitments and subscriptions for 5,000,000 shares of HighPeak Energy common stock in exchange for $50 million through its forward purchase agreement.  For each $10 invested, the forward purchaser will receive: One share of HighPeak Energy common stock; plus One CVR; plus One full warrant to purchase HighPeak Energy common stock for $11.50 per share. Pure expects to finalize additional forward purchase commitments and subscriptions prior to the closing of the business combination. Jack Hightower, HighPeak Energy's Chairman and CEO commented, "We are excited to be finalizing our business combination with the HighPeak Funds and expect the closing will take place during the third week of August.  With the interest our Pure stockholders have expressed in participating in the business combination, our $50 million of forward purchase commitments and our anticipated success raising additional investment through forward purchases, we expect HighPeak Energy to be well capitalized with a strong balance sheet at the closing of our business combination." Each full warrant received by the Pure stockholder who participates in the HighPeak Energy business combination and each full warrant received by forward purchase participants entitle the holder to purchase one share of HighPeak Energy common stock at a price of $11.50 per share and will expire five (5) years after the closing of the business combination.  The warrants are not redeemable by the Company and are expected to trade on either the Nasdaq Global Market ("Nasdaq") or the New York Stock Exchange ("NYSE").  The warrants may be exercised for cash or on a cashless basis at the discretion of the holder. The CVRs are contractual rights to receive a contingent payment in the form of additional shares of HighPeak Energy common stock.  The CVRs provide significant valuation protection if the trading price of HighPeak Energy's common stock is below the price that would provide the CVR holder with a 10% preferred simple annual return based on $10.00 per share at the closing of the business combination, subject to a floor downside per-share price of $4.00 at the CVR maturity date of two years which can be extended an additional six months by the HighPeak Funds.  HighPeak Energy intends to list the CVRs on either the Nasdaq or the NYSE.  The HighPeak Funds will deposit 2.125 shares of HighPeak Energy common stock per CVR in escrow to secure the downside protection and preferred return for Pure stockholders who participate in the HighPeak Energy business combination.    Michael L. Hollis, HighPeak Energy's President, said "With the stabilization of oil prices around $40 per barrel, we began turning most of our wells back on to production in late July and expect to be producing at or near pre shut down levels within the next few weeks." Business Combination  Pursuant to the HPK Business Combination Agreement, HighPeak Energy will acquire, in exchange for 75,000,000 shares, as adjusted in accordance with the HPK Business Combination Agreement, of HighPeak Energy common stock, all of the outstanding interests in HPK Energy, LP ("HPK"), which holds certain rights, title and interests in oil and natural gas assets.  The closing of the business combination is subject to the requisite approval of Pure's stockholders and the satisfaction of customary conditions. The business combination is expected to close in the third quarter of 2020. The description of the business combination contained herein is only a summary and is qualified in its entirety by reference to the HPK Business Combination Agreement relating thereto. Upon completion of the business combination, HighPeak Energy intends to list its common stock for trading on either the Nasdaq or the NYSE under the symbol "HPK"." Pure's securities are expected to be delisted from the Nasdaq Capital Market at closing of the business combination concurrently with the listing for trading of HighPeak Energy's securities on either the NYSE or the Nasdaq.