Page 6 of 15 – SEC Filing
CUSIP NO. 40537Q506 Page 6 of 15
This Amendment No. 3 amends and supplements the Schedule 13D originally filed by the reporting persons with the Securities and Exchange Commission (the “SEC”) on September 29, 2016 (the “Original Schedule 13D” and
together with Amendment No. 1, Amendment No. 2, and collectively, the “Schedule 13D”). Unless otherwise indicated, each capitalized term used but not defined herein shall have the meaning assigned to such term in the
Original Schedule 13D.
Item 1. Security and Issuer
This statement relates to the Common Stock, par value $0.0001 per share (the “Common Stock” ), of HALCON RESOURCES CORPORATION, a Delaware corporation (the “Issuer”), whose principal executive offices are located at 1000 Louisiana, Suite 6700, Houston, Texas, 77002.
Item 2. Identity and Background
(a)-(c), (f) The persons filing this Statement and the citizenship of such filers are listed on the cover pages hereto. The directors and principal executive officers of Franklin Resources, Inc. (“FRI”) and its indirectly wholly-owned subsidiary, Franklin Advisers, Inc. (“FAV”), their present principal occupations, citizenship and business addresses, and the business addresses of the filers are listed on Exhibit A.
(d) During the last five years, none of the filers, and to the best knowledge of the filers, none of the persons listed on Exhibit A has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, none of the filers, and to the best knowledge of the filers, none of the persons listed on Exhibit A was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On September 9, 2016 (the “Effective Date”), the Issuer issued shares of Common Stock and warrants to purchase additional shares of Common Stock (the “Warrants”) to certain of its creditors, including FAV and Franklin Templeton Institutional, LLC (collectively, the “Investment Management Subsidiaries”), pursuant to the pre-packaged plan of reorganization (the “Plan”) of the Issuer and certain of its subsidiaries (the “Debtors”) filed on July 27, 2016, as part of their voluntary petitions for relief under Chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware. The Plan included a restructuring support agreement (the “Restructuring Support Agreement”) among the Debtors and certain stakeholders of the Debtors, including FAV, pursuant to which the stakeholders received the shares of Common Stock and Warrants.
Item 4. Purpose of Transaction
Before the Effective Date, the Investment Management Subsidiaries held certain of the Issuer’s Third Lien Notes and Unsecured Notes (each as defined in the Plan). As of the Effective Date under the Restructuring Support Agreement, the Investment Management Subsidiaries received shares of Common Stock and cash in exchange for their Third Lien Notes and Warrants, shares of Common Stock and cash in exchange for their Unsecured Notes. On the Effective Date, the Third Lien Notes and the Unsecured Notes were cancelled. Also pursuant to the Plan and the Restructuring Support Agreement, FAV received the right to appoint three members to the Issuer’s nine-member board of directors (the “Board”) and the right to consent to one of the three directors appointed by Ares Management LLC and certain of its affiliates (collectively, “Ares”) that also received Common Stock and Warrants under the Plan and were parties to the Restructuring Support Agreement. As of the Effective Date, FAV appointed Eric G. Takaha, James W. Christmas and William J. Campbell to the Board and consented to Ares’ appointment of Ronald Scott. Mr. Takaha and Mr. Christmas are also members of the Issuer’s Audit Committee. Mr. Campbell is also a member of the Issuer’s Compensation and Corporate Governance Committees. FAV does not have any rights to appoint future directors to the Board of the Issuer.
Mr. Takaha was an employee of FRI until his retirement in June 2016. Before his retirement, Mr. Takaha was a Portfolio Manager, Senior Vice President and Director of the Corporate and High Yield Group at Franklin Templeton Investments. He also served as a member of the firm’s Fixed Income Policy Committee, which helped guide investment strategies for multi-sector fixed income accounts. He managed multiple fixed income portfolios, with a focus on those with corporate credit investments, as well as overseeing and directing the firm’s group of high yield and investment grade credit analysts as they formulated investment recommendations. He originally joined Franklin Templeton Investments in 1989.
None of the directors appointed by FAV, including Mr. Takaha, is affiliated with the Investment Management Subsidiaries, FRI or their affiliates, and no such director is a representative of, reports to, or provides information to, any of such persons. FAV’s decision as to whether to vote for any such director when such director next stands for election will be based on the same factors as it considers for any director that was not originally designated to serve on the board by FAV.
Additionally on the Effective Date, the Issuer entered into a registration rights agreement (the “Registration Rights Agreement”) with FAV, among others, under which it agreed to file with the SEC within 30 days following the earlier to occur of (i) the Issuer filing with the SEC its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and (ii) the Issuer meeting the eligibility requirements to file a registration statement on Form S-3, and thereafter to use its commercially reasonable efforts to cause to be declared effective as promptly as practicable, a shelf registration statement for the offer and resale of the Common Stock. The Registration Rights Agreement contains other customary terms and conditions, including blackout periods and indemnification provisions.
