Hess Corporation Announces Concurrent Offerings of Common Stock and Depositary Shares Representing an Interest in Mandatory Convertible Preferred Stock
Hess Corporation (NYSE:HES) today announced the commencement of
concurrent underwritten public offerings of 25,000,000 shares of its
common stock and 10,000,000 depositary shares, each of which represents
a 1/20th interest in a share of its Series A Mandatory Convertible
Preferred Stock (the “Convertible Preferred Stock”), $1.00 par value per
share, with a liquidation preference of $1,000 per share of Convertible
Preferred Stock (equivalent to $50 per depositary share). In connection
with the concurrent offerings, Hess intends to grant the respective
underwriters in each offering a 30-day option to purchase up to
3,750,000 additional shares of its common stock and up to 1,500,000
additional depositary shares. The concurrent offerings are separate
public offerings made by means of separate prospectus supplements and
are not contingent on one another.
Hess plans to use the net proceeds from these offerings to strengthen
the Company's balance sheet and for general corporate purposes including
funding its longer term capital needs and the cost of the capped call
transactions described below.
Goldman, Sachs & Co. is acting as book-running manager for the
The depositary shares entitle the holders, through the bank depositary,
to a proportional fractional interest in the rights and preferences of
the Convertible Preferred Stock, including conversion, dividend,
liquidation and voting rights, subject to certain limited exceptions.
Unless converted earlier at the option of the holders, each share of
Convertible Preferred Stock will automatically convert into a variable
number of shares of common stock on or around February 1, 2019. The
conversion rates, dividend rate and other terms of the Convertible
Preferred Stock will be determined at the time of pricing of the
offering of the depositary shares.
In connection with the pricing of the depositary shares, Hess expects to
enter into one or more privately negotiated capped call transactions
with one or more of the underwriters or their affiliates (the “option
counterparties”). The capped call transactions are expected generally to
reduce the potential dilution to Hess’ common stock upon conversion of
the Convertible Preferred Stock, with such reduction subject to a cap.
If the underwriters of the depositary shares offering exercise their
over-allotment option, Hess intends to enter into additional capped call
transactions with the option counterparties.
In connection with establishing their initial hedge of the capped call
transactions, the option counterparties or their respective affiliates
expect to enter into various derivative transactions with respect to
Hess’ common stock concurrently with, or shortly after, the pricing of
the depositary shares. These activities could increase (or reduce the
size of any decrease in) the market price of Hess’ common stock or the
depositary shares at that time.
In addition, the option counterparties or their respective affiliates
may modify their hedge positions by entering into or unwinding
derivative transactions with respect to Hess’ common stock and/or by
purchasing or selling shares of Hess’ common stock or other securities
of Hess in secondary market transactions following the pricing of the
depositary shares and prior to the mandatory conversion date of the
Convertible Preferred Stock (and are likely to do so during the final
averaging period relating to the mandatory conversion of the Convertible
Preferred Stock). This activity could also cause or avoid an increase or
a decrease in the market price of Hess’ common stock or the depositary
shares, which could affect the value of the shares of Hess’ common stock
that a holder of depositary shares will receive upon conversion of the
Convertible Preferred Stock and, to the extent the activity occurs
during the final averaging period relating to the mandatory conversion
of the Convertible Preferred Stock, it could also affect the number of
shares of Hess’ common stock that a holder of depositary shares will
receive upon conversion.
The common stock and the depositary shares are being offered pursuant to
an effective shelf registration statement on Form S-3 that was
previously filed with the Securities and Exchange Commission (“SEC”).
Currently, no public market exists for the depositary shares. Hess
intends to apply to list the depositary shares on The New York Stock
Exchange under the symbol “HES.PRA.” If the application is approved,
Hess expects trading of the depositary shares on The New York Stock
Exchange to commence within 30 days after the initial delivery of the
Hess has filed a registration statement (including a prospectus and a
preliminary prospectus supplement) with the SEC for each of the
offerings to which this press release relates. Before you invest, you
should read the prospectuses and the preliminary prospectus supplements
in that registration statement and other documents Hess has filed with
the SEC for more complete information about the issuer and the offering.
You may get these documents for free by visiting EDGAR on the SEC
website at www.sec.gov.
Alternatively, copies of the prospectus and the preliminary prospectus
supplement relating to the offering may be obtained from Goldman, Sachs
& Co., c/o Prospectus Department, 200 West Street, New York, NY 10282,
by calling (866) 471-2526 or by email at firstname.lastname@example.org
About Hess Corporation
Hess Corporation is a leading global independent energy company engaged
in the exploration and production of crude oil and natural gas.
This news release contains statements about future events and
expectations, or “forward-looking statements,” all of which are
inherently uncertain. These forward-looking statements are based on
management’s current expectations and assumptions and not on historical
facts. Examples of these statements include, but are not limited to, our
ability to complete the offerings, the anticipated use of proceeds from
the offerings, our intention to enter into capped call transactions, the
expected impact of the capped calls and the expected actions of the
option counterparties, our intention to list the depositary shares on The
New York Stock Exchange and the date trading on The New York
Stock Exchange is expected to commence. These forward-looking
statements are subject to a number of risks and uncertainties that could
cause actual results to differ materially from those indicated in such
forward-looking statements including prevailing market conditions and
other factors. For more information about potential risk factors that
could affect Hess and its results, we refer you to the information
contained in each prospectus and prospectus supplement for the
respective offerings and the risk factors summarized in our Form 10-K
for the year ended December 31, 2014. Hess undertakes no obligation to
update the information contained in this press release to reflect
subsequently occurring events or circumstances.
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