Southwestern Energy Announces Early Results and Upsizing of Cash Tender Offers and Consent Solicitations for Senior Notes
Southwestern Energy Company (NYSE: SWN) (the “Company”) today announced
the early results and increase in the size of its previously announced
offers to purchase for cash (collectively, the “Tender Offers” and each
a “Tender Offer”) up to a maximum aggregate purchase price (subject to
the respective sub-caps and Acceptance Priority Levels as set forth in
the table below), excluding accrued interest, equal to $900 million of
the Company’s 4.10% senior notes due 2022 (the “2022 Notes”), 4.05%
senior notes due 2020 (the “2020 Notes”), 4.95% senior notes due 2025
(the “2025 Notes”), 7.50% senior notes due 2026 (the “2026 Notes”) and
7.75% senior notes due 2027 (the “2027 Notes” and, together with the
2022 Notes, the 2020 Notes, the 2025 Notes and the 2026 Notes, the
“Notes”) and related Consent Solicitations (as defined below), upon the
terms and conditions described in the Company’s Offer to Purchase and
Consent Solicitation Statement dated September 4, 2018 (the “Offer to
Purchase”). The maximum aggregate purchase price of the Tender Offers,
excluding accrued interest, has been increased to $901,728,320, the
amount sufficient to allow the purchase of $900 million aggregate
principal amount of Notes of the series described below.
According to information received from Global Bondholder Services
Corporation (“GBSC”), the Tender Agent and Information Agent for the
Tender Offers and Consent Solicitations, as of 5:00 p.m., New York City
time, on September 17, 2018 (that date and time, the “Early Tender
Time”), the Company had received valid tenders from holders of the Notes
as outlined in the table below.
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Aggregate Principal Amount Outstanding
($)
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Series of Notes
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CUSIP / ISIN Number
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Sub-Cap ($)
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Acceptance Priority Level
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Principal Amount Tendered ($)
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Total Consideration per $1,000 Principal Amount
of Notes ($)(1)(2)
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Final Proration Factor
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4.10% Senior Notes due 2022
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845467AF6; 85467AH2/ U84517AB4
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$1,000,000,000
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N/A
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1
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$787,210,000
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$1,000.00
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100.0%
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4.05% Senior Notes due 2020(3)
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845467AK5
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$91,557,000
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N/A
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2
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$40,028,000
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$1,025.00
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100.0%
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4.95% Senior Notes due 2025(3)
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845467AL3
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$1,000,000,000
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N/A
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3
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$218,600,000
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$1,010.00
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33.4%(4)
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7.50% Senior Notes due 2026
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845467AM1
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$650,000,000
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$50,000,000
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4
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$76,373,000
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$1,052.50
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0%
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7.75% Senior Notes due 2027
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845467AN9
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$500,000,000
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$50,000,000
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5
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$95,268,000
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$1,060.00
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0%
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(1)
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Does not include accrued interest, which will also be payable as
provided herein.
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(2)
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Includes the Early Tender Premium (as defined below).
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(3)
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In February and June 2016, Moody’s and S&P downgraded certain
senior notes of the Company, increasing the interest rates by 175
basis points effective July 2016. As a result of these downgrades,
the interest rate increased to 5.80% for the 2020 Notes and to
6.70% for the 2025 Notes. In April and May 2018, S&P and Moody’s
upgraded certain senior notes, decreasing the interest rates by 50
basis points effective July 2018. The first coupon payment to the
bondholders at the lower interest rate will be paid in January
2019. As a result of these upgrades, the interest rate decreased
to 5.30% for the 2020 Notes and to 6.20% for the 2025 Notes. The
first coupon payment to the bondholders at the lower interest rate
will be paid in January 2019.
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(4)
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Rounded to the nearest tenth of a percentage point for
presentation purposes.
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Because the purchase of all Notes validly tendered in the Tender Offers
would cause the Company to purchase an aggregate principal amount of
Notes that would result in an aggregate purchase price, excluding
accrued interest, in excess of $901,728,320, subject to the satisfaction
or waiver of all conditions to the Tender Offers described in the Offer
to Purchase, the Company intends to accept for purchase (a) all tendered
2022 Notes and 2020 Notes (b) only $72,762,000 principal amount of 2025
Notes, and (c) none of the 2026 Notes and 2027 Notes. If accepted, the
Company intends to pay holders of 2025 Notes tendered on or prior to the
Early Tender Time on a pro rata basis according to the proration
procedures described in the Offer to Purchase.
Notes that have been validly tendered on or prior to the Early Tender
Time cannot be withdrawn, except as may be required by applicable law.
Because the Tender Offers were oversubscribed at the Early Tender Time,
holders of Notes who tender after the Early Tender Time will not have
any of their Notes accepted for purchase. Any tendered Notes that are
not accepted for purchase will be returned or credited without expense
to the holder’s account.
Holders of Notes that were validly tendered prior to the Early Tender
Time and that are accepted for purchase pursuant to the applicable
Tender Offer will receive the applicable Total Consideration for each
series of Notes as set forth in the table above, which includes the
early tender premium of $50.00 per $1,000 principal amount of Notes (the
“Early Tender Premium”), together with accrued and unpaid interest on
such Notes from the last interest payment date with respect to such
Notes to, but not including, the settlement date.
As part of the Tender Offers, the Company also solicited consents (the
“Consent Solicitations”) from the holders of Notes to certain proposed
amendments described in the Offer to Purchase to remove certain
restrictive covenants and events of default contained in the indentures
governing the Notes (the “Proposed Amendments”). As of the Early Tender
Time, holders of $787,210,000 aggregate principal amount of the 2022
Notes, representing approximately 78.72% of the outstanding 2022 Notes
had validly tendered their 2022 Notes and were deemed to have delivered
their consents to the Proposed Amendments with respect to such series by
virtue of such tender. As a result, the number of consents required to
approve the Proposed Amendments with respect to the 2022 Notes have been
received, and such Proposed Amendments are expected to become effective
on or promptly following the date hereof upon the execution of a
supplemental indenture to the indenture governing the 2022 Notes. The
Proposed Amendments with respect to the 2022 Notes will not become
operative until the Company consummates the Tender Offer with respect to
the 2022 Notes in accordance with its terms and in a manner resulting in
the purchase of all 2022 Notes validly tendered prior to the Early
Tender Time. The consents required to approve the Proposed Amendments
with respect to the 2020 Notes, the 2025 Notes, the 2026 Notes and the
2027 Notes were not obtained by the Company and therefore the indentures
governing such Notes will not be amended and will remain in effect in
their present form.
The Tender Offers are not conditioned upon the tender of any minimum
principal amount of Notes of any series nor on the delivery of a number
of consents required to amend the indenture with respect to each series
of Notes. However, the Tender Offers and Consent Solicitations are
subject to, and conditioned upon, the satisfaction or waiver of certain
conditions described in the Offer to Purchase, including the Company’s
consummation of the sale under the Membership Interest Purchase
Agreement dated as of August 30, 2018, by and between the Company and
Flywheel Energy Operating, LLC, the Company’s subsidiary that owns and
operates its Fayetteville Shale exploration and production and related
midstream gathering assets (the “Fayetteville Sale”).
The Company intends to fund the Tender Offers, including accrued and
unpaid interest and fees and expenses payable in connection with the
Tender Offers, with proceeds from the Fayetteville Sale.
The Tender Offers will each expire at 11:59 p.m., New York City time, on
October 1, 2018, unless extended or terminated by the Company (the
“Expiration Date”).
Citigroup Global Markets Inc. is the Lead Dealer Manager and Lead
Solicitation Agent in the Tender Offers and Consent Solicitations and
MUFG Securities Americas Inc., RBC Capital Markets, LLC, SG Americas
Securities, LLC and Wells Fargo Securities, LLC are Co-Dealer Managers
and Co-Solicitation Agents in the Tender Offers and Consent
Solicitations. GBSC has been retained to serve as the Tender Agent and
Information Agent for the Tender Offers and Consent Solicitations.
Persons with questions regarding the Tender Offers and Consent
Solicitations should contact Citigroup Global Markets Inc. at (toll
free) (800) 558-3745 or (collect) (212) 723-6106. Requests for the Offer
to Purchase should be directed to Global Bondholder Services Corporation
at (toll free) (866) 807-2200 or by email to contact@gbsc-usa.com.
This news release shall not constitute an offer to sell, a solicitation
to buy or an offer to purchase or sell any securities. The Tender Offers
and Consent Solicitations are being made only pursuant to the Offer to
Purchase and only in such jurisdictions as is permitted under applicable
law. In any jurisdiction in which the Tender Offers are required to be
made by a licensed broker or dealer, the Tender Offers will be deemed to
be made on behalf of the Company by the Dealer Managers, or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
About Southwestern Energy Company
Southwestern Energy Company (NYSE: SWN) is an independent energy company
whose wholly-owned subsidiaries are engaged in natural gas, natural gas
liquids and oil exploration, development, production, gathering and
marketing. Additional information about the Company is available at www.swn.com.
Forward-Looking Statements
This news release contains forward-looking statements. Forward-looking
statements relate to future events and anticipated results of
operations, business strategies, and other aspects of our operations or
operating results. In many cases you can identify forward-looking
statements by terminology such as “anticipate,” “intend,” “plan,”
“project,” “estimate,” “continue,” “potential,” “should,” “could,”
“may,” “will,” “objective,” “guidance,” “outlook,” “effort,” “expect,”
“believe,” “predict,” “budget,” “projection,” “goal,” “forecast,”
“target” or similar words. Statements may be forward looking even in the
absence of these particular words. Where, in any forward-looking
statement, the company expresses an expectation or belief as to future
results, such expectation or belief is expressed in good faith and
believed to have a reasonable basis. However, there can be no assurance
that such expectation or belief will result or be achieved. The actual
results of operations can and will be affected by a variety of risks and
other matters including, but not limited to, changes in commodity
prices; changes in expected levels of natural gas and oil reserves or
production, or the consummation of the Fayetteville Sale; operating
hazards, drilling risks, unsuccessful exploratory activities; limited
access to capital or significantly higher cost of capital related to
illiquidity or uncertainty in the domestic or international financial
markets; international monetary conditions; unexpected cost increases;
potential liability for remedial actions under existing or future
environmental regulations; potential liability resulting from pending or
future litigation; and general domestic and international economic and
political conditions; as well as changes in tax, environmental and other
laws applicable to our business. Other factors that could cause actual
results to differ materially from those described in the forward-looking
statements include other economic, business, competitive and/or
regulatory factors affecting our business generally as set forth in our
filings with the Securities and Exchange Commission. Unless legally
required, Southwestern Energy Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
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