Southwestern Energy Announces Final Results and Expiration of Cash Tender Offers and Consent Solicitations for Senior Notes
Southwestern Energy Company (NYSE: SWN) (the “Company”) today announced
the final results and expiration 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 $901,728,320 (such
amount, the “Maximum Purchase Price”) 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 Tender Offers and Consent Solicitations were 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 (the “MIPA”), by and between the Company and Flywheel
Energy Operating, LLC, the Company’s subsidiaries that owned and
operated its Fayetteville Shale exploration and production and related
midstream gathering assets (the “Fayetteville Sale”). The Fayetteville
Sale was consummated under the MIPA on December 3, 2018. 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.
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”) and as of 11:59 p.m., New York City time, on December 3, 2018
(that date and time, the “Expiration Date”), 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 ($)
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Acceptance Priority Level
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Principal Amount Tendered as of the Early
Tender Time ($)
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Principal Amount Accepted for Purchase
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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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Principal Amount Tendered after the Early
Tender Time and prior to the Expiration Date ($)(5)
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4.10% Senior Notes due 2022
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845467AF6; 845467AH2/ 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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$787,210,000
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$1,000.00
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100.0%
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$532,000
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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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$40,028,000
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$1,025.00
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100.0%
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$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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$72,762,000
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$1,010.00
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33.4%(4)
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$1,468,000
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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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$0
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$1,052.50
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0%
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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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$0
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$1,060.00
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0%
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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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(5)
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Not accepted for purchase by the Company.
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Because the purchase of all Notes validly tendered in the Tender Offers
prior to the Early Tender Time 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 the Maximum
Purchase Price, the Company has accepted for purchase (a) all 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, in each case tendered prior
to the Early Tender Time (such amount of Notes, the “Final Tender
Amount”). The Company will pay holders of 2025 Notes tendered prior to
the Early Tender Time on a pro rata basis according to the proration
procedures described in the Offer to Purchase. On the “Final Settlement
Date,” which is currently expected to occur on the date hereof, the
Company will purchase the Final Tender Amount. Any tendered Notes that
are not accepted for purchase will be returned or credited without
expense to the holders’ account.
Holders of Notes that were validly tendered prior to the Early Tender
Time and have been 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 Final 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 the Company has executed a supplemental indenture to the
indenture governing the 2022 Notes. However, 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.
Citigroup Global Markets Inc. acted as 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 acted as Co-Dealer
Managers and Co-Solicitation Agents in the Tender Offers and Consent
Solicitations. GBSC served 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.
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 were 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 were required to be
made by a licensed broker or dealer, the Tender Offers were 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
(including geographic basis differentials); changes in expected levels
of natural gas and oil reserves or production; operating hazards,
drilling risks, unsuccessful exploratory activities; natural disasters;
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 in service or other costs related to drilling and completion
activities; potential liability for remedial actions under existing or
future environmental regulations; failure to obtain necessary regulatory
approvals; 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, including court rulings, 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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