Baytex Announces Pricing of Upsized US$575 Million Private Placement Offering of Senior Notes
- Baytex Energy Corp. increases the size of its private placement offering to US$575 million.
- The senior unsecured notes due 2032 will bear interest at a rate of 7.375% per annum.
- The Notes were priced at 99.266% of par to yield 7.500% per annum.
- Baytex intends to use the net proceeds to redeem US$409.8 million of its outstanding 8.75% notes due April 1, 2027, repay debt, and for general corporate purposes.
- The Offering is subject to customary closing conditions and is expected to close on April 1, 2024.
- The Notes will be issued in reliance on Rule 144A under the Securities Act of 1933 and Regulation S under the Securities Act for non-U.S. investors.
- The Notes have not been registered under the Securities Act or state securities laws.
- In Canada, the Notes will be offered and sold on a private placement basis in certain provinces.
- None.
Insights
The announcement by Baytex Energy Corp. regarding the pricing and upsize of its senior unsecured notes is a strategic financial move. The upsizing to US$575 million indicates a robust demand from investors, which may reflect confidence in the company's creditworthiness and future prospects. The interest rate of 7.375% is slightly below the yield, which suggests that the notes were priced attractively to investors. This could potentially lead to a favorable reception in the bond market.
By opting to redeem its outstanding 8.75% notes due in 2027, Baytex is capitalizing on the opportunity to reduce its interest expenses, as the new notes carry a lower interest rate. This could improve their debt profile and interest coverage ratios, which are key metrics for credit rating agencies and investors. Over time, this may have positive implications for the company's stock performance as the market often reacts favorably to improved financial stability and reduced leverage.
However, the use of proceeds to repay a portion of the debt on its credit facilities also indicates that the company is managing a significant level of debt. Investors should monitor the company's debt-to-equity ratio and interest coverage to assess the sustainability of its capital structure.
The private placement of senior unsecured notes by Baytex Energy Corp. reflects broader market trends where energy companies are securing financing to strengthen their balance sheets and fund operations or strategic initiatives. Given the volatility in energy prices and the necessity for energy companies to maintain liquidity, such financial instruments are important for operational flexibility.
Investors should consider the sector's performance and the potential impact of fluctuating oil and gas prices on Baytex's ability to service its debt. Furthermore, as the notes are not registered under the Securities Act, they are subject to certain restrictions on their transferability, which could affect their liquidity in the secondary market. This is a common trade-off in private placements that offer higher yields in exchange for less liquidity.
It is also important to note the timing of the transaction, which is set to close on April 1, 2024. The successful completion of this offering may signal to the market that Baytex has the financial flexibility to navigate the current economic environment, which could influence investor sentiment and the company's stock price.
The legal aspects of Baytex Energy Corp.'s note offering are significant as they involve complex securities regulations. The reliance on Rule 144A and Regulation S for the issuance of these notes is a common strategy for U.S. and non-U.S. investors, respectively, allowing Baytex to bypass the more rigorous public registration process. This move is indicative of a strategic approach to capital raising, utilizing exemptions to access a broader range of investors while remaining compliant with securities laws.
However, the lack of registration under the Securities Act implies that these securities come with higher risks due to the limited disclosure requirements compared to publicly offered securities. For potential investors, it is essential to conduct thorough due diligence. The conditional notice of redemption for the 2027 Notes also introduces a layer of complexity and legal considerations, as it is contingent upon the successful completion of the Offering.
Investors should be aware of the legal implications of the private placement nature of the offering, which restricts the resale of the notes, potentially impacting their marketability and pricing in secondary markets.
Calgary, Alberta--(Newsfile Corp. - March 14, 2024) - Baytex Energy Corp. (TSX: BTE) (NYSE: BTE) ("Baytex") is pleased to announce the pricing and upsize to US
Baytex intends to use the net proceeds from the Offering to redeem US
Pursuant to the terms of the indenture governing the 2027 Notes, Baytex intends to issue a conditional notice of redemption to redeem all of the outstanding 2027 Notes, which redemption will be conditional upon the successful completion of the Offering.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any Notes, nor shall there be any sale of Notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of the Notes under the securities laws of any such jurisdiction. The Notes will be issued in reliance on the exemption from the registration requirements provided by Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and, outside of the United States, only to non-U.S. investors pursuant to Regulation S under the Securities Act. None of the Notes have been registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. In Canada, the Notes are to be offered and sold on a private placement basis in certain provinces of Canada. This press release does not constitute an offer to purchase the 2027 Notes.
Advisory Regarding Forward-Looking Statements
In the interest of providing Baytex's shareholders and potential investors with information regarding Baytex, including management's assessment of Baytex's future plans and operations, certain statements in this press release are "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements"). In some cases, forward-looking statements can be identified by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "intend", "may", "objective", "ongoing", "outlook", "potential", "project", "plan", "should", "target", "would", "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this press release speak only as of the date thereof and are expressly qualified by this cautionary statement.
Specifically, this press release contains forward-looking statements relating to but not limited to: the terms and timing of the Offering, the use of proceeds of the Offering and the intention to and timing of the redemption of the 2027 Notes.
These forward-looking statements are based on certain key assumptions regarding, among other things, the completion of the Offering. Readers are cautioned that such assumptions, although considered reasonable by Baytex at the time of preparation, may prove to be incorrect.
Actual results will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Such factors include, but are not limited to: the Offering may not be completed on the terms contemplated or at all; the intended use of proceeds of the Offering; and other factors, many of which are beyond the control of Baytex. Additional risk factors are discussed in our Annual Information Form, Annual Report on Form 40-F and Management's Discussion and Analysis for the year ended December 31, 2023, as filed with Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission.
The above summary of assumptions and risks related to forward-looking statements has been provided in order to provide shareholders and potential investors with a more complete perspective on Baytex's current and future operations and such information may not be appropriate for other purposes.
There is no representation by Baytex that actual results achieved will be the same in whole or in part as those referenced in such forward-looking statements and Baytex does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
All amounts in this press release are stated in Canadian dollars unless otherwise specified.
Baytex Energy Corp.
Baytex Energy Corp. is an energy company with headquarters based in Calgary, Alberta and offices in Houston, Texas. The company is engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States. Baytex's common shares trade on the Toronto Stock Exchange and the New York Stock Exchange under the symbol BTE.
For further information about Baytex, please contact:
Brian Ector, Senior Vice President, Capital Markets and Investor Relations
Toll Free Number: 1-800-524-5521
Email: investor@baytexenergy.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/201770
FAQ
What is the purpose of Baytex Energy Corp.'s private placement offering of senior unsecured notes due 2032?
What is the interest rate on the Notes issued by Baytex Energy Corp.?
When is the expected closing date for the Offering?
How will Baytex Energy Corp. utilize the net proceeds from the Offering?
Under which exemptions will the Notes be issued?
Are the Notes registered under the Securities Act or state securities laws?
Where will the Notes be offered and sold in Canada?
