CNX Resources Corporation Announces Closing of $400 Million Senior Notes Offering

Rhea-AI Summary

CNX Resources Corporation closes $400 million private placement of senior notes due 2032. Proceeds to retire outstanding notes, repay credit facility, and for general corporate purposes. Notes offered to qualified institutional buyers and non-U.S. persons. CNX is a natural gas company with significant reserves and a focus on long-term shareholder value.

Insights

Financial Analyst

The recent announcement by CNX Resources Corporation regarding the closing of a $400 million private placement of senior notes is a significant financial maneuver that warrants a detailed analysis from a financial perspective. The senior notes, bearing a 7.250% interest rate and maturing in 2032, represent a long-term debt instrument that the company is using to restructure its existing debt obligations. By initiating a tender offer to purchase its outstanding 2027 Notes and potentially redeeming any remaining notes not purchased, CNX is effectively managing its debt maturity profile.

From an investor's standpoint, this move could signal a proactive approach to capital management, possibly reflecting the company's confidence in its financial stability and future cash flows. The guaranteed backing by CNX's wholly-owned domestic restricted subsidiaries could provide additional security to note holders, potentially making the offering more attractive. However, the relatively high interest rate might also suggest a premium paid by CNX to attract investors in a potentially higher risk environment or to compensate for the company's credit risk.

It is also noteworthy that the proceeds will be used to repay borrowings under its revolving credit facility, which could indicate a strategic shift from variable-rate to fixed-rate debt, potentially mitigating interest rate risk. The remaining proceeds earmarked for general corporate purposes must be monitored to ensure they are allocated in a manner that maximizes shareholder value.

Legal Expert

The legal intricacies of CNX's private placement of senior notes are pivotal in understanding the broader implications of the transaction. The notes have been structured under an indenture with subsidiary guarantors and a trustee, which is a common framework for such debt issuances. The fact that the notes are not registered under the Securities Act of 1933, as amended and are only offered to qualified institutional buyers and non-U.S. persons outside the United States, underscores the private nature of the placement and the regulatory landscape that governs it.

Rule 144A and Regulation S under the Securities Act provide the exemptions that allow for this type of transaction. This legal framework is designed to facilitate capital raising by limiting the offering to sophisticated investors who are deemed capable of evaluating the risks involved without the need for the same level of public disclosure as a registered offering. The legal structure of the transaction, including the indenture and the restrictions on the sale of the notes, is essential in protecting the interests of both the issuer and the note holders.

Market Research Analyst

Analyzing the impact of CNX's senior notes issuance from a market research perspective involves examining the company's position within the energy sector, specifically its focus on ultra-low carbon intensive natural gas development. The company's substantial asset base and proven reserves of natural gas position it favorably in a market that is increasingly attentive to sustainable and environmentally responsible energy sources. CNX's emphasis on technology development and innovation could further bolster its competitive edge.

The decision to issue debt may also be influenced by the current market conditions, including interest rates and investor appetite for energy sector securities. The company's reference to free cash flow deployment for long-term per share value creation suggests a strategic use of financial leverage to support growth initiatives or return capital to shareholders. The market's reception of this debt issuance will depend on the perceived alignment of CNX's financial strategy with industry trends and the broader economic outlook for the energy sector.

PITTSBURGH, Feb. 23, 2024 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX," "we," or "our") today announced the closing of its private placement of $400 million aggregate principal amount of its 7.250% senior notes due 2032 (the "Notes"). The Notes were offered under an indenture, dated February 23, 2024 (the "Indenture"), among CNX, the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee. The Notes are guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility.

CNX intends to use the net proceeds of the sale of the Notes to (i) purchase any and all of its outstanding 7.250% senior notes due 2027 (the "2027 Notes") pursuant to the tender offer that commenced concurrently with the offering of the Notes (the "Tender Offer"), (ii) to the extent any 2027 Notes remain outstanding after the Tender Offer, fund the redemption of all 2027 Notes not purchased in the Tender Offer (the "Redemption") and (iii) repay borrowings under its revolving credit facility, with any remaining proceeds used for general corporate purposes.

The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes have been and will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.

CNX Resources Corporation (NYSE: CNX) is a premier, ultra-low carbon intensive natural gas development, production, midstream, and technology company centered in Appalachia, one of the most energy abundant regions in the world. With the benefit of a 160-year regional legacy, substantial asset base, leading core operational competencies, technology development and innovation, and astute capital allocation methodologies, we responsibly develop our resources and deploy free cash flow to create long-term per share value for our shareholders, employees, and the communities where we operate. As of December 31, 2023, CNX had 8.74 trillion cubic feet equivalent of proved natural gas reserves.

Cautionary Statements:

This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering of Notes was made only by means of an offering memorandum. This press release does not constitute an offer to purchase or the solicitation of an offer to sell any 2027 Notes in the Tender Offer, nor does it constitute a notice of redemption under the indenture governing the 2027 Notes.

Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "will" or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release, including those relating to the offering of Notes and the use of proceeds therefrom, the Tender Offer and the Redemption, speak only as of the date of this press release; we disclaim any obligation to update these statements unless required by securities laws and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in our 2023 Annual Report on Form 10-K under "Risk Factors," which is on file at the U.S. Securities and Exchange Commission.

 

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SOURCE CNX Resources Corporation

FAQ

What is the purpose of CNX's private placement of senior notes due 2032?

The purpose is to retire outstanding 2027 notes, repay credit facility, and for general corporate purposes.

How much was the aggregate principal amount of the senior notes in the private placement?

The aggregate principal amount was $400 million.

How are the Notes offered?

The Notes are offered to qualified institutional buyers and non-U.S. persons.

What is CNX's focus as a company?

CNX is a natural gas company with a focus on long-term shareholder value.

What is the ticker symbol for CNX Resources Corporation?

The ticker symbol is 'CNX'.