CNX Resources Corporation Announces Pricing Terms of Cash Tender Offer for its 7.250% Senior Notes due 2027
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Insights
The tender offer announced by CNX Resources Corporation for its 7.250% Senior Notes due 2027 represents a strategic financial maneuver aimed at managing the company's debt profile. The repurchase of these notes at a premium, set by a fixed spread plus the yield of a reference U.S. Treasury security, is a common practice known as a 'yield to worst' calculation. The fixed spread of 0 basis points indicates that CNX is offering to buy back the notes at the yield equivalent to the reference Treasury rate. This could imply that the company is confident about its liquidity position and the success of its concurrent new notes offering.
From a financial perspective, this transaction could be beneficial for CNX as it may result in interest cost savings if the new notes offering has a lower interest rate compared to the existing 7.250% notes. Additionally, the tender offer may also be seen as a signal to the market that CNX is proactive in managing its debt and could potentially improve its credit rating over time. However, the timing and success of the tender offer and subsequent redemption are contingent upon the completion of the new notes offering, which introduces a degree of uncertainty for investors and the company alike.
The natural gas sector, where CNX Resources Corporation operates, is subject to volatile market conditions influenced by a myriad of factors including geopolitical events, regulatory changes and shifts in supply and demand dynamics. CNX's decision to repurchase its outstanding senior notes could be interpreted as an effort to optimize its capital structure amidst such volatility. This move might also be indicative of the company's broader strategy to maintain financial flexibility, which is crucial in the energy industry where companies must swiftly adapt to changing market conditions.
Moreover, the announcement of this tender offer and potential redemption could have an impact on CNX's stock market performance. Investors typically view such financial strategies as positive when they lead to a stronger balance sheet and reduced interest expense. However, the market will also consider the terms of the new notes offering and the company's future debt servicing capabilities. It is important for current and potential investors to monitor these developments closely as they could influence CNX's financial health and stock valuation.
The tender offer and subsequent redemption of notes are governed by complex legal documents and securities regulations. CNX Resources Corporation must adhere to the covenants outlined in the indenture agreement of the 7.250% Senior Notes due 2027. The company's ability to issue a conditional notice of redemption is contingent upon the fulfillment of specific conditions, including the successful closing of the new notes offering and the receipt of sufficient net proceeds. Failure to meet these conditions could result in the termination of the redemption and rescission of the notice, which would have legal implications for CNX and its investors.
Additionally, the press release's cautionary statements highlight the regulatory compliance aspect of such transactions, emphasizing that the tender offer is not a solicitation for sales or purchases in jurisdictions where it would be unlawful without appropriate registration or exemptions. It is crucial for CNX to navigate these legal intricacies carefully to avoid potential regulatory issues and to ensure the successful completion of their financial restructuring activities.
The "Purchase Price" for each
Title of | CUSIP | Principal |
| Bloomberg | Reference | Fixed | Purchase |
Senior Notes due 2027 | 144A Reg S |
| FIT3 | 5.536 % | 0 |
In addition to the Purchase Price, holders whose Notes are purchased pursuant to the Tender Offer will also receive accrued and unpaid interest thereon from the last interest payment date up to, but not including, the initial date on which CNX makes payment for such Notes, which date is currently expected to be February 23, 2024, assuming that the Tender Offer is not extended or earlier terminated.
The Tender Offer is being made pursuant to the terms and conditions contained in the Offer to Purchase and Notice of Guaranteed Delivery, copies of which may be obtained from Global Bondholder Services Corporation, the tender agent and information agent for the Tender Offer, by calling (855) 654-2015 (toll free) or, for banks and brokers, (212) 430-3774 or by email at contact@gbsc-usa.com.
The Tender Offer will expire at 5:00 p.m. New York City Time today, unless extended or earlier terminated (such time and date as the same may be extended, the "Expiration Time"). Tendered Notes may be withdrawn at any time before the Expiration Time. Holders of Notes must validly tender and not validly withdraw their Notes (or comply with the procedures for guaranteed delivery) before the Expiration Time to be eligible to receive the Purchase Price for their Notes.
The Tender Offer is conditioned upon the satisfaction of certain conditions, including the completion of a contemporaneous notes offering by CNX (the "new notes offering") on terms and conditions (including, but not limited to, the amount of proceeds raised in such offering) satisfactory to CNX. The Tender Offer is not conditioned upon any minimum amount of Notes being tendered and the Tender Offer may be amended, extended, terminated or withdrawn, subject to applicable law.
Concurrently with the commencement of the Tender Offer, CNX issued a conditional notice, pursuant to the indenture governing the Notes, to redeem (the "Redemption") all Notes not purchased in the Tender Offer, at a redemption price of
CNX has retained J.P. Morgan Securities LLC to serve as the Lead Dealer Manager and TD Securities (
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 constitute an offer to purchase or the solicitation of an offer to sell any Notes in the Tender Offer, nor does it constitute a notice of redemption under the indenture governing the 2027 Notes . In addition, this press release is not an offer to sell or the solicitation of an offer to buy any securities issued in connection with any contemporaneous notes offering, nor shall there be any sale of the securities issued in such offering in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
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. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. 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 offer, the new notes offering and the Redemption, speak only as of the date of this press release; we disclaim any obligation to update these statements. 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
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SOURCE CNX Resources Corporation
FAQ
What are the details of CNX's cash tender offer for 7.250% Senior Notes due 2027?
What is the Purchase Price for each $1,000 principal amount of Notes tendered?
What additional benefits do holders receive if their Notes are purchased through the Tender Offer?
What is the deadline for the Tender Offer to expire?
What is the condition for the Redemption of unsold Notes?
