CNX Resources Corporation Announces Tender Offer for its 7.250% Senior Notes due 2027
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Insights
The announcement by CNX Resources Corporation regarding the commencement of a cash tender offer for its outstanding 7.250% Senior Notes due 2027 is a strategic financial maneuver that can have significant implications for the company's capital structure and liquidity. By repurchasing debt before its maturity, CNX aims to manage its interest expenses and optimize its debt profile in response to the current market conditions. The fixed spread of 0 basis points over the U.S. Treasury Reference Security indicates the company's cost of borrowing in relation to risk-free government bonds. This move could signal to the market that CNX is proactively managing its liabilities, potentially leading to an improved credit rating and reduced cost of capital in the future.
The conditionality of the tender offer on the success of a contemporaneous notes offering suggests a refinancing strategy where CNX is attempting to replace older, higher-interest debt with new issuance at potentially lower rates. This could improve the company's interest coverage ratio, a critical measure of financial health and provide more flexibility in its financial operations. The impact on the stock market will depend on investor perception of CNX's financial management and the success of the new notes offering. A successful tender offer and subsequent debt issuance could be viewed favorably, potentially leading to an uptick in CNX's stock price.
The natural gas sector, where CNX operates, is highly competitive and subject to volatile commodity prices. CNX's decision to repurchase its 7.250% Senior Notes could be a strategic move to reduce the cost burden of high-interest debt amidst a fluctuating energy market. This decision comes at a time when energy companies are under pressure to maintain financial discipline while investing in technology and sustainable practices. CNX's emphasis on being an 'ultra-low carbon intensive natural gas development' company aligns with the increasing investor interest in environmentally responsible and sustainable energy production.
By analyzing the company's proven natural gas reserves and its positioning in Appalachia, a region with significant energy resources, investors can gauge the potential for long-term value creation. The tender offer and the potential redemption of notes not purchased in the offer could be seen as a proactive step in strengthening the balance sheet, which can be particularly appealing to investors focused on long-term stability and growth in the energy sector.
From a legal standpoint, the tender offer and the conditional redemption notice issued by CNX Resources Corporation are governed by specific terms outlined in the indenture agreement. The company's adherence to these terms, including the conditions for the redemption and the provision of a notice period, is crucial to ensure compliance with contractual and regulatory obligations. The offer is subject to certain conditions, including the completion of a new notes offering, which introduces a level of uncertainty for note holders. The legal framework allows CNX to amend, extend, terminate, or withdraw the tender offer, subject to applicable law, providing the company with flexibility in its capital management strategies.
It is also important to note that the press release includes cautionary statements that clarify the communication is neither an offer to purchase nor a solicitation of an offer to sell the notes, which is a standard legal disclaimer to mitigate the risk of the communication being construed as an unlawful offer or solicitation in jurisdictions where such actions would require further regulatory compliance.
Certain information regarding the Notes and the
Title of Security | CUSIP | Principal Amount |
| Bloomberg | Fixed Spread |
| 144A Reg S |
| FIT3 | 0 | |
The "Purchase Price" for each
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 on February 16, 2024, 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
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