Crescent Energy Announces Pricing of $700 Million Private Placement of 7.625% Senior Notes Due 2032
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Insights
The pricing of Crescent Energy Company's $700 million Senior Notes at 7.625% represents a significant financial event for the company and its investors. The interest rate, notably higher than the current average corporate bond yield, indicates a potentially higher risk profile or a premium demanded by investors for the long-term commitment until 2032. This move appears to be a strategic effort to manage the company's debt profile by using the proceeds to address the outstanding 7.250% Senior Notes due 2026.
Investors should note that the decision to issue new debt at a higher interest rate to pay off existing debt could signal management's confidence in future cash flows, despite the cost. The tender offer and redemption plan for the 2026 Notes also suggest an active approach to liability management. However, this could also impact the company's interest expenses and financial leverage, potentially affecting future profitability and stock performance.
Considering the current economic climate, with rising interest rates and potential recession concerns, the company's ability to secure such a deal may reflect its creditworthiness and investor confidence. Nevertheless, stakeholders should monitor the company's leverage ratios and interest coverage metrics closely, as these will be critical in understanding the long-term impact of this financial maneuver.
The decision by Crescent Energy to price the Senior Notes at par and offer them through a private placement under Rule 144A and Regulation S suggests a targeted approach towards institutional investors and international markets. This method of offering bypasses the general public and is tailored for sophisticated investors, likely due to the nature of the unregistered securities involved.
The 7.625% interest rate, while attractive to investors seeking higher yields, could reflect underlying market conditions and investor sentiment towards the energy sector. The energy market's volatility, driven by fluctuating commodity prices and regulatory changes, can impact the risk assessment and pricing of such financial instruments.
As the offering is contingent upon the completion of the tender offer and redemption of the 2026 Notes, it's essential to consider the success of these transactions. Should the market conditions change or investor appetite wane, the company could face challenges in fulfilling its strategic financial plans. Observers should also be aware of the implications of such debt restructuring on the company's long-term financial health and its ability to respond to market or operational shifts.
The Issuer intends to use net proceeds from this offering, together with additional borrowings under the revolving credit facility, to purchase for cash any and all of the Issuer’s outstanding
The Notes and the related guarantees have not been registered under the Securities Act, or any state securities laws, and, unless so registered, the Notes and the guarantees may not be offered or sold in
This communication shall not constitute an offer to sell, or the solicitation of an offer to buy, the securities described herein, nor shall there be any sale of these 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. Additionally, this communication shall not constitute an offer to purchase or the solicitation of an offer to sell any 2026 Notes in the Tender Offer, nor does it constitute a notice of redemption under the indenture governing the 2026 Notes.
About Crescent Energy Company
Crescent Energy Company is a
Cautionary Statement Regarding Forward-Looking Information
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on current expectations. The words and phrases “should”, “could”, “may”, “will”, “believe”, “think”, “plan”, “intend”, “expect”, “potential”, “possible”, “anticipate”, “estimate”, “forecast”, “view”, “efforts”, “target”, “goal” and similar expressions identify forward-looking statements and express our expectations about future events. This communication includes statements regarding this private placement and the use of proceeds therefrom, including the Tender Offer, the timing or outcome thereof, and the Redemption, that may contain forward-looking statements within the meaning of federal securities laws. We believe that our expectations are based on reasonable assumptions; however, no assurance can be given that such expectations will prove to be correct. A number of factors could cause actual results to differ materially from the expectations, anticipated results or other forward-looking information expressed in this communication, including weather, political, economic and market conditions, including a decline in the price and market demand for natural gas, natural gas liquids and crude oil, uncertainties inherent in estimating natural gas and oil reserves and in projecting future rates of production; our hedging strategy and results, federal and state regulations and laws, the impact of pandemics such as COVID-19, actions by the Organization of the Petroleum Exporting Countries (“OPEC”) and non-OPEC oil-producing countries, including recent production cuts by OPEC, the impact of armed conflicts, including in and around
Many of such risks, uncertainties and assumptions are beyond our ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. We do not give any assurance (1) that we will achieve our expectations or (2) concerning any result or the timing thereof.
All subsequent written and oral forward-looking statements concerning this offering, the use of proceeds therefrom, Crescent Energy Company and the Issuer or other matters and attributable thereto or to any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. We assume no duty to update or revise their respective forward-looking statements based on new information, future events or otherwise.
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Brandi Kendall
IR@crescentenergyco.com
Source: Crescent Energy
FAQ
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