Crescent Energy Announces Tender Offer for Its 7.250% Senior Notes due 2026

Rhea-AI Summary

Crescent Energy Finance , a subsidiary of Crescent Energy Company, has initiated a cash tender offer to purchase all outstanding senior notes listed in the Offer to Purchase. The offer includes the purchase of 7.250% Senior Notes due 2026 with a principal amount of $700,000,000 at a price of $1,018.83 per $1,000 of Notes. Holders will also receive accrued and unpaid interest. The Tender Offer expires on March 25, 2024, with settlement expected on March 26, 2024, and any remaining Notes will be redeemed on May 1, 2024, subject to conditions. CE Finance plans to use the proceeds from a Notes Offering to fund the purchase and redemption. BofA Securities is the exclusive Dealer Manager for the Tender Offer.

Insights

Financial Analyst

The tender offer initiated by Crescent Energy Finance LLC to repurchase its outstanding senior notes is a strategic financial move that aims to manage the company's debt profile effectively. The purchase price set above par value indicates a premium is being offered to the note holders, which could be an incentive for investors to tender their notes back to the company. This premium reflects the company's willingness to pay extra to reacquire the debt, possibly to take advantage of lower interest rates or improve its balance sheet ahead of future financial maneuvers.

From a financial analyst's perspective, the success of this tender offer could lead to interest savings and a stronger financial position for Crescent. However, the need to draw from a revolving credit facility raises questions about the company's liquidity and cash flow management. Investors should monitor the terms of the new notes offering, as it could affect the company's cost of capital and leverage ratios. The outcome of this transaction will likely have implications for Crescent's credit rating and stock valuation.

Debt Market Analyst

Examining the tender offer from a debt market analyst's viewpoint, the fact that Crescent Energy Finance is willing to redeem the notes at a premium suggests a bullish stance on the company's part regarding its debt market conditions. This move could be interpreted as a signal that the company anticipates an improvement in its creditworthiness or a strategic shift in its capital structure. Furthermore, the conditions of the tender offer, which do not require a minimum amount of notes to be tendered, provide flexibility for the company in managing the repurchase.

The impact on the secondary market for these notes could be significant. If the tender offer is well-received, it might lead to a tightening of the spread on Crescent's remaining debt instruments, reflecting a lower risk premium demanded by investors. Conversely, if the market perceives this as a sign of distress or a lack of confidence in future cash flows, the opposite effect could occur. Market participants will be watching closely to see the level of participation in the tender offer as a gauge of investor sentiment towards Crescent's financial health.

Credit Risk Analyst

From the perspective of a credit risk analyst, the key focus is on Crescent's credit profile and the implications of this tender offer on its overall risk. The company's decision to repurchase its senior notes could be a proactive step to reduce potential future refinancing risk, especially if market conditions deteriorate. By locking in the cost of capital through a new notes offering, Crescent may be seeking to mitigate the risk of rising interest rates.

However, the reliance on additional borrowings to finance this transaction could increase the company's leverage in the short term, potentially elevating its credit risk. The conditions mentioned in the tender offer, such as the successful completion of a contemporaneous notes offering, are important to not exacerbating this risk. Credit risk analysts will evaluate the final terms of the new debt issuance to assess whether the company's creditworthiness is likely to improve or if the additional debt burden will pose a greater risk to creditors.

HOUSTON--(BUSINESS WIRE)-- Crescent Energy Finance LLC (“CE Finance”), a wholly owned subsidiary of Crescent Energy Company (“Crescent”) announced today that it has commenced a cash tender offer (the “Tender Offer”) to purchase any and all of the outstanding senior notes (the “Notes”) listed in the following table upon the terms and conditions described in CE Finance’s Offer to Purchase, dated March 19, 2024 (the “Offer to Purchase”).

Issuer (1)		Title of Security		CUSIP Number		Principal Amount Outstanding			Purchase Price per $1,000 of Notes (2)
Crescent Energy Finance LLC		7.250% Senior Notes due 2026		45344LAA1 (144A) / U4526LAA5 (Reg S)		$	700,000,000		$	1,018.83

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(1)		Crescent Energy Finance LLC, a Delaware limited liability company and a wholly owned subsidiary of Crescent Energy Company (NYSE:CRGY), is the issuer of these securities.
(2)		Holders will also receive accrued and unpaid interest thereon from the last interest payment date up to, but not including, the settlement date in addition to the Purchase Price.

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) 654-2014 (toll free) or, for banks and brokers, (212) 430-3774. Copies of the Offer to Purchase and Notice of Guaranteed Delivery are also available at the following web address: https://www.gbsc-usa.com/crescentenergyco/.

The Tender Offer will expire at 5:00 p.m., New York City time, on March 25, 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 consideration for their Notes.

Settlement for Notes tendered prior to the Expiration Time and accepted for purchase will occur promptly after the Expiration Time, which is expected to be March 26, 2024, assuming that the Tender Offer is not extended or earlier terminated. The settlement date for any Notes tendered pursuant to a Notice of Guaranteed Delivery is expected to be on March 28, 2024, subject to the same assumption.

Additionally, CE Finance intends to redeem any Notes that are not repurchased in the Tender Offer on May 1, 2024. However, there can be no assurance that any Notes will be repaid. The Tender Offer and the redemption are conditioned upon the satisfaction of certain conditions, including the completion of a contemporaneous notes offering (the “Notes Offering”) by CE Finance on terms and conditions (including, but not limited to, the amount of proceeds raised in such Notes Offering) satisfactory to CE Finance and Crescent. The Tender Offer is not conditioned upon any minimum amount of Notes being tendered. The Tender Offer may be amended, extended, terminated or withdrawn. Crescent intends to use the net proceeds of the Notes Offering, together with borrowings under Crescent’s revolving credit facility, if needed, to fund the purchase of the Notes in the Tender Offer and to redeem any of the Notes outstanding after completion of the Tender Offer.

CE Finance has retained BofA Securities to serve as the exclusive Dealer Manager for the Tender Offer. Questions regarding the terms of the Tender Offer may be directed to BofA Securities at +1 (888) 292-0070 (toll-free), +1 (646) 743-2120 (collect) or debt_advisory@bofa.com.

This press release is neither an offer to purchase nor a solicitation of an offer to sell any Notes in the Tender Offer and does not constitute a notice of redemption for the 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.

About Crescent Energy Company

Crescent Energy Company is a U.S. energy company with a portfolio of assets concentrated in Texas and the Rockies.

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 tender offer 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 Ukraine and Israel, the impact of disruptions in the banking industry and capital markets, the timing and success of business development efforts, including acquisition and disposition opportunities, our reliance on external manager, cost inflation and central bank policy changes associated therewith and other uncertainties. All statements, other than statements of historical facts, included in this communication that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Consequently, actual future results could differ materially from our expectations due to a number of factors, including, but not limited to, those items identified as such in the most recent Annual Report on Form 10-K and any subsequently filed Quarterly Reports on Form 10-Q and the risk factors described thereunder, filed by Crescent Energy Company with the U.S. Securities and Exchange Commission.

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 these forward-looking statements based on new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240318238506/en/

Brandi Kendall

IR@crescentenergyco.com

Source: Crescent Energy

FAQ

What is the principal amount of the 7.250% Senior Notes due 2026 being offered for purchase in the Tender Offer by Crescent Energy Finance ?

The principal amount of the 7.250% Senior Notes due 2026 being offered for purchase is $700,000,000.

What is the purchase price per $1,000 of Notes in the Tender Offer?

The purchase price per $1,000 of Notes in the Tender Offer is $1,018.83.

When does the Tender Offer expire?

The Tender Offer expires at 5:00 p.m., New York City time, on March 25, 2024.

What is the expected settlement date for Notes tendered prior to the Expiration Time?

The expected settlement date for Notes tendered prior to the Expiration Time is March 26, 2024.

What is the purpose of the Notes Offering mentioned in the press release?

The Notes Offering is intended to fund the purchase of the Notes in the Tender Offer and to redeem any outstanding Notes after the completion of the Tender Offer.