Centennial Resource Development, Inc. Announces Proposed Exchangeable Senior Notes Offering
The notes will be senior, unsecured obligations of CRP, will accrue interest payable semi-annually in arrears and will mature on
CRP intends to use a portion of the net proceeds from the offering to fund the cost of entering into the capped call transactions described below. CRP intends to use the remainder of the net proceeds from the offering to redeem, at par, all of its outstanding 8.00% second lien senior secured notes due 2025 and to repay outstanding borrowings under its revolving credit facility. If the underwriters exercise their option to purchase additional notes, then CRP intends to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions as described below, as well as to repay additional outstanding borrowings under its revolving credit facility.
In connection with the pricing of the notes, CRP and Centennial expect to enter into privately negotiated capped call transactions with one or more of the underwriters and/or their respective affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions will cover, subject to customary adjustments, the number of shares of Centennial’s common stock initially underlying the notes. The capped call transactions are expected generally to reduce potential dilution to Centennial’s common stock upon exchange of the notes and/or at CRP’s election (subject to certain conditions) offset any cash payments CRP is required to make in excess of the aggregate principal amount of exchanged notes, as the case may be, with such reduction or offset subject to a cap. If the underwriters exercise their option to purchase additional notes, CRP and Centennial expect to enter into additional capped call transactions with the option counterparties.
In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to Centennial’s common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Centennial’s common stock or the notes at that time. In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Centennial’s common stock and/or purchasing or selling Centennial’s common stock or other securities issued by the Company in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so on each exercise date of the capped call transactions or following any repurchase, redemption or early exchange of the notes, in each case if we exercise our option to terminate the relevant portion of the capped call transactions). This activity could also cause or avoid an increase or a decrease in the market price of Centennial’s common stock or the notes, which could affect a noteholder’s ability to exchange the notes and, to the extent the activity occurs during any observation period related to an exchange of the notes, it could affect the number of shares, if any, and value of the consideration that a noteholder will receive upon exchange of the notes.
In addition, if any such capped call transaction fails to become effective, whether or not the offering of the notes is completed, the option counterparty party thereto may unwind its hedge positions with respect to Centennial’s common stock, which could adversely affect the value of Centennial’s common stock and, if the notes have been issued, the value of the notes.
The offering is being made pursuant to an effective shelf registration statement on file with the
This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities referred to in this press release, nor will there be any sale of any such securities, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
Centennial is an independent oil and natural gas company focused on the development of unconventional oil and associated liquids-rich natural gas reserves in the
The information in this press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this press release are forward-looking statements. When used in this press release, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “goal,” “plan,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.
The Company cautions you that these forward-looking statements are subject to a variety of risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. Important information about issues that could cause actual results and plans to differ materially from those expressed in any forward-looking statements can be found in the Company’s public periodic filings with the
Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release.
Director, Investor Relations
Source: Centennial Resource Development