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Talos Production sets talk in upsized $1.25 billion two-part notes offering; pricing Thursday
By Paul A. Harris
Portland, Ore., Jan. 25 – Talos Production Inc., a wholly owned subsidiary of Talos Energy Inc., upsized its two-part offering of senior secured second-priority notes (B3/BB-/B+) to $1.25 billion from $1 billion and set price talk on Thursday, according to market sources.
The Rule 144A and Regulation S deal features a tranche of five-year notes with two years of call protection, talked to yield 9¼% to 9½%.
The offering also features a tranche of seven-year notes with three years of call protection, talked to price 3/8% behind the five-year notes.
Pricing is set to take place on Thursday.
Prior to the upsize and release of price talk there was $6.5 billion of demand across both tranches, according to a bond trader, who added that demand was slightly skewed toward the five-year notes.
That level of demand could see pricing on the five-year notes go as low as 9%, the trader remarked, noting that the seven-year notes continue to be expected to price 3/8% behind the five-year notes.
J.P. Morgan Securities LLC is leading the notes sale.
The Houston-based independent energy company plans to use the proceeds to fund a portion of the cash consideration for its pending acquisition of QuarterNorth Energy, Inc., as well as to pay off the Talos Production 12% second-priority senior secured notes due 2026, with any remaining proceeds to be used for general corporate purposes, which may include repayment of a portion of the senior reserves-based revolver.
An aggregate of $340 million of the new notes will be subject to a special mandatory redemption if the QuarterNorth merger is not consummated on or before May 31, 2024.
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