Northern Oil begins exchange, tender, subscription offers, consent bid

By Sarah Lizee

Olympia, Wash., Oct. 22 – Northern Oil and Gas, Inc. began a private offer to holders of its 8˝% senior secured second-lien notes due 2023 to participate in exchange, tender and subscription offers, as well as a consent solicitation for the notes.

Exchange offer

The company is offering to exchange up to $70,754,716 of existing notes for newly issued 6.5% perpetual convertible preferred stock having an aggregate liquidation preference of $75 million.

Eligible holders that validly tender notes in the exchange offer will be entitled to have 10.27677% of those tendered notes accepted for exchange and will receive 10.6 shares of preferred stock per $1,000 principal amount of notes accepted for exchange.

Any notes that are not accepted for exchange due to the exchange limit will be deemed to be tendered in the separate tender offer.

Eligible holders who elect to participate in the exchange offer will not participate the separate subscription offer.

Tender offer

Northern Oil is offering to purchase for cash up to $200 million of the notes at a purchase price of $1,060 per $1,000 principal amount, including excess exchange notes, subject to proration.

Consent bid

The company is soliciting consents to amend the indenture governing the notes and some corresponding modifications to the intercreditor agreement dated as of May 15 between TPG Specialty Lending, Inc. and Wilmington Trust, NA.

Northern Oil is offering to pay holders who validly deliver consents to the proposed amendments at or prior to the early participation deadline a consent fee of $10 per $1,000 principal amount of notes.

Holders who validly tender notes under the exchange offer or tender offer will be deemed to have consented to the amendments.

Subscription offer

Northern Oil is offering for holders who participate in the exchange offer to subscribe to purchase additional shares of preferred stock having an aggregate liquidation preference of $75 million at a price of $1,000 for 10 shares.

Each eligible holder participating in the subscription offer will be required to purchase a number of shares equal to the aggregate exchange consideration such eligible holder will receive in the exchange offer.

Holders of preferred stock will be entitled to receive cumulative dividends at a rate per annum of 6.5% on the sum of the liquidation preference of $100 per share of preferred stock plus all accumulated dividends.

Electing holders may convert any or all of their shares of preferred stock at any time based on an initial conversion rate of 43.63 shares of the company’s common stock per share of preferred stock.

The preferred stock is subject to mandatory conversion at the company’s option under certain circumstances, but is not redeemable by either the company or the holders.

The exchange offer and subscription offer are fully backstopped by Angelo, Gordon, & Co., LP.

The offers will expire at 11:59 p.m. ET on Nov. 18, unless extended.

To be eligible to receive the consent fee, holders must validly tender their notes or validly deliver consents at or prior to 5 p.m. ET on Nov. 1.

Holders who validly tender their notes or deliver consents after the early participation deadline will not receive the consent fee but will be eligible to receive the exchange consideration, subject to the exchange limit, and/or the tender consideration, subject to proration.

Notes validly tendered may be withdrawn and consents may be revoked at any time prior to 5 p.m. ET on Nov. 1, but not after.

The offers are subject to some conditions, including receipt of consents from holders of at least a majority of the notes outstanding.

D.F. King & Co., Inc. (800 967-4617 or NOG@dfking.com) is the exchange and tender agent and the information agent for the consent solicitation.

Northern Oil is a Minneapolis-based oil and gas exploration and production company focused on the Williston Basin Bakken and Three Forks play in North Dakota and Montana.

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