By Paul A. Harris
Portland, Ore., May 18 – EP Energy Corp. priced a $1 billion issue of eight-year 1.125-lien senior secured notes (B1/B) at par to yield 7¾% on Friday, according to market sources.
The yield printed at the wide end of the upwardly revised 7½% to 7¾% yield talk. Earlier yield talk was 7¼% to 7½%.
In addition to the wider talk there were also covenant changes bearing primarily upon how the company may disburse cash and incur additional debt.
With those changes and the wider talk, investors stepped forward, according to market sources.
At the wider talk the deal was heard to be playing to $1.5 billion of orders, an investor said.
Credit Suisse Securities (USA) LLC was the lead left bookrunner for the Rule 144A and Regulation S for life offering. Citigroup Global Markets Inc., J.P. Morgan Securities LLC, RBC Capital Markets LLC, BMO Capital Markets Corp., Deutsche Bank Securities Inc., TD Securities (USA) LLC and Goldman Sachs & Co. were the joint bookrunners.
The Houston-based oil and natural gas exploration and production company plans to use the proceeds to repay revolver debt and put cash on its balance sheet.
The issuing entities will be EP Energy LLC, a wholly owned subsidiary of EP Energy Corp., and Everest Acquisition Finance Inc., a wholly owned subsidiary of EP Energy LLC.
| Issuers: | EP Energy LLC and Everest Acquisition Finance Inc.
|
| Amount: | $1 billion
|
| Maturity: | May 15, 2026
|
| Securities: | 1.125-lien senior secured notes
|
| Lead left bookrunner: | Credit Suisse Securities (USA) LLC
|
| Joint bookrunners: | Citigroup Global Markets Inc., J.P. Morgan Securities LLC, RBC Capital Markets LLC, BMO Capital Markets Corp., Deutsche Bank Securities Inc., TD Securities (USA) LLC, Goldman Sachs & Co.
|
| Co-managers: | DNB Markets, Sumitomo, Mizuho Securities USA Inc.
|
| Coupon: | 7¾%
|
| Price: | Par
|
| Yield: | 7¾%
|
| Spread: | 469 bps
|
| First call: | May 15, 2021 at 105.813
|
| Equity clawback: | 40% at 107.75 until May 15, 2021
|
| Trade date: | May 18
|
| Settlement date: | May 23
|
| Ratings: | Moody's: B1
|
| S&P: B
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 7½% to 7¾%, revised from 7¼% to 7½%
|
| Marketing: | May 17 investor call
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