Callon Petroleum launches tender offers for 2028, 2030 notes

By Marisa Wong

Los Angeles, March 1 – Callon Petroleum Co. has begun cash tender offers for any and all of its $650 million outstanding 8% senior notes due 2028 (Cusip: 13123XBD3, U1303XAG1) and any and all of its $600 million outstanding 7½% senior notes due 2030 (Cusip: 13123XBF8, U1303XAH9), according to a Friday press release.

In connection with the tender offers, Callon is soliciting consents to some proposed amendments to the indentures governing the notes. The proposed amendments would, among other things, eliminate substantially all restrictive covenants and some of the default provisions contained in each of the indentures.

A tender of notes under the tender offer will constitute a consent of the holder to the proposed amendments. Holders may not deliver consents without also tendering their notes.

For approval, the proposed amendments require consents from holders of a majority in principal amount of the applicable series.

The tender offer and consent solicitation for each of the 2028 notes and 2030 notes is being made independently of the offer and consent bid for the other series.

The purchase price for the 2028 notes will be calculated based on the 3% U.S. Treasury due July 31, 2024 and a fixed spread of 50 basis points, and the purchase price for the 2030 notes will be based on the 2 7/8% U.S. Treasury due June 15, 2025 and a fixed spread of 50 bps.

The total consideration will include a consent fee of $30 per $1,000 principal amount of notes tendered prior to the consent fee deadline. Holders tendering after the consent fee deadline will only be eligible to receive the tender offer consideration, which is the total consideration less the consent fee.

The company noted that the 2028 notes are callable on or after Aug. 1, 2024 at a redemption price of 104, and the 2030 notes are callable on or after June 15, 2025 at a redemption price of 103.75. The total consideration or tender offer consideration, as applicable, will be based on a yield to those respective call dates at those specified redemption prices.

In addition, the company will pay accrued interest.

The consent fee deadline is 5 p.m. ET on March 14, which is also the withdrawal deadline.

Pricing will be calculated at 10 a.m. ET on March 15.

The offers will expire at 11:59 p.m. ET on March 28.

Settlement is expected to occur on April 1.

The offers are conditioned on closing of APA Corp.’s acquisition of Callon. If the merger is not completed by the settlement date, Callon will not be required to accept for purchase any tendered notes or pay the total tender offer consideration.

The offers are also contingent on receipt of the required consents under the consent solicitation.

The dealer managers and solicitation agents are MUFG Securities Americas Inc. (212 405-7481), HSBC Securities (USA) Inc. (212 525-5552) and Mizuho Securities USA LLC (212 205-7736).

D.F. King & Co., Inc. (800 791-3320; Callon@dfking.com) is the information agent and tender agent.

Callon is a Houston-based independent oil and natural gas company focused on the acquisition, exploration and sustainable development of high-quality assets in the Permian Basin in West Texas.

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