New Issue: Southwestern Energy sells $1.5 billion 6.25% mandatory convertible preferred stock

By Stephanie N. Rotondo

Phoenix, Jan. 15 – Southwestern Energy Co. priced $1.5 billion of 6.25% series B mandatory convertible preferred stock, the company said in an FWP filed with the Securities and Exchange Commission on Thursday.

There is a $225 million over-allotment option.

The issuer also sold a concurrent $600 million offering of common stock at $23.00 per common share.

The convertible preferreds were issued as depositary shares representing a 1/20th interest.

BofA Merrill Lynch, Citigroup Global markets Inc., J.P. Morgan Securities LLC, Wells Fargo Securities LLC and BNP Paribas Securities Corp. were the bookrunning managers.

The initial price of the $50-par shares was $23.00 apiece, representing a liquidation preference of $1,000 divided by the maximum conversion rate of 43.4782 common shares.

The threshold appreciation price is $27.025, a 17.5% premium over the initial price dividend by the minimum conversion rate of 37.0028 shares.

The floor price is $8.05, or approximately 35% of the initial price.

The securities are mandatorily convertible on Jan. 15, 2018. Holders can convert their shares prior to that date at the minimum conversion rate.

Additionally, the holders can convert their holdings upon a fundamental change.

Dividends will be paid on a cumulative basis on the 15th day of January, April, July and October, beginning April 15.

Proceeds will be used to partially repay borrowings under Southwestern Energy’s $4.5 billion 364-day bridge term loan facility.

Southwestern Energy is a Houston-based independent natural gas and oil company.

Issuer:	Southwestern Energy Co.
Securities:	Series B mandatory convertible preferred stock
Amount:	$1.5 billion, or 30 million shares
Greenshoe:	$225 million, or 1.5 million shares
Maturity:	Jan. 15, 2018
Bookrunners:	BofA Merrill Lynch, Citigroup Global markets Inc., J.P. Morgan Securities LLC, Wells Fargo Securities LLC, BNP Paribas Securities Corp.
Senior co-managers:	BMO Capital Markets Corp., MUFG, Mizuho Securities USA Inc., RBS Securities Inc., SMBC Nikko Securities America, Inc.
Co-managers:	BBVA Securities Inc., Credit Agricole Securities (USA) Inc., RBC Capital Markets, LLC, CIBC World Markets Corp., SG Americas Securities, LLC, BB&T Capital Markets, Comerica Securities, Inc., Fifth Third Securities, Inc., Heikkinen Energy Securities, LLC, HSBC Securities (USA) Inc., KeyBanc Capital Markets Inc., Macquarie Capital (USA) Inc., PNC Capital Markets LLC, Robert W. Baird & Co. Inc., Scotia Capital (USA) Inc., Tudor, Pickering, Holt & Co. Securities, Inc., U.S. Bancorp Investments, Inc.
Dividend:	6.25%
Par:	$50.00
Initial price:	$23.00
Threshold appreciation price:	$27.025
Liquidation preference:	$1,000
Maximum conversion rate:	43.4782 common shares
Minimum conversion rate:	37.0028 common shares
Conversion options:	Prior to Jan. 15, 2018 at the minimum conversion rate or upon a fundamental change
Pricing date:	Jan. 15
Settlement date:	Jan. 21
Expected listing:	NYSE: SWNC
Stock symbol:	NYSE: SWN
Stock price:	$23.02
Market capitalization:	$8.26 billion

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