Published on 6/19/2015 in the Prospect News High Yield Daily.
New Issue: Eclipse Resources prices downsized $550 million eight-year notes to yield 9¼%
By Paul Deckelman
New York, June 19 – Eclipse Resources Corp. (Caa1/CCC+) priced $550 million of eight-year senior notes on Friday, high-yield syndicate sources said – but the regularly scheduled forward calendar offering was downsized from the $650 million that had originally been announced, and it priced at a considerable discount to par.
The notes came to market at 97.903, yielding 9¼%, at the wider end of the 9% to 9¼% price talk.
The Rule 144A and Regulation S with registration rights deal was brought to market by joint bookrunning managers Deutsche Bank Securities Inc., BMO Capital Markets Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., KeyBanc Capital Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC.
The notes are non-callable for the first three years after issue, other than via a make-whole call process.
There is a three-year equity clawback provision for up to 35% of the issue.
Eclipse Resources, a State College, Pa.-based oil and natural gas exploration and production company, said that it expects to garner net proceeds from the offering after expenses of about $525.5 million; it plans to use about $510.7 million of that to finance the redemption of its outstanding 12% senior unsecured PIK notes due 2018.
As of March 31, according to its most recent regulatory filings, the company had $437.3 million principal amount of the 12% PIK notes outstanding, with a fair value of $487 million.
Eclipse intends to use the remaining proceeds from the note issue to fund its capital spending plan and for general corporate purposes.
| Issuer: | Eclipse Resources Corp.
|
| Face amount: | $550 million, downsized from $650 million originally
|
| Gross proceeds: | $538,466,500
|
| Expected net proceeds: | $525.5 million
|
| Maturity: | July 15, 2023
|
| Security: | Senior notes
|
| Bookrunners: | Deutsche Bank Securities Inc., BMO Capital Markets Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., KeyBanc Capital Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, Wells Fargo Securities, LLC
|
| Co-managers: | Barclays, Global Hunter Securities LLC, Johnson Rice & Co. LLC, Scotia Capital (USA)
|
| Coupon: | 8 7/8%
|
| Price: | 97.903
|
| Yield: | 9¼%
|
| Spread: | 712 bps over 2½% Treasuries of Aug. 15, 2023
|
| Call protection: | Non-callable for first three years of issue, other than via a make-whole call. First callable on July 15, 2018 at 106.656%; callable on or after July 15, 2019 at 104.438%, on or after July 15, 2020 at 102.219% and finally callable on or after July 15, 2021 at par
|
| Equity clawback: | For up to 35% of the issue prior to July 15, 2018 at 108.875
|
| Trade date: | June 19
|
| Settlement date: | July 6 (T+10)
|
| Ratings: | Moody’s: Caa1
|
| Standard & Poor’s: CCC+
|
| Distribution: | Rule 144A and Regulation S with registration rights
|
| Price talk: | 9% to 9¼%
|
| Marketing: | Roadshow
|
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