By Paul A. Harris
Portland, Ore., Sept. 18 – Vital Energy, Inc. priced an upsized $900 million of senior notes (B3/B) in two tranches on Monday, according to market sources.
The deal, which was upsized from $800 million, included at upsized $400 million add-on to the company’s 10 1/8% senior notes due Jan. 15, 2028 that priced at 101 for a 9.617% yield to worst. The tranche size increased from $300 million. The price came on top of final price talk that had been revised from earlier talk of 100.5 to 101.
The deal also included a $500 million issue of new 9¾% seven-year notes that priced at 98.742 to yield 10%. The yield printed at the tight end of the revised 10% to 10 1/8% yield talk (the revised talk also telegraphed an original issue discount). Earlier yield talk was in the 10¼% area.
Timing was accelerated. Original timing had the deal remaining in the market until Tuesday.
Wells Fargo Securities LLC was the left bookrunner. Joint bookrunners were BofA Securities Inc., Mizuho Securities USA Inc., Truist Securities Inc., Capital One Securities Inc., Citigroup Global Markets Inc., KeyBanc Capital Markets Inc., PNC Capital Markets LLC and U.S. Bancorp Investments Inc.
The Tulsa, Okla.-based independent energy company plans to use the proceeds to refinance its 9½% senior notes due 2025, as well as to pay down its reserve-based lending loan, and for general corporate purposes.
If the planned acquisition of Henry Energy and Henry Resources is not consummated on or prior to Jan. 11, 2024, the new seven-year notes will be subject to a special mandatory redemption at a price equal to 100% of the initial issue price plus accrued and unpaid interest.
Vital Energy is focused on the acquisition, exploration and development of oil and natural gas properties primarily in the Permian Basin in West Texas.
| Issuer: | Vital Energy, Inc.
|
| Amount: | $900 million, increased from $800 million
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| Issue: | Senior notes
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| Left bookrunner: | Wells Fargo Securities LLC
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| Joint bookrunners: | BofA Securities Inc., Mizuho Securities USA Inc., Truist Securities Inc., Capital One Securities Inc., Citigroup Global Markets Inc., KeyBanc Capital Markets Inc., PNC Capital Markets LLC and U.S. Bancorp Investments Inc.
|
| Co-managers: | Amegy Bank, BOK Financial Securities Inc. and Comerica Securities Inc.
|
| Counsel to issuer: | Akin Gump Strauss Hauer & Feld LLP
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| Counsel to underwriters: | Baker Botts LLP
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| Trade date: | Sept. 18
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| Settlement date: | Sept. 25
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| Ratings: | Moody’s: B3
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| S&P: B
|
| Distribution: | SEC registered
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| Marketing: | Roadshows
|
|
|
| Add-on notes
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| Amount: | $400 million, increased from $300 million
|
| Issue: | Add-on senior notes
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| Maturity: | Jan. 15, 2028
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| Coupon: | 10 1/8%
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| Price: | 101
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| Yield to worst: | 9.617%
|
| Yield to maturity: | 9.826%
|
| Spread: | 469 bps
|
| Call: | Presently callable at 107.594
|
| Change of control: | 101
|
| Price talk: | 101, revised from 100.5 to 101
|
| Cusip: | 516806AG1
|
|
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| New notes
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| Amount: | $500 million
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| Issue: | Senior notes
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| Maturity: | Oct. 15, 2030
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| Coupon: | 9¾%
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| Price: | 98.742
|
| Yield: | 10%
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| Spread: | 559 bps
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| Make-whole call: | Prior to Oct. 15, 2026 at Treasuries plus 50 bps
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| First call: | Oct. 15, 2026 at 104.875
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| Equity clawback: | For up to 35% of notes at 109.75 plus accrued interest prior to Oct. 15, 2026
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| Change of control: | 101
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| Price talk: | 10% to 10 1/8% including possible discount, revised from 10¼% area
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| Cusip: | 516806AJ5
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