Centennial offers to swap 2026, 2027 notes for new 2025, 2027 notes

By Marisa Wong

Los Angeles, April 23 – Centennial Resource Development, Inc. announced that its operating subsidiary, Centennial Resource Production, LLC, has begun offers to exchange any and all of its $400 million outstanding 5 3/8% senior notes due 2026 (Cusips: 15138AAA8, U14008AA1, 15138AAB6) and $500 million outstanding 6 7/8% senior notes due 2027 (Cusips: 15138AAC4, U14008AB9, 15138AAD2) for new notes.

In exchange for the existing 2026 notes and 2027 notes, Centennial Resource Production is offering up to $250 million of newly issued 8% second-lien senior secured notes due 2025 and up to $200 million of newly issued 8% third-lien senior secured notes due 2027.

The exchange offers will expire at 11:59 p.m. ET on May 19.

Holders who tender their notes at or prior to 5 p.m. ET on May 5, the early tender date, will be eligible to receive $500 principal amount of new notes for each $1,000 principal amount of old notes tendered and accepted for exchange.

Holders tendering their notes after the early tender date will be eligible to receive $450 principal amount of new notes for each $1,000 principal amount of old notes.

All second-lien notes will be issued before any third-lien notes are issued. In the event that the aggregate amount of second-lien notes to be issued in exchange for old notes would exceed $250 million, the amount of second-lien notes issued to each tendering holder will be prorated. The portion of old notes tendered that are not exchanged into second-lien notes as a result of such proration will be exchanged for third-lien notes.

In addition, the issuer will pay in cash accrued interest on the old notes accepted in the exchange offers from the last interest payment date to but excluding the settlement date for the exchange offers, which is expected to be May 22.

The issuer said it is also soliciting consents from holders of each series of notes to some proposed amendments to the indenture governing the existing notes. The amendments would eliminate substantially all of the restrictive covenants and some of the default provisions contained in each of the indentures.

The issuer must receive consents from holders representing a majority of the outstanding principal amount of each series of old notes to adopt the proposed amendments.

Holders may not tender their notes without delivering their consents, and holders may not deliver consents without tendering their notes.

The exchange offers are not, however, conditioned on receiving the necessary consents to amend the notes.

After completion of the exchange offers and the consent solicitations, and upon effectiveness of the proposed amendments, any holders of the old notes that do not participate in the exchange offers would rank effectively junior to the new notes, the company noted.

Neither of the exchange offers is conditioned on any minimum amount of notes being tendered.

Tenders may be withdrawn and related consents revoked at any time prior to 5 p.m. ET on May 5, 2020.

The exchange offers and consent solicitations will only be made and the new notes are only being offered under Rule 144A and Regulation S.

Jefferies LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are dealer managers for the exchange offer.

Global Bondholder Services Corp. (212 430-3774 for banks and brokers or 866 807-2200 for all others, contact@gbsc-usa.com, https://gbsc-usa.com/eligibility/centennial) is the information and exchange agent.

Centennial is a Denver-based oil and natural gas company with assets concentrated in the Delaware Basin, a sub-basin of the Permian Basin.

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