Published on 2/3/2015 in the Prospect News High Yield Daily.
New Issue: CrownRock prices upsized $350 million eight-year notes at discount to yield 8%
By Paul Deckelman
New York, Feb. 3 – CrownRock LP and CrownRock Finance, Inc. priced an upsized $350 million offering of eight-year senior notes (Caa1/B) on Tuesday, high-yield syndicate sources said.
The 7¾% notes due 2023 priced at 98.536 to yield 8%, after the offering was increased from the originally announced $300 million.
It priced at the tight end of pre-deal market price talk envisioning a yield between 8% and 8¼% with an approximately 1-point original issue discount.
The issue, which was first announced on Monday, was marketed to potential investors via a mid-morning (ET) conference call and priced during the afternoon.
The Rule 144A/Regulation S for life offering was brought to market via joint bookrunners Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Citigroup Global Markets Inc. and Mitsubishi UFG Securities International plc.
BB&T Capital Markets, a division of BB&T Securities, LLC, BBVA Securities Inc., BMO Capital Markets Corp., Comerica Securities, Inc., Iberia Capital Partners LLC and J.P. Morgan Securities LLC acted as co-managers for the transaction.
The notes have three years of call protection, and then will be callable at par plus ¾ of the coupon.
There is also a provision for an equity clawback for up to 35% of the issue in the first three years, as well as a change-of-control investor put at 101%.
CrownRock, a Midland, Texas-based oil and gas-producing joint venture of CrownQuest Operating and Lime Rock Partners that focuses on operations in the Permian Basin region of western Texas, plans to use the new-deal proceeds to repay revolving credit facility borrowings and for general corporate purposes.
| Issuers: | CrownRock, LP and CrownRock Finance, Inc.
|
| Amount: | $350 million (upsized from $300 million)
|
| Securities: | Senior notes
|
| Maturity: | Feb. 15, 2023
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| Joint book-running managers: | Credit Suisse Securities (USA) LLC, Wells Fargo Securities, LLC, Citigroup Global Markets Inc. and Mitsubishi UFJ Securities (USA), Inc.
|
| Co-managers: | BB&T Capital Markets, a division of BB&T Securities, LLC, BBVA Securities Inc., BMO Capital Markets Corp., Comerica Securities, Inc., Iberia Capital Partners LLC and J.P. Morgan Securities LLC
|
| Coupon: | 7¾%
|
| Price: | 98.536
|
| Yield to maturity: | 8%
|
| Spread: | 635 basis points vs. 2% UST due February 15, 2023
|
| Call protection: | Non-callable before Feb. 15, 2018, other than via a make-whole call at T + 50 bps.; callable on or after Feb. 15, 2018 at 105.813%, on or after Feb. 15, 2019 at 103.875%, on or after Feb. 15, 2020 at 101.938%, on or after Feb. 15, 2021 at par
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| Equity clawback: | For up to 35% of issue at 107.75% prior to Feb. 15, 2018
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| Change of control: | Put at 101% plus any accrued and unpaid interest
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| Trade date: | Feb. 3
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| Settlement date: | Feb. 6 (T+3)
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| Ratings: | Moody’s: Caa1
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| S&P: B
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| Distribution: | Rule 144A/Regulation S for life
|
| Marketing: | Brief roadshow
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| Price talk: | 8%-to-8¼%, including about 1 point of OID
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