Consol begins cash tender offer for up to $200 million of 8¼% notes

By Marisa Wong

Madison, Wis., July 29 – Consol Energy Inc. said it began a Dutch auction cash tender offer to purchase up to $200 million principal amount of its $1.25 billion outstanding 8¼% senior notes due 2020.

The tender offer began on Tuesday and will expire at 11:59 p.m. ET on Aug. 25.

Holders who tender their 8¼% notes prior to 5 p.m. ET on Aug. 11, the early tender time, will be eligible to receive the total consideration, which includes an early tender premium of $30 per $1,000 principal amount of notes.

The total consideration will be equal to the clearing price, which will be determined under a modified Dutch auction until the early tender time. This means that holders who elect to participate in the tender offer prior to the early tender time must specify the minimum total consideration they would be willing to receive in exchange for each $1,000 of notes tendered.

The bid price must be expressed in increments of $0.50 and may not be not less than $1,070.00 or more than $1,087.50.

Holders who tender their notes after the early tender time will receive the tender offer consideration, which is the total consideration less the early tender premium.

Holders will also receive accrued interest to, but not including, the applicable settlement date.

Consol said it reserves the right, but is not obligated, to accept notes tendered prior to the early tender time in an amount up to the tender cap on an early settlement date following the early tender deadline and before the expiration time.

The company will accept early tendered notes in order of lowest to highest bid prices and will select the lowest single bid price (the clearing price) for all early tenders such that it will be able to accept for purchase an aggregate principal amount of notes up to the tender cap.

If the aggregate principal amount of all notes tendered prior to the early tender time is less than the cap, the clearing price will be the highest bid price for any notes tendered prior to the early deadline.

If the total amount tendered by the early tender time exceeds the tender cap, then the offer will be oversubscribed and Consol will accept for purchase, up to the cap, (a) first, notes tendered with a bid price less than the clearing price and (b) second, notes tendered with a bid price equal to the clearing price on a prorated basis.

If the tender offer is not oversubscribed at the early tender time but the purchase of all notes tendered after the early tender time and prior to the expiration time with a deemed bid price equal to the tender offer consideration would cause Consol to accept for purchase an amount of notes in excess of the tender cap, then the offer will be oversubscribed at the expiration time. The company will then accept for purchase (a) first, on the early settlement date, all notes tendered prior to the early deadline and (b) second, promptly after the expiration time, all notes tendered after the early deadline and prior to the expiration time on a prorated basis.

The company said may choose to lift the tender cap without extending the withdrawal deadline, 5 p.m. ET on Aug. 11.

The tender offer is not conditioned upon any minimum number of notes being tendered, but it is subject to a number of other conditions, including the completion of a debt offering in an aggregate principal amount of at least $200 million.

Goldman Sachs & Co. (800 828-3182) is the dealer manager for the tender offer. D.F. King & Co., Inc., (800 848-3416 or cnx@dfking.com) is the tender agent and information agent.

Consol is a Pittsburgh-based producer of natural gas and coal.

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