New Issue: Hilcorp Energy downsizes seven-year notes to $275 million, yield 10½%

By Paul A. Harris

St. Louis, August 5 - Hilcorp. Energy Co. priced a downsized offering of $275 million senior notes due Sept. 1, 2010 (B3/B) Tuesday at par to yield 10½%, according to market sources.

The deal was reduced from $350 million. Revised price talk was 10¼%-10½%, increased from the 10% area.

Deutsche Bank Securities Inc. and Lehman Brothers were joint bookrunners on the Rule 144A deal. Harris Nesbitt was co-manager.

Proceeds will be used to acquire the partner's equity interest and repay part of the bank debt.

The issuer is a privately-held Texas corporation that acquires and exploits oil and gas properties.

Issuer:	Hilcorp Energy Co.
Amount:	$275 million (from $350 million)
Maturity:	Sept. 1, 2010
Security description:	Senior notes
Bookrunners:	Deutsche Bank Securities, Lehman Brothers
Co-manager:	Harris Nesbitt
Coupon:	10½%
Price:	Par
Yield:	10½%
Spread:	681 basis points
Call features:	Callable on Sept. 1, 2007 at 105.25, then 102.625, declining to par on Sept. 1, 2009 and thereafter
Equity clawback:	Until Sept. 1, 2006 for 35% at 110.50
Settlement date:	Aug. 12, 2003
Ratings:	Moody's: B3
	Standard & Poor's: B
Price talk:	10¼%-10½% (revised from 10% area)

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