Sanchez Energy plans $100 million perpetual preferred convertibles to yield 4.875%, up 10%

By Rebecca Melvin

New York, Sept. 11 - Sanchez Energy Corp. launched an offering of about $100 million of convertible preferred stock that was seen pricing with a 4.875% dividend and 10% initial conversion premium via bookrunner RBC Capital Markets, market sources said.

The Rule 144A deal, which as a $20 million over-allotment option, is a perpetual preferred that is non-callable but has mandatory conversion at the issuer's option at any time on or after Oct. 5, 2017 if the company's common stock exceeds 130% of the conversion price then in effect for 20 out of 30 days.

The deal was seen pricing late Tuesday after launching after the market close.

Proceeds are expected to be used to fund capital expenditures and, in particular, to accelerate its drilling program across all of its operating areas, for its other operating expenses and for general corporate purposes.

Houston-based Sanchez Energy is an oil and natural gas exploration and development company.

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