American Energy talks $530 million first-lien notes at discount to yield 13%; pricing Thursday

By Paul A. Harris

Portland, Ore., Nov. 19 – American Energy – Permian Basin, LLC plans to price a downsized and restructured $530 million offering of five-year senior secured first-lien notes (B2/B) on Thursday, according to a syndicate source.

The deal, which was downsized from $560 million, is talked to price at a small discount to par and to yield 13%.

Call protection was increased to three years from two years; the notes become callable after three years at par plus the full coupon.

Commitments are due at 2 p.m. ET Thursday afternoon, and the notes are set to price thereafter.

The offering kicked off in mid-October and has spent much of the intervening time on the sidelines of the high-yield primary market, as price talk increased from initial guidance in the 9% area.

There have also been covenant changes.

Goldman Sachs & Co. is the left bookrunner for the Rule 144A and Regulation S for life offering, which was downsized from $560 million. Jefferies LLC and BofA Merrill Lynch were the joint bookrunners.

Morgan Stanley & Co. LLC, MUFG and Wells Fargo Securities LLC are the co-managers.

The Oklahoma City-based independent oil and gas company plans to use the proceeds to repay all borrowings currently outstanding under its revolver, the amount of which was $201 million as of Sept. 30, 2015.

Proceeds will also possibly be used to fund the remaining portion of the pending acquisition of Enduring Resources LLC.

Any additional proceeds will be used to fund drilling and completion activities, for infrastructure development and for general corporate purposes.

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