APA plans $2 billion term loan with Callon Petroleum purchase

By Sara Rosenberg

New York, Jan. 4 – APA Corp. plans on getting a new $2 billion term loan in connection with its all-stock acquisition of Callon Petroleum Co., according to a company presentation.

JPMorgan Chase Bank, Citigroup Global Markets Inc. and Wells Fargo Bank provided the term loan commitment.

The term loan will enable debt reduction flexibility with no pre-payment penalties.

Proceeds from the term loan will be used to replace Callon’s existing notes and indentures.

New debt to adjusted EBITDAX is expected to be 1.1x, up slightly from 1x currently.

APA intends to continue strengthening the balance sheet and maintain current investment-grade metrics, the presentation said.

Under the agreement, each share of Callon common stock will be exchanged for a fixed ratio of 1.0425 shares of APA common stock.

The transaction is valued at about $4.5 billion, inclusive of Callon’s net debt.

Upon closing, existing APA shareholders are expected to own around 81% of the combined company and existing Callon shareholders are expected to own about 19% of the combined company.

Closing is anticipated during the second quarter, subject to customary conditions, termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and approval of the shareholders of both APA and Callon.

Houston-based APA and Houston-based Callon are oil and natural gas companies.

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