EP Energy says early tender ‘successful,’ extends total payment

New York, Dec. 20 – EP Energy Corp. subsidiary EP Energy LLC announced the early response in its exchange offer for three series of notes, calling the results “successful,” in a news release.

The issuer also further amended the terms of the offer so that all participants will receive the total consideration instead of only those who responded by the early tender deadline.

As of that early deadline, 5 p.m. ET on Dec. 19, holders had tendered $891,608,000, or 74.29%, of EP Energy’s $1.2 billion of 9 3/8% notes due 2020. These notes had first priority.

In addition, $44,872,000, or 17.94%, of its $250.06 million of 7¾% notes due 2022 and $103,686,000, or 20.00%, of its $518.52 million of 6 3/8% notes due 2023 were tendered with a priority acceptance level of two.

Finally, $8,533,000, or 3.41%, of the 7¾% notes and $35,346,000, or 6.82%, of the 6 3/8% notes were tendered with a priority acceptance level of three.

EP Energy announced the exchange offer on Nov. 20, saying it was offering up to $1.2 billion of new 9 3/8% notes due 2024.

As amended on Dec. 14, holders will receive $50.00 in cash and $1,000 of new notes for each $1,000 principal amount of 9 3/8% notes, $725 principal amount of new notes per $1,000 principal amount of priority two notes and $700 principal amount of new notes per $1,000 principal amount of priority three notes.

For the 9 3/8% notes, the $50.00 cash component is the early tender premium. Before the Dec. 14 changes, it was payable in new notes rather than cash.

The early tender premium for the other series of notes is $50 of new notes for each $1,000 of notes tendered by the early deadline.

Originally only holders who participated by the early deadline were to receive the early tender premium but on Wednesday EP Energy amended the offer so that all participants will receive the full amount.

On Dec. 15, EP Energy amended the offer to add its 2025 senior secured notes into the definition of “permitted liens” under the description of the new notes and delete “of any amendment thereto or pursuant to a new loan agreement” immediately after the text “in each case” in the definition of “RBL Facility.”

EP Energy also amended the deadlines. On Dec. 14 it pushed back the early deadline to 5 p.m. ET on Dec. 19 from 5 p.m. ET on Dec. 13. It was previously extended from 5 p.m. ET on Dec. 8 and 5 p.m. ET on Dec. 4.

The exchange offers and consent solicitations will remain open until 5 p.m. ET on Dec. 28.

As announced on Nov. 20, any 7¾% notes or 6 3/8% notes tendered by holders who also tendered 9 3/8% notes will have second priority up to the principal amount of 9 3/8% notes tendered by that holder. Any 7¾% notes or 6 3/8% notes tendered in excess of the principal amount of 9 3/8% notes tendered by a holder will have third acceptance priority.

The company said it may lift the tender cap to $1.4 billion.

In connection with the exchange offers, the issuers will solicit consents to amend the old notes and the indentures governing the old notes.

The proposed amendments, which require the consent of a majority in principal amount of the outstanding notes of each series, will eliminate or waive substantially all of the restrictive covenants, eliminate certain events of default, modify covenants regarding mergers and transfers of assets, and modify or eliminate certain other provisions in the indentures.

EP Energy will not accept consents for the 7¾% notes or 6 3/8% notes if less than the full amount of tendered 7¾% notes or 6 3/8% notes are accepted for exchange.

Everest Acquisition Finance Inc. is a co-issuer of the existing notes.

The exchange offers are not conditioned on a minimum principal amount of outstanding old notes being tendered or the issuance of a minimum principal amount of new notes, although there are some other conditions.

D.F. King & Co., Inc. (212 269-5550 or 800 207-3158) is the information and exchange agent.

The oil and natural gas exploration and production company is based in Houston.

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