Rex Energy extends exchange offer for 8 7/8%, 6¼% notes to March 22

By Susanna Moon

Chicago, March 4 – Rex Energy Corp. said it extended the exchange offer for its $350 million outstanding 8 7/8% senior notes due 2020 and $325 million outstanding 6¼% senior notes due 2022.

The exchange offer and consent solicitation will now continue until 9 a.m. ET on March 22, extended from 9 a.m. ET on March 3. The offer began on Feb. 3.

So far, investors have tendered for exchange about $137,837,000 principal amount, or 39.38%, of the 2020 notes and about $129,849,000 principal amount, or 39.95%, of the 2022 notes, according to a company notice.

The company is offering to swap out the notes for up to $480 million principal amount of its new 10% senior secured second-lien notes due 2020 and 10,125,000 shares of its common stock.

Rex also is soliciting consents to amend the notes indentures to eliminate or modify some restrictive covenants and to modify some defined terms.

No consent fees will be paid.

The total exchange amount for each $1,000 principal amount of notes tendered for exchange before 5 p.m. ET on Feb. 17, the early tender deadline, was as follows:

• For the 8 7/8% notes, $740 principal amount of new notes and 15 shares of common stock; and

• For the 6¼% notes, $640 principal amount of new notes and 15 common shares.

The total exchange value includes the early tender premium, which consists of $50 principal amount of the new notes.

Holders who tendered notes after the early tender deadline will receive the base exchange amount, which is the total exchange value less the early tender premium.

The company will pay accrued interest on existing notes accepted in the exchange offer up to but excluding the settlement date. The amount of accrued interest will be paid in the form of an equal principal amount of new notes.

The first three semiannual interest payments on the new notes can be made at the company’s option in whole or in part as a payment in kind with any such in-kind payments at a 12% annual interest rate.

The new notes will be initially secured by second-priority liens on substantially all of the company’s and any subsidiary guarantors’ assets. The liens securing the new notes and the related subsidiary guarantees will be contractually subordinated to the liens on the assets securing the company’s revolving credit facility and some hedging and bank product obligations permitted, to the extent of the value of the collateral securing such debt, pursuant to the terms of an inter-creditor agreement.

Any 8 7/8% notes or 6¼% notes that remain outstanding following the exchange offer will be effectively subordinated to the new notes as well as the obligations under the senior credit facility and any other secured debt.

The exchange offer and consent solicitation is only made to holders who are qualified institutional buyers under Rule 144A or outside the United States and persons other than U.S. persons under Rule 902 under the Securities Act.

The information agent is D.F. King & Co., Inc. (866 387-9392, 212 269-5550 or dfking.com/rexx).

Based in State College, Pa., Rex Energy is an oil and gas exploration and production company.

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