Unit terminates offer to exchange 6 5/8% notes due 2021

By Sarah Lizee

Olympia, Wash., March 27 – Unit Corp. has decided to terminate its offer to exchange any and all of its existing 6 5/8% senior subordinated notes due 2021 (Cusip: 909218AB5) for new 10% senior secured notes due Dec. 15, 2024 or 7% junior secured notes due Dec. 15, 2025.

Since the exchange offer has been terminated, the exchange consideration will not be paid to holders. Notes tendered for exchange will be promptly returned to holders.

Additionally, the consent solicitation has been terminated, and the proposed amendments to the indenture governing the old notes will not become effective.

As previously reported, the expiration date for the offer was 11:59 p.m. ET on March 30, extended from 11:59 p.m. ET on Jan. 31, 11:50 p.m. ET on Jan. 10 and 11:59 p.m. ET on Dec. 13.

As announced on Nov. 12, holders could elect to receive either senior or junior notes in exchange for their old notes. Unit was offering either $735 of senior notes or $1,000 of junior notes per $1,000 principal amount of existing notes to holders who tendered by the early tender date.

Each of the early exchange considerations included a premium of $50 of new notes that would be paid to all holders who tendered by the expiration of the offer.

The maximum amount of senior secured notes and junior secured notes to be issued in the exchange offer was limited to $300 million and $650 million, respectively.

If the principal amount of senior secured notes required to exchange all old notes tendered would exceed $300 million, tendering holders who elected to receive senior secured notes would have the amount of old notes tendered for senior secured notes accepted on a pro rata basis. In this case, the principal amount of senior secured notes issued in the exchange offer would equal the senior secured notes cap, and the balance of old notes tendered would be exchanged into junior secured notes at the consideration being offered for junior notes.

Holders who tendered old notes and elected to receive junior secured notes would not be subject to proration.

Unit was also concurrently soliciting consents from holders to eliminate substantially all of the restrictive covenants from the indenture governing the old notes and to modify or eliminate some other provisions.

Consents could no longer be revoked as of 5 p.m. ET on Nov. 25.

The exchange offer was conditioned on either an amendment to the company’s credit agreement or a refinancing or replacement of the credit agreement. However, the exchange offer was not subject to completion of the consent solicitation or any other minimum participation condition.

Unit was going to pay a soliciting dealer fee equal to $2.50 for each $1,000 principal amount of old notes tendered for exchange to retail brokers. That fee will only be paid for the first $200,000 of notes exchanged.

Unit said the purpose of the exchange offer was to extend the maturity profile of its outstanding debt and eliminate short- to medium-term refinancing and related risks associated with its capital structure.

The new notes would be guaranteed by each of Unit’s subsidiaries that guarantees the old notes.

BofA Securities (888 292-0070 or 980 388-4813) was the dealer manager for the exchange offer and consent solicitation. Global Bondholder Services Corp. (212 430-3774 for banks and brokers or 866 470-4200 for all others or contact@gbsc-usa.com) was the information and exchange agent.

Unit is a Tulsa, Okla.-based publicly held energy company.

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