Callon Petroleum gives final results of 2028, 2030 notes tender offers

By Marisa Wong

Los Angeles, April 1 – Callon Petroleum Co. announced the final results of its March 1 cash tender offers for any and all of its $650 million of outstanding 8% senior notes due 2028 (Cusip: 13123XBD3, U1303XAG1) and any and all of its $600 million of outstanding 7½% senior notes due 2030 (Cusip: 13123XBF8, U1303XAH9).

Holders had tendered $615,000 of 2028 notes and $177,000 of 2030 notes after the consent fee deadline but at or prior to the expiration time, according to a Friday press release.

Holders had tendered $641,128,000, or 98.6%, of the 2028 notes and $584,213,000, or 97.4%, of the 2030 notes at or prior to the consent fee deadline, as previously reported.

The consent fee deadline was at 5 p.m. ET on March 14, and the expiration deadline was 11:59 p.m. ET on March 28.

In connection with the tender offers, Callon was soliciting consents to some proposed amendments to the indentures governing the notes.

A tender of notes under the tender offer constituted a consent of the holder to the proposed amendments. Holders could not deliver consents without also tendering their notes.

Because consents of holders of a majority in principal amount of each series were received as of the consent fee deadline, the company and trustee U.S. Bank Co., NA executed supplemental indentures to the indentures governing each series to implement the proposed amendments.

The amendments, among other things, eliminate substantially all restrictive covenants and some of the default provisions contained in each of the indentures. The amendments will become operative on the settlement date of the tender offers.

The purchase price for the 2028 notes is $1,045.88, calculated based on the 3% U.S. Treasury due July 31, 2024 and a fixed spread of 50 basis points, and the purchase price for the 2030 notes is $1,058.03, based on the 2 7/8% U.S. Treasury due June 15, 2025 and a fixed spread of 50 bps.

The total considerations include a consent fee of $30 per $1,000 principal amount of notes tendered prior to the consent fee deadline. Holders who tendered after the consent fee deadline are only be eligible to receive the tender offer consideration, which is the total consideration less the consent fee.

The company noted that the 2028 notes are callable on or after Aug. 1, 2024 at a redemption price of 104, and the 2030 notes are callable on or after June 15, 2025 at a redemption price of 103.75. The total considerations or tender offer considerations, as applicable, were based on a yield to those respective call dates at those specified redemption prices.

In addition, the company will pay accrued interest.

Pricing was calculated at 10 a.m. ET on March 15.

Settlement was expected to occur on April 1.

The offers were conditioned on closing of APA Corp.’s acquisition of Callon. If the merger was not completed by the settlement date, Callon was not required to accept for purchase any tendered notes or pay the total tender offer consideration. APA confirmed the closing in a press release on Monday morning.

The offers were also contingent on receipt of the required consents under the consent solicitation.

The dealer managers and solicitation agents are MUFG Securities Americas Inc. (212 405-7481), HSBC Securities (USA) Inc. (212 525-5552) and Mizuho Securities USA LLC (212 205-7736).

D.F. King & Co., Inc. (800 791-3320; Callon@dfking.com) is the information agent and tender agent.

Callon is a Houston-based independent oil and natural gas company focused on the acquisition, exploration and sustainable development of high-quality assets in the Permian Basin in West Texas.

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