California Resources marketing $5 billion notes in three tranches

By Paul A. Harris

Portland, Ore., Sept. 4 – California Resources Corp. is on the road with $5 billion of non-callable senior notes (Ba1/expected BB) in three tranches, according to market sources.

The Rule 144A and Regulation S with registration rights deal, which was announced on Wednesday, is set to price in the week ahead.

It includes a tranche of 5.5-year notes that will have a par call one month prior to maturity. It also includes a tranche of seven-year notes that will have a par call two months prior to maturity. The long piece of the deal features 10-year notes that will have a par call one month prior to maturity.

Tranche sizes remain to be determined.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Citigroup Global Markets, Wells Fargo Securities LLC, Goldman Sachs & Co., HSBC, Morgan Stanley & Co., MUFG and US Bancorp are the joint bookrunners.

BB&T, BBVA, DNB Markets, Mizuho, PNC Capital Markets, Scotia Capital and SG CIB are the senior co-managers.

IMI, BNY Mellon, KeyBanc Capital Markets and SMBC Nikko are the co-managers.

The proceeds of the notes and a $1 billion term loan will be used to fund a $6 billion distribution to Occidental Petroleum Corp. as part of the spinoff of California Resources, which is a wholly owned subsidiary of Occidental Petroleum.

The notes will feature a special call on or before Jan. 31, 2015 at par plus accrued interest if the spinoff has not been completed.

California Resources is a Los Angeles-based oil and gas exploitation and production company.

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