Northern Oil announces 99% participation in consent bid for 8˝% notes

By Wendy Van Sickle

Columbus, Ohio, Nov. 20 – Northern Oil and Gas, Inc. said holders of more than 99% of its 8˝% senior secured second-lien notes due 2023 gave their consents to amend terms of the notes, according to a press release issued on Wednesday.

The company also announced an amendment to and expansion of its senior secured revolving credit facility.

“We are now free to execute on our stated plan, which includes returning capital to shareholders, reducing debt ratios and growing our free cash flow and profitability over time in a responsible manner,” Northern Oil’s president and chief financial officer Nick O’Grady said in the short release.

The company said it plans to settle the consent solicitation and an amended and expanded $800 million revolver on Thursday.

Pro forma for all fees and transaction costs, Northern Oil said it expects a decrease in total debt upon settling the transactions.

The company offered a consent fee of $15 per $1,000 principal amount, increased from $10 per $1,000 principal amount, as previously reported.

Northern Oil sought consents to amend the indenture governing the notes and some corresponding modifications to the intercreditor agreement dated as of May 15 between TPG Specialty Lending, Inc. and Wilmington Trust, NA.

The consent bid was announced on Oct. 23, along with a related exchange and tender offer for the notes. Holders who tendered notes under the exchange offer or tender offer were deemed to have consented to the amendments.

The early participation deadline was previously extended to 5 p.m. ET on Nov. 14 from 5 p.m. ET on Nov. 5, which was an extension from the original early participation deadline of 5 p.m. ET on Nov. 1.

Exchange offer

As announced on Oct. 21, Northern Oil is offering to exchange up to $70,754,716 of existing notes for newly issued 6.5% perpetual convertible preferred stock having an aggregate liquidation preference of $75 million.

Holders who tender notes in the exchange offer will be entitled to have 10.27677% of those tendered notes accepted for exchange and will receive 10.6 shares of preferred stock per $1,000 principal amount of notes accepted for exchange.

Any notes that are not accepted for exchange due to the exchange limit will be deemed to be tendered in the separate tender offer.

Holders who elect to participate in the exchange offer will not participate the separate subscription offer.

Tender offer

Northern Oil is offering to purchase for cash up to $200 million of the notes at a purchase price of $1,060 per $1,000 principal amount, including excess exchange notes, subject to proration.

Subscription offer

Northern Oil is offering for holders who participate in the exchange offer to subscribe to purchase additional shares of preferred stock having an aggregate liquidation preference of $75 million at a price of $1,000 for 10 shares.

Each holder participating in the subscription offer will be required to purchase a number of shares equal to the aggregate exchange consideration that holder would receive in the exchange offer.

Holders of preferred stock will be entitled to receive cumulative dividends at a rate per annum of 6.5% on the sum of the liquidation preference of $100 per share of preferred stock plus all accumulated dividends.

Electing holders may convert any or all of their shares of preferred stock at any time based on an initial conversion rate of 43.63 shares of the company’s common stock per share of preferred stock.

The preferred stock is subject to mandatory conversion at the company’s option under certain circumstances but is not redeemable by either the company or the holders.

The exchange offer and subscription offer are fully backstopped by Angelo, Gordon, & Co., LP.

The offers were to expire at 11:59 p.m. ET on Nov. 18, unless extended.

To be eligible to receive the consent fee, holders must validly tender their notes or validly deliver consents at or prior to the now extended early participation deadline.

Holders who tender their notes or deliver consents after the early participation deadline will not receive the consent fee but will be eligible to receive the exchange consideration, subject to the exchange limit, and/or the tender consideration, subject to proration.

The offers were subject to some conditions, including receipt of consents from holders of a majority of the notes outstanding.

D.F. King & Co., Inc. (800 967-4617 or NOG@dfking.com) is the exchange and tender agent and the information agent for the consent solicitation.

Northern Oil is a Minneapolis-based oil and gas exploration and production company focused on the Williston Basin Bakken and Three Forks play in North Dakota and Montana.

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