Item 1.01. Entry into Material Definitive Agreements.
On December 6, 2016, Cobalt International Energy, Inc. (the Company), entered into definitive documents in connection with,
and consummated, its previously announced debt exchange and financing transaction (the Transaction) with certain holders (the Holders) of the Companys outstanding 2.625% Convertible Senior Notes due 2019 (the 2019
Notes) and 3.125% Convertible Senior Notes due 2024 (the 2024 Notes and, together with the 2019 Notes, the Existing Notes). The Transaction consisted of: (i) the issuance and sale by the Company of $500 million
aggregate principal amount of new first lien senior secured notes due 2021 (the First Lien Notes) to Holders for cash at a price of 98% and (ii) the issuance by the Company of $584,732,000 aggregate principal amount of new second
lien senior secured notes due 2023 (the Second Lien Notes and, together with the First Lien Notes, the Notes) and 30.0 million shares of its common stock, par value $0.01 per share, to Holders in exchange for
$616,554,000 aggregate principal amount of 2019 Notes and $95,855,000 aggregate principal amount of 2024 Notes held by the Holders.
Purchase and Exchange Agreement
. The Transactions were consummated pursuant to the terms and conditions set forth in the purchase and
exchange agreement (the Purchase and Exchange Agreement), dated December 6, 2016, among the Company, the Guarantors (as defined below) and the Holders. The Purchase and Exchange Agreement is attached as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference. A copy of the Purchase and Exchange Agreement has been included to provide security holders with information regarding its terms. It is not intended to provide any other factual information
about the Company. The representations, warranties and covenants contained in the Purchase and Exchange Agreement were made solely for purposes of the Transaction and as of specific dates, were solely for the benefit of the parties to the Purchase
and Exchange Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Purchase and Exchange
Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to security holders. Security holders are not third-party beneficiaries
under the Purchase and Exchange Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company. Moreover, information
concerning the subject matter of the representations and warranties may change after the date of the Purchase and Exchange Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures.
First Lien Notes Indenture:
The First Lien Notes were issued pursuant to an indenture (the First Lien Indenture) dated
December 6, 2016 among the Company, the Guarantors and Wilmington Trust, National Association, as trustee and collateral agent (the Trustee). The First Lien Notes mature on December 1, 2021 and bear interest at 10.750% in
cash per annum, payable semi-annually in arrears on each June 1 and December 1, commencing June 1, 2017. The First Lien Indenture includes covenants customary for instruments of this type, including, without limitation, restrictions
on the Companys ability to incur additional indebtedness, create liens on its properties, pay dividends and make restricted payments or certain investments, in each case subject to certain exceptions. The First Lien Indenture also requires the
Company to apply a portion of the proceeds from certain asset sales to offer to repay the obligations under the First Lien Indenture, limits the incurrence of indebtedness secured on a second lien basis (including additional Second Lien Notes) and
prohibits the issuance of additional First Lien Notes. The Company may redeem the First Lien Notes at certain prices set forth in the First Lien Indenture. The First Lien Notes are secured (subject to certain exceptions) by a first priority lien on
(i) substantially all of the assets of the Company and the Guarantors and (ii) 65% of the shares of capital stock of Cobalt International Energy Overseas Ltd., a private limited company organized under the laws of the Cayman Islands
(Cobalt Overseas), which indirectly owns the Companys working interests in its blocks offshore the Republic of Angola and the Gabonese Republic (together, the Collateral). The First Lien Notes are initially guaranteed
by all of the Companys wholly-owned domestic subsidiaries (the Guarantors). The First Lien Indenture is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Second Lien Notes Indenture:
The Second Lien Notes were issued pursuant to an indenture (the Second Lien Indenture and,
together with the First Lien Indenture, the Indentures) dated December 6, 2016 among the Company, the Guarantors and the Trustee. The Second Lien Notes mature on December 1, 2023 and bear interest at 7.750% in cash per
annum, payable semi-annually in arrears on each June 1 and December 1, commencing June 1, 2017. The Second Lien Indenture includes covenants and redemption provisions substantially similar to those in the First Lien Indenture, and the
Second Lien Notes are secured (subject to certain exceptions) by a second priority lien on the Collateral. The Second Lien Notes are guaranteed by the Guarantors. The Second Lien Indenture is attached as Exhibit 10.3 to this Current Report on Form
8-K and is incorporated herein by reference.
The foregoing summary of the Purchase and Exchange Agreement, the Notes and the Indentures do not
purport to be complete and are qualified in their entirety by reference to the full text of such agreements attached as exhibits hereto.