Item 1.01 Entry into a Material Definitive Agreement.
Supplemental Indentures for 3.750% Senior Notes due 2027 and 4.875% Senior Notes due 2047
On September 26, 2017, Concho Resources Inc. (the
Company
) completed the public offering of $1,000 million
aggregate principal amount of the Companys 3.750% Senior Notes due 2027 (the
2027
notes
) and $800 million aggregate principal amount of the Companys 4.875% Senior Notes due 2047 (the
2047 notes
and, together with the 2027 notes, the
Notes
). The Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Companys current subsidiaries (collectively,
the
Subsidiary Guarantors
).
The terms of the Notes are governed by the indenture dated as of September 18,
2009 (the
Base Indenture
), among the Company, certain of the Subsidiary Guarantors, and Wells Fargo Bank, National Association, as trustee (the
Trustee
), as amended and supplemented by, in the case
of the 2027 notes, the twelfth supplemental indenture, dated as of September 26, 2017 (the
Twelfth
Supplemental Indenture
) and by, in the case of the 2047 notes, the thirteenth supplemental indenture,
dated as of September 26, 2017 (the
Thirteenth Supplemental Indenture
; the Base Indenture, as amended and supplemented by the Twelfth Supplemental Indenture and the Thirteenth Supplemental Indenture, the
Indenture
).
The 2027 notes will mature on October 1, 2027, and interest is payable on the 2027 notes on
each April 1 and October 1, commencing on April 1, 2018. The Company may redeem some or all of the 2027 notes at any time on or after July 1, 2027 at par, and it may redeem some or all of the 2027 notes at any time prior to
July 1, 2027 on a make-whole basis, in each case as specified in the Twelfth Supplemental Indenture. The 2047 notes will mature on October 1, 2047, and interest is payable on the 2047 notes on each April 1 and
October 1, commencing on April 1, 2018. The Company may redeem some or all of the 2047 notes at any time on or after April 1, 2047 at par, and it may redeem some or all of the 2047 notes at any time prior to April 1, 2047 on a
make-whole basis, in each case as specified in the Thirteenth Supplemental Indenture. If a Change of Control Triggering Event (as defined in the Indenture) occurs with respect to either series of the Notes, each holder of the Notes of
that series will have the right to require the Company to repurchase such holders Notes at a purchase price equal to 101% of par, plus accrued and unpaid interest, if any, to the date of repurchase.
The Notes are the Companys senior unsecured obligations and will rank equally in right of payment with all of the Companys
existing and future senior debt, including all borrowings under the Companys credit facility, and rank senior in right of payment to all of the Companys future subordinated debt. The Notes will be effectively subordinated in right of
payment to all of the Companys future secured debt to the extent of the value of the collateral securing such indebtedness and will be structurally subordinated to all liabilities of any of the Companys future subsidiaries that do not
guarantee the Notes.
The Indenture restricts the Companys ability and the ability of certain of its subsidiaries to, among other
things: (i) create liens that secure debt and (ii) merge or consolidate with another company. These covenants are subject to a number of important exceptions and qualifications.
The Indenture contains customary events of default with respect to the Notes of either series,
including:
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default in any payment of interest on any Note of that series when due, continued for 30 days;
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default in the payment of principal of or premium, if any, on any Note of that series when due;
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failure by the Company to comply with its other obligations under the Indenture, in certain cases subject to notice and grace periods;
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payment defaults and accelerations with respect to other indebtedness of the Company and its Subsidiaries (as defined in the Indenture) in the aggregate principal amount of $150.0 million or more;
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certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary (as defined in the Indenture) or group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary;
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failure by the Company or any Significant Subsidiary or group of Subsidiaries that, taken together, would constitute a Significant Subsidiary to pay certain final judgments aggregating in excess of $150.0 million
within 60 days; and
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any Subsidiary Guarantee of a Significant Subsidiary or group of Subsidiaries that, taken together, would constitute a Significant Subsidiary, ceases to be in full force and effect, is declared null and void in a
judicial proceeding or is denied or disaffirmed by its maker.
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If an event of default under the Indenture occurs with
respect to either series of the Notes and is continuing, the Trustee or the holders of at least 25% in principal amount of the outstanding Notes of the applicable series may declare the principal of, premium, if any, and accrued and unpaid interest,
if any, on the Notes of that series to be due and payable, or, in the case of certain events of default relating to bankruptcy, insolvency or reorganization, those amounts will automatically become immediately due and payable.
Other material terms of the Notes, the Base Indenture, the Twelfth Supplemental Indenture and the Thirteenth Supplemental Indenture are
described in the final prospectus supplement, dated September 13, 2017, as filed by the Company and the Subsidiary Guarantors with the Securities and Exchange Commission on September 14, 2017. The foregoing descriptions of the Indenture
and the Notes are qualified in their entirety by reference to the Twelfth Supplemental Indenture and the Thirteenth Supplemental Indenture (including, in each case, the form of Notes attached thereto), copies of which are filed herewith as Exhibit
4.1 and Exhibit 4.2 and are incorporated herein by reference.