Centennial Resource Development, Inc. (NASDAQ: CDEV) (the “Company”
or “Centennial”) today announced its intention to offer, subject to
market and other conditions, $150,000,000 aggregate principal
amount of exchangeable senior notes due 2028 (the “notes”) of its
wholly owned operating subsidiary, Centennial Resource Production,
LLC (“CRP”), in a public offering registered under the Securities
Act of 1933, as amended. The notes will be fully and
unconditionally guaranteed, on a senior, unsecured basis, by
Centennial and CRP’s subsidiaries that currently guarantee CRP’s
outstanding senior notes. CRP expects to grant the underwriters of
the notes a 30-day option to purchase up to an additional
$22,500,000 principal amount of notes, solely to cover
over-allotments.
The notes will be senior, unsecured obligations
of CRP, will accrue interest payable semi-annually in arrears and
will mature on April 1, 2028, unless earlier repurchased, redeemed
or exchanged. Noteholders will have the right to exchange their
notes in certain circumstances and during specified periods. CRP
will settle exchanges by paying or delivering, as applicable, cash,
shares of Centennial’s Class A common stock, par value $0.0001 per
share (the “common stock”), or a combination of cash and shares of
Centennial’s common stock, at CRP’s election. The notes will be
redeemable, in whole or in part (subject to certain limitations),
for cash at CRP’s option at any time, and from time to time, on or
after April 7, 2025 and on or before the 40th scheduled trading day
immediately before the maturity date, but only if the last reported
sale price per share of Centennial’s common stock exceeds 130% of
the exchange price for a specified period of time. The redemption
price will be equal to the principal amount of the notes to be
redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date. The interest rate, initial exchange
rate and other terms of the notes will be determined at the pricing
of the offering.
CRP intends to use a portion of the net proceeds
from the offering to fund the cost of entering into the capped call
transactions described below. CRP intends to use the remainder of
the net proceeds from the offering to redeem, at par, all of its
outstanding 8.00% second lien senior secured notes due 2025 and to
repay outstanding borrowings under its revolving credit facility.
If the underwriters exercise their option to purchase additional
notes, then CRP intends to use a portion of the additional net
proceeds to fund the cost of entering into additional capped call
transactions as described below, as well as to repay additional
outstanding borrowings under its revolving credit facility.
In connection with the pricing of the notes, CRP
and Centennial expect to enter into privately negotiated capped
call transactions with one or more of the underwriters and/or their
respective affiliates and/or other financial institutions (the
“option counterparties”). The capped call transactions will cover,
subject to customary adjustments, the number of shares of
Centennial’s common stock initially underlying the notes. The
capped call transactions are expected generally to reduce potential
dilution to Centennial’s common stock upon exchange of the notes
and/or at CRP’s election (subject to certain conditions) offset any
cash payments CRP is required to make in excess of the aggregate
principal amount of exchanged notes, as the case may be, with such
reduction or offset subject to a cap. If the underwriters exercise
their option to purchase additional notes, CRP and Centennial
expect to enter into additional capped call transactions with the
option counterparties.
In connection with establishing their initial
hedges of the capped call transactions, the option counterparties
or their respective affiliates expect to enter into various
derivative transactions with respect to Centennial’s common stock
concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of Centennial’s common stock or the notes at that
time. In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Centennial’s common
stock and/or purchasing or selling Centennial’s common stock or
other securities issued by the Company in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes (and are likely to do so on each exercise
date of the capped call transactions or following any repurchase,
redemption or early exchange of the notes, in each case if we
exercise our option to terminate the relevant portion of the capped
call transactions). This activity could also cause or avoid an
increase or a decrease in the market price of Centennial’s common
stock or the notes, which could affect a noteholder’s ability to
exchange the notes and, to the extent the activity occurs during
any observation period related to an exchange of the notes, it
could affect the number of shares, if any, and value of the
consideration that a noteholder will receive upon exchange of the
notes.
In addition, if any such capped call transaction
fails to become effective, whether or not the offering of the notes
is completed, the option counterparty party thereto may unwind its
hedge positions with respect to Centennial’s common stock, which
could adversely affect the value of Centennial’s common stock and,
if the notes have been issued, the value of the notes.
Citigroup Global Markets Inc., J.P. Morgan
Securities LLC and Jefferies LLC are acting as book-running
managers for the offering.
The offering is being made pursuant to an
effective shelf registration statement on file with the Securities
and Exchange Commission (the “SEC”). The offering will be made only
by means of a prospectus supplement and an accompanying prospectus.
Once available, an electronic copy of the preliminary prospectus
supplement, together with the accompanying prospectus, can be found
on the SEC’s website at www.sec.gov. Alternatively, copies of the
preliminary prospectus supplement, together with the accompanying
prospectus, can be obtained by contacting: Citigroup Global Markets
Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue,
Edgewood, New York 11717, or by telephone: (800) 831-9146; J.P.
Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155
Long Island Avenue, Edgewood, NY 11717, or by telephone at (866)
803-9204; or Jefferies LLC at 520 Madison Avenue, 12th Floor, New
York, NY 10022, Attention: Prospectus Department, or by telephone
at (877) 547-6340 or by email to
Prospectus_Department@Jefferies.com.
This press release does not constitute an offer
to sell, or the solicitation of an offer to buy, any securities
referred to in this press release, nor will there be any sale of
any such securities, in any state or other jurisdiction in which
such offer, sale or solicitation would be unlawful prior to
registration or qualification under the securities laws of such
state or jurisdiction.
About Centennial Resource Development,
Inc.
Centennial is an independent oil and natural gas
company focused on the development of unconventional oil and
associated liquids-rich natural gas reserves in the Permian Basin.
The Company’s assets and operations, which are held and conducted
through CRP, are concentrated in the Delaware Basin, a sub-basin of
the Permian Basin.
Forward-Looking Statements
The information in this press release includes
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical fact included in this press release
are forward-looking statements. When used in this press release,
the words “could,” “believe,” “anticipate,” “intend,” “estimate,”
“expect,” “project,” “goal,” “plan,” “target” and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such
identifying words. These forward-looking statements are based on
management’s current expectations and assumptions about future
events and are based on currently available information as to the
outcome and timing of future events.
The Company cautions you that these
forward-looking statements are subject to a variety of risks and
uncertainties, most of which are difficult to predict and many of
which are beyond the Company’s control. Important information about
issues that could cause actual results and plans to differ
materially from those expressed in any forward-looking statements
can be found in the Company’s public periodic filings with the SEC,
including in the Company’s Annual Report on Form 10-K. All
forward-looking statements, expressed or implied, included in this
press release are expressly qualified in their entirety by this
cautionary statement. This cautionary statement should also be
considered in connection with any subsequent written or oral
forward-looking statements that the Company or persons acting on
its behalf may issue.
Except as otherwise required by applicable law,
the Company disclaims any duty to update any forward-looking
statements, all of which are expressly qualified by the statements
in this section, to reflect events or circumstances after the date
of this press release.
Contact:
Hays Mabry Director, Investor Relations (832)
240-3265 ir@cdevinc.com
Centennial Resource Deve... (NASDAQ:CDEV)
Historical Stock Chart
From Mar 2024 to Apr 2024
Centennial Resource Deve... (NASDAQ:CDEV)
Historical Stock Chart
From Apr 2023 to Apr 2024