Item 1.01 Entry into a Material Definitive Agreement.
Supplemental Indentures for 4.300% Senior Notes due 2028 and 4.850% Senior Notes due 2048
On July 2, 2018, Concho Resources Inc. (the
Company
) completed the public offering of $1,000 million aggregate principal
amount of the Companys 4.300% Senior Notes due 2028 (the
2028
notes
) and $600 million aggregate principal amount of the Companys 4.850% Senior Notes due 2048 (the
2048
notes
and, together with the 2028 notes, the
Notes
). The Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of 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
2028 notes, the fourteenth supplemental indenture, dated as of July 2, 2018 (the
Fourteenth
Supplemental Indenture
) and by, in the case of the 2048 notes, the fifteenth supplemental indenture, dated as of
July 2, 2018 (the
Fifteenth Supplemental Indenture
; the Base Indenture, as amended and supplemented by the Fourteenth Supplemental Indenture and the Fifteenth Supplemental Indenture, the
Indenture
).
The 2028 notes will mature on August 15, 2028, and interest is payable on the 2028 notes on each
August 15 and February 15, commencing on February 15, 2019. The Company may redeem some or all of the 2028 notes at any time on or after May 15, 2028 at par, and it may redeem some or all of the 2028 notes at any time prior to
May 15, 2028 on a make-whole basis, in each case as specified in the Fourteenth Supplemental Indenture. The 2048 notes will mature on August 15, 2048, and interest is payable on the 2048 notes on each August 15 and
February 15, commencing on February 15, 2019. The Company may redeem some or all of the 2048 notes at any time on or after February 15, 2048 at par, and it may redeem some or all of the 2048 notes at any time prior to
February 15, 2048 on a make-whole basis, in each case as specified in the Fifteenth 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 Fourteenth Supplemental Indenture and the Fifteenth Supplemental Indenture are described in the
final prospectus supplement, dated June 14, 2018, as filed by the Company and the Subsidiary Guarantors with the Securities and Exchange Commission on June 15, 2018. The foregoing descriptions of the Indenture and the Notes are qualified
in their entirety by reference to the Fourteenth Supplemental Indenture and the Fifteenth 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.