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Item 1.01
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Entry into a Material Definitive Agreement.
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Underwriting Agreement
On August 10, 2020, Concho Resources Inc. (the “Company”) and certain of its current subsidiaries entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, as representatives of the underwriters named in Schedule 1 thereto (collectively, the “Underwriters”), in connection with an underwritten public offering of $500 million aggregate principal amount of the Company’s 2.400% senior unsecured notes due 2031 (the “notes”). The Company intends to use the net proceeds from this offering for general corporate purposes, including, together with cash on hand, to redeem all of its outstanding 4.375% senior notes due 2025 (the “2025 notes”) for approximately $624 million, which includes $4 million of accrued but unpaid interest.
The issuance and sale of the notes has been registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to an automatic shelf Registration Statement on Form S-3 (Registration No. 333-225609), as amended, of the Company, filed with the Securities and Exchange Commission on June 14, 2018. The notes will be issued pursuant to a new supplemental indenture to the Company’s existing indenture. The notes will be guaranteed on a senior unsecured basis by certain of the Company’s current subsidiaries. Closing of the issuance and sale of the notes is expected to occur on August 24, 2020, subject to customary closing conditions.
The Underwriting Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing, obligations of the parties and termination provisions. Additionally, the Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Underwriters may be required to make because of any of those liabilities.
Certain of the Underwriters or their affiliates have from time to time provided investment banking, commercial banking and financial advisory services to the Company, for which they have received customary compensation. The Underwriters and their affiliates may provide similar services in the future. In particular, certain of the Underwriters or their affiliates are lenders under the Company’s credit facility. From time to time, certain of the Underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in the Company’s debt or equity securities or loans, and may do so in the future. In addition, certain of the Underwriters or their affiliates are holders of the 2025 notes and, accordingly, may receive a portion of the proceeds of this offering pursuant to the repayment thereof with the proceeds of this offering.
The foregoing description of the Underwriting Agreement is qualified in its entirety by reference to such Underwriting Agreement, a copy of which is filed herewith as Exhibit 1.1 and is incorporated herein by reference.