|
Item 1.01
|
Entry into a Material Definitive Agreement
|
In connection with the previously announced private offering
of $450 million aggregate principal amount of 7.500% senior notes due 2028 (the “Notes”) to eligible purchasers, Kosmos
Energy Ltd. (the “Company”) issued such Notes under the indenture dated March 4, 2021 (the “Indenture”)
among the Company, the guarantors named therein (the “Guarantors”), Wilmington Trust, National Association, as trustee,
paying agent, transfer agent and registrar, and Banque Internationale à Luxembourg S.A., as Luxembourg listing agent, Luxembourg
paying agent and Luxembourg transfer agent.
The Notes
The Notes mature on March 1, 2028. Interest accrues at 7.500%
per annum from March 4, 2021 and is payable semi-annually in arrears each March 1 and September 1, commencing on September 1, 2021.
The Notes are senior, unsecured obligations of the Company and rank equal in right of payment with all of its existing and future
senior indebtedness (including all borrowings under the revolving credit facility (the “Corporate Revolver”) and its
7.125% Senior Notes due 2026 (the “7.125% Notes”)) and rank effectively junior in right of payment to all of its existing
and future secured indebtedness (including all borrowings under the commercial debt facility (the “Facility”) and all
borrowings under the secured term loan (the “GoM Term Loan”).
The Notes are guaranteed on a senior, unsecured basis by certain
subsidiaries owning the Company’s U.S. Gulf of Mexico assets and on a subordinated, unsecured basis by certain of its subsidiaries
that borrow under, or guarantee, the Facility and, on a subordinated basis, guarantee the Corporate Revolver and the 7.125% Notes.
Redemption and Repurchase
At any time prior to March 1, 2024, and subject to certain conditions,
the Company may, on one or more occasions, redeem up to 40% of the original principal amount of the Notes with an amount not to
exceed the net cash proceeds of certain equity offerings at a redemption price of 107.500% of the outstanding principal amount
of the Notes, together with accrued and unpaid interest and premium, if any, to, but excluding, the date of redemption. Additionally,
at any time prior to March 1, 2024 the Company may, on any one or more occasions, redeem all or a part of the Notes at a redemption
price equal to 100%, plus any accrued and unpaid interest, and plus a “make-whole” premium.
On or after March 1, 2024, the Company may redeem all or a part
of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest:
Year
|
Percentage
|
2024
|
103.750%
|
2025
|
101.875%
|
2026 and thereafter
|
100.000%
|
Upon the occurrence of a “change of control triggering
event” as defined under the Indenture, the Company will be required to make an offer to repurchase Notes at a repurchase
price equal to 101% of the outstanding principal amount, plus accrued and unpaid interest to, but excluding, the date of repurchase.
If the Company sells assets, under certain circumstances outlined
in the Indenture, it will be required to use the net proceeds to make an offer to purchase Notes at an offer price in cash in an
amount equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the repurchase date.
Covenants
The Indenture restricts the ability of the Company and its restricted
subsidiaries to, among other things: incur or guarantee additional indebtedness, create liens, pay dividends or make distributions
in respect of capital stock, purchase or redeem capital stock, make investments or certain other restricted payments, sell assets,
enter into agreements that restrict the ability of the Company’s subsidiaries to make dividends or other payments to the
Company, enter into transactions with affiliates or effect certain consolidations, mergers or amalgamations. These covenants are
subject to a number of important qualifications and exceptions. Certain of these covenants will be terminated if the Notes are
assigned an investment grade rating by both Standard & Poor’s Rating Services and Fitch Ratings Inc. and no default or
event of default has occurred and is continuing.
The information provided in this Item 1.01 is qualified in its
entirety by the terms of the Indenture and Notes. A copy of the Indenture (including the Form of Notes) is filed as Exhibit 4.1
hereto, and is incorporated herein by reference.