Kosmos Energy Ltd. Prices Upsized Offering of $350 Million
3.125% Convertible Senior Notes Due 2030
March 6, 2024
Dallas, March 6, 2024 - Kosmos
Energy Ltd. (NYSE/LSE: KOS) ("Kosmos" or the "Company"),
announced today that it has priced a private offering
of $350 million aggregate
principal amount of its 3.125% convertible senior notes due 2030
(the "notes"), which represents a $50 million increase in principal
amount from the previously announced offering size. The Company
also granted the initial purchasers an option to purchase
up to an additional $50 million aggregate
principal amount of notes, for settlement within a 13-day period
beginning on, and including, the date on which the notes are first
issued. The offering is expected to close on March 8, 2024, subject
to customary closing conditions.
The notes will be senior, unsecured
obligations of the Company. The notes will rank pari passu with the
Company's existing senior notes and the Company's revolving credit
facility. The notes will be guaranteed (i) on a senior, unsecured
basis by certain of the Company's existing subsidiaries that
guarantee on a senior basis the Company's revolving credit facility
and the Company's existing senior notes, and (ii) on a
subordinated, unsecured basis by certain of the Company's existing
subsidiaries that borrow under or guarantee the Company's
commercial debt facility and guarantee on a subordinated basis the
Company's revolving credit facility and the Company's existing
senior notes. Upon conversions of the notes, the Company will
satisfy its conversion obligation by paying cash up to the
aggregate principal amount of the notes to be converted, and paying
or delivering, as the case may be, cash, shares of the Company's
common stock or a combination of cash and shares of the Company's
common stock, at the Company's election, in respect of the
remainder, if any, of its conversion obligation in excess of the
aggregate principal amount of the notes to be converted. The notes
will have an initial conversion rate of 142.4501 shares of the
Company's common stock per $1,000 principal amount of notes (which
is subject to adjustment in certain circumstances). This is
equivalent to an initial conversion price of approximately $7.02
per share. The initial conversion price represents a premium of
approximately 30.0% to the $5.40 per share closing price of the
Company's common stock on The New York Stock Exchange on March 5,
2024.
The notes will accrue interest at an
annual rate of 3.125%, payable semi-annually in arrears on March 15
and September 15 of each year, beginning on September 15, 2024. The
notes will mature on March 15, 2030, unless earlier repurchased,
redeemed or converted. Prior to December 15, 2029, the notes will
be convertible at the option of the holders only upon the
occurrence of specified events, and thereafter until the close of
business on the second scheduled trading day immediately preceding
the maturity date, the notes will be convertible at any time. In
the event of certain tax law changes, the Company may redeem the
notes in whole, but not in part. In addition, the Company may
redeem for cash all or any portion of the notes (subject to a
partial redemption limitation), at the Company's option, on or
after March 22, 2027 and prior to the 41st scheduled trading day
immediately preceding the maturity date, if the last reported sale
price per share of the Company's common stock has been at least
130% of the conversion 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 Company estimates that the net
proceeds from this offering will be approximately $340.4 million
(or approximately $389.0 million if the initial purchasers exercise
in full their option to purchase additional notes), after deducting
discounts payable to the initial purchasers. The Company intends to
use the net proceeds from the sale of the notes to
(i) repay a portion of outstanding indebtedness
under the Company's commercial debt facility; (ii) pay the cost of
the capped call transactions described below, using net proceeds of
approximately $43.6 million; and (iii) pay
fees and expenses related to the offering.
In connection with the pricing of
the notes, the Company entered into privately negotiated capped
call transactions with certain of the initial purchasers of the
notes or their respective affiliates and certain other financial
institutions (the "option counterparties"). The capped call
transactions are expected generally to reduce potential dilution to
the Company's common stock upon any conversion of the notes and/or
offset any cash payments the Company is required to make in excess
of the principal amount of converted notes, as the case may be,
with such reduction and/or offset subject to a cap. The cap
price of the capped call transactions will initially be $10.80,
which represents a premium of 100.0% above the last reported sale
price of the Company's common stock on The New York Stock Exchange
on March 5, 2024, and is subject to customary anti-dilution
adjustments. If the initial purchasers of the notes exercise their
option to purchase additional notes, the Company expects to enter
into additional capped call transactions with the option
counterparties and use a portion of the net proceeds from the sale
of the additional notes to pay the cost of such additional capped
call transactions.
In connection with establishing
their initial hedges of the capped call transactions, the Company
expects the option counterparties or their respective affiliates to
enter into various derivative transactions with respect to the
Company's common stock concurrently with or shortly after the
pricing of the notes, and may unwind these various derivative
transactions and purchase the Company's common stock in open market
transactions shortly after the pricing of the
notes. This
activity could increase (or reduce the size of any decrease in) the
market price of the Company'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 the Company's
common stock and/or purchasing or selling the Company's common
stock or other securities of 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 during any
observation period related to a conversion of
notes). This
activity could also cause or avoid an increase or a decrease in the
market price of the Company's common stock or the
notes, which could
affect the ability of noteholders to convert the notes
and, to the extent
the activity occurs during any observation period related to a
conversion of the notes,
it could
affect the number of shares and value of
the consideration that noteholders will receive upon conversion of the
notes.
The offering is being made to
persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act"). The offer and sale of the notes, the guarantees and any shares
of the Company's common stock issuable upon conversion of the notes
have not been and will not be registered under the Securities
Act, or under any
state securities laws, and the notes and such shares may not be
offered or sold in the United States except pursuant to an
exemption from, or
in a transaction not subject to, the registration requirements of
the Securities Act and applicable state securities laws.
This announcement does not
constitute an offer to sell or the solicitation of an offer to buy
the notes in the offering,
nor shall there be any sale of such notes in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
Forward-Looking
Statements
This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. All statements, other than statements of historical
facts, included in this press release that address activities,
events or developments that Kosmos expects, believes or anticipates
will or may occur in the future are forward-looking statements,
including the potential offering of convertible senior notes and
the effects of entering into the capped call transactions. Kosmos'
estimates and forward-looking statements are mainly based on its
current expectations and estimates of future events and trends,
which affect or may affect its businesses and operations. Although
Kosmos believes that these estimates and forward-looking statements
are based upon reasonable assumptions, they are subject to several
risks and uncertainties and are made in light of information
currently available to Kosmos. When used in this press release, the
words "anticipate," "believe," "intend," "expect," "plan," "will,"
"may," "potential" or other similar words are intended to identify
forward-looking statements. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond
the control of Kosmos, which may cause actual results to differ
materially from those implied or expressed by the forward-looking
statements. Further information on such assumptions, risks and
uncertainties is available in Kosmos' Securities and Exchange
Commission filings. Kosmos undertakes no obligation and does not
intend to update or correct these forward-looking statements to
reflect events or circumstances occurring after the date of this
press release, except as required by applicable law. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
All forward-looking statements are qualified in their entirety by
this cautionary statement.
About Kosmos Energy Ltd.
Kosmos is a full-cycle deepwater
independent oil and gas exploration and production company focused
along the Atlantic Margins. The Company's key assets include
production offshore Ghana, Equatorial Guinea and the U.S. Gulf of
Mexico, as well as a world-class gas development offshore
Mauritania and Senegal. Kosmos also maintains a sustainable proven
basin exploration program in Equatorial Guinea and the U.S. Gulf of
Mexico. Kosmos is listed on the New York Stock Exchange and London
Stock Exchange and is traded under the ticker symbol KOS.
Kosmos Energy Ltd. is headquartered
in Dallas, TX.
Investor Relations
Jamie Buckland
+44 (0) 203 954 2831
jbuckland@kosmosenergy.com
Media Relations
Thomas Golembeski
+1-214-445-9674
tgolembeski@kosmosenergy.com
SOURCE: Kosmos
Energy Ltd.