Finance & Investing | Fundraising | Capital Markets | Private Equity Activity
Midstates Wraps Up $420MM in Private Offerings
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Midstates Petroleum Company, Inc. has completed a series of transactions that substantially increase its liquidity to approximately $420 million.
The Company completed a private offering of Senior Secured Second Lien Notes at par with an aggregate principal amount of $625 million and an annual interest rate of 10%. A portion of the net proceeds were used to fully repay borrowings under the Company’s revolving credit facility, with the remainder held in cash for general corporate purposes.
Concurrently with the offering of Second Lien Notes, the Company exchanged approximately $279.8 million of its 10.75% Senior Unsecured Notes due 2020 and approximately $350.3 million of its 9.25% Senior Unsecured Notes due 2021 for new Third Lien Senior Secured Notes (“Third Lien Notes”) in an aggregate principal amount of $504.1 million, representing an exchange at 80% of par value. The Third Lien Notes will pay cash interest of 10% and pay-in-kind interest of 2%, per annum.
The Company also amended its revolving credit facility to provide additional covenant flexibility and allow for the Second Lien Notes issuance and exchange transactions. Upon completion of the transaction, the Company’s borrowing base under its revolving credit facility was reduced to $253 million. The next borrowing base redetermination is scheduled for October 2015.
Jake Brace, Midstates’ President and CEO commented, "We are very pleased to announce the successful completion of this transaction which gives Midstates a significant boost to liquidity and enables us to continue to exploit our premier Mississippian Lime asset. We evaluated multiple alternatives and concluded that this comprehensive transaction was the best option for all stakeholders, and will provide the Company a substantial runway to prosper in a variety of commodity price environments.
"Entering 2015, our immediate focus was on delivering operational excellence and strengthening our liquidity and balance sheet. We have been and are continuing to execute on our strategy of exercising capital discipline and maximizing returns. Our outstanding operational performance to date in 2015, coupled with the flexibility this transaction provides, better positions us to maximize the value of our asset base for all our stakeholders."
Evercore Group LLC acted as financial advisor and Kirkland & Ellis LLP provided legal advice for these transactions.