Finance & Investing | Capital Markets

Halcon Initiates $1.2B Senior Note Exchange to Cut Debt

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Halcón Resources Corporation has entered into privately negotiated exchange agreements with certain holders of its outstanding unsecured debt securities as part of its efforts to deleverage the Company’s balance sheet.

Halcón has agreed to issue approximately $1.02 billion aggregate principal amount of new 13.00% Third Lien Senior Secured Notes due 2022 in exchange for approximately $1.57 billion aggregate principal amount of its outstanding unsecured debt securities (the “Existing Notes”) as follows:

• $497.2 million of its 9.75% Senior Unsecured Notes due 2020;
• $774.7 million of its 8.875% Senior Unsecured Notes due 2021; and
• $294.3 million of its 9.25% Senior Unsecured Notes due 2022

Floyd C. Wilson, Chairman and Chief Executive Officer, stated, “Not only do these exchanges result in a material reduction to our long-term debt, they also effectively improve our leverage profile by almost a full turn and reduce our annual cash interest expense by approximately $12 million. We remain steadfast in our mission to continue improving our balance sheet and are confident we will emerge from this downturn a much stronger company.”

The Company expects to close the debt exchanges within 10 business days, subject to customary closing conditions, including an amendment to its senior secured revolving credit facility to, among other things, permit the issuance of the New Notes and reduce the borrowing base by $50 million to $850 million. Halcón currently expects the borrowing base to remain unchanged at $850 million as a result of the regularly scheduled fall redetermination.

The New Notes have not been registered under the Securities Act, or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities.

Jefferies LLC and J.P. Morgan Securities LLC acted as placement agents to the Company for the debt exchanges.