8-KMaterial AgreementsFinancial EventsOther Events+1

EQT Corp 8-K Report, Material Agreement (Oct 4, 2017)

Filed October 4, 2017For Securities:EQT

Summary

EQT Corporation (EQT) filed an 8-K on October 4, 2017, detailing the issuance of $2.5 billion in aggregate principal amount of senior notes and floating rate notes. This debt issuance was primarily to finance the previously announced acquisition of Rice Energy Inc. (Rice Merger). The proceeds are earmarked for the cash consideration of the acquisition, associated transaction expenses, and the extinguishment of approximately $1.9 billion of Rice's net debt and preferred equity. The filing also outlines provisions for a special mandatory redemption of certain notes if the Rice Merger does not close by May 19, 2018, or if EQT decides not to pursue it. This demonstrates a clear link between the debt issuance, the strategic acquisition, and potential contingency plans for either scenario, which are critical for investors to understand EQT's capital structure and strategic execution.

Key Highlights

  • 1EQT issued $2.5 billion in new debt, consisting of Floating Rate Notes due 2020, 2.500% Senior Notes due 2020, 3.000% Senior Notes due 2022, and 3.900% Senior Notes due 2027.
  • 2The primary purpose of the debt issuance is to fund the acquisition of Rice Energy Inc. (Rice Merger).
  • 3Proceeds will also be used to pay merger-related expenses and to extinguish approximately $1.9 billion of Rice's net debt and preferred equity.
  • 4The issuance was made under EQT's effective shelf registration statement on Form S-3.
  • 5Specific conditions are in place for a special mandatory redemption of Floating Rate Notes due 2020, 2.500% Senior Notes due 2020, and 3.900% Senior Notes due 2027 if the Rice Merger does not close by May 19, 2018, or is not pursued.
  • 6The Indenture governing the notes includes covenants limiting EQT's ability to incur certain liens, engage in sale and leaseback transactions, and enter into certain consolidations or mergers.
  • 7The filing includes updated computations for the Ratio of Earnings to Fixed Charges and opinions of counsel related to the debt offering.

Frequently Asked Questions

EQT issued a total of $2.5 billion in aggregate principal amount of notes, comprising $500 million in Floating Rate Notes due 2020, $500 million in 2.500% Senior Notes due 2020, $750 million in 3.000% Senior Notes due 2022, and $1,250 million in 3.900% Senior Notes due 2027.

The net proceeds are intended to fund the cash consideration for the acquisition of Rice Energy Inc., pay related transaction expenses, and extinguish approximately $1.9 billion of Rice's net debt and preferred equity. Any remaining funds may be used for general corporate purposes, including potentially redeeming EQT's 2018 senior notes.

If the Rice Merger does not close by May 19, 2018, or if EQT decides not to pursue it, the company will be required to redeem the Floating Rate Notes due 2020, the 2.500% Senior Notes due 2020, and the 3.900% Senior Notes due 2027 at a redemption price of 101% of the principal amount plus accrued interest. The 3.000% Senior Notes due 2022 are not subject to this special mandatory redemption.

The Indenture governing the notes contains covenants that restrict EQT's ability to incur certain liens securing indebtedness, engage in certain sale and leaseback transactions, and enter into certain consolidations, mergers, or sales of assets, subject to certain exceptions.