Summary
Diamondback Energy, Inc. (FANG) filed an 8-K on December 5, 2019, to report on significant debt financing activities. The company successfully closed an underwritten public offering, raising a substantial $3,000,000,000 in aggregate principal amount through the issuance of three series of Senior Notes: $1,000,000,000 of 2.875% Senior Notes due 2024, $800,000,000 of 3.250% Senior Notes due 2026, and $1,200,000,000 of 3.500% Senior Notes due 2029. These new notes are senior unsecured obligations of the Company, guaranteed by Diamondback O&G LLC, and are senior to future subordinated debt, but rank equally with existing senior indebtedness. They are effectively subordinated to secured debt and structurally subordinated to other subsidiaries' debt. In conjunction with this new debt issuance, Diamondback Energy also announced the redemption of its $1,250,000,000 aggregate principal amount of 4.750% Senior Notes due 2024. The redemption price was set at 103.563% of the principal amount, plus accrued interest. This action effectively terminates the indenture governing the 4.750% Notes, satisfying and discharging the agreement and releasing associated guarantors. Furthermore, in connection with these transactions, certain subsidiaries (Diamondback E&P LLC, Energen Corporation, Energen Resources Corporation, and EGN Services Inc.) were released as guarantors under the Company's revolving credit facility and from their guarantees of the 5.375% Senior Notes due 2025. This filing indicates a strategic move to refinance existing debt and potentially extend maturity profiles or lower borrowing costs.
Key Highlights
- 1Completed a $3 billion public offering of Senior Notes across three maturities (2024, 2026, 2029) with coupon rates ranging from 2.875% to 3.500%.
- 2The new notes are senior unsecured obligations, guaranteed by Diamondback O&G LLC.
- 3Effectively refinanced and redeemed $1.25 billion of 4.750% Senior Notes due 2024 at a redemption premium.
- 4The redemption of the 4.750% Notes leads to the satisfaction and discharge of their governing indenture.
- 5Several subsidiaries are released from their guarantees under the revolving credit facility and the 5.375% Senior Notes due 2025.
- 6The company utilized proceeds from the new note issuance to fund the redemption of the older notes.
- 7The new notes are effectively subordinated to secured indebtedness and structurally subordinated to debt of other subsidiaries.