Summary
Occidental Petroleum Corporation (OXY) filed an 8-K on March 2, 2018, to announce the entry into a material definitive agreement regarding a significant debt offering. The company entered into an Underwriting Agreement to issue and sell $1 billion in aggregate principal amount of 4.20% senior notes due in 2048. These notes were offered at a public price of 99.272% of their principal amount, resulting in estimated net proceeds of approximately $983 million after accounting for underwriting discounts and expenses. The primary use of these proceeds is to refinance the repayment of $500 million in 1.50% senior notes that matured on February 15, 2018. The remaining funds will be allocated for general corporate purposes. This transaction effectively extends Occidental's debt maturity profile and lowers its overall interest expense by replacing shorter-term, lower-interest debt with longer-term, higher-interest debt.
Key Highlights
- 1Occidental Petroleum issued $1 billion in 4.20% senior notes due 2048.
- 2Net proceeds from the offering are approximately $983 million.
- 3Proceeds will be used to refinance $500 million of maturing 1.50% senior notes due 2018.
- 4Remaining proceeds will support general corporate purposes.
- 5The offering was conducted through an Underwriting Agreement with major financial institutions.
- 6The notes are governed by an Indenture and supplemented by an Officers' Certificate.
- 7Covenants in the Indenture include limitations on liens, sale and leaseback transactions, and mergers/asset transfers.