Southwestern Energy Company (NYSE:SWN) announced recently the pricing of its Public Offering of $1.15 billion total amount of senior notes. The principal amount comprises of $650 million series of 7.500% senior Notes, the unsecured 2026 Notes, and $500 million of 7.750% senior notes, and the unsecured 2027 notes. The Notes will be offered to the public at an initial price of 100.000% face value for both 2026 and 2027 Notes. The offering is effective September 25, if all the terms and conditions are met.
The company is expecting to obtain the net proceeds from the Public Offering amounting to about $1.133 billion after deducting all the expenses including the underwriting discounts and other offing expenses. The firm intends to put in use about $327 million of the net proceeds from the Offering to repay its 2015 Amended and Restated Term Loan that it owes several companies including the Bank of America among others. The remainder will be used to fund other pending tender offers.
In case the tender offers would not be consummated on time or the aggregate amount from securities in the tender offers and accepted for payment would be lesser than net proceeds from the Offering, Southwestern Energy will use the remaining amount of the net proceeds to repay its indebtedness depending on the terms of its credit facilities.
Southwestern Energy sunk into huge debts in 2015, but it has since recovered from the prolonged slump. Last year, the company focused on three core initiatives, namely: to strengthen its balance sheet, optimize its portfolio, and improve margins. As a result, the natural gas driller halted its drilling activities until the commodity prices stabilized and partnered with Williams Companies to pull together the resources.
Furthermore, the company sold some of its plants that enabled them to significantly optimize its portfolio. Southwestern Energy also accumulated some cash from its secondary offering to repay its outstanding debts. With multiple transactions, the company is already on the road to recovery and has restored its public trust as they plan to launch the Public Offering.