(BUSINESS WIRE)–GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a leading independent Latin American oil and gas explorer, operator and consolidator with operations and growth platforms in Colombia, Ecuador, Chile, Brazil, and Argentina, today announced successful first phase of its strategic deleveraging process that is expected to result in a significant debt reduction and an improved financial profile with extended maturities and lower cost of debt.
The strategic deleveraging process is being executed through a series of transactions1 that included a successful tender to purchase $255 million of the 6.500% Senior Notes due 2024 (“2024 Notes”) to be funded with a combination of cash in hand and a $150 million new issuance from the reopening of the 5.500% Senior Notes due 2027 (“2027 Notes”). As part of this process, the tender included a consent solicitation to align covenants of the 2024 Notes to those of the 2027 Notes. The new notes offering and the tender offer are scheduled to close on Friday April 23 and Monday April 26, respectively.
The reopening of the 2027 Notes was priced above par at 101.875%, representing a yield to maturity of 5.117%. This yield reflects a negative concession of 2.3 bps relative to the yield to maturity of the day before pricing. Total demand reached over $780 million at its peak and ended at over $540 million. The transaction was oversubscribed by more than 3.5 times from diversified, top tier institutional investors.
Rationale and Benefits
- Initiated a debt reduction process, with total financial debt being reduced by $105 million while maintaining a solid balance sheet with a pro-forma cash position of approximately $70 million2
- Reduced the cost of debt with annual interest savings of approximately $9 million
- Enhanced financial profile with debt maturities extended by 2.3 years
- An overall debt structure that provides greater flexibility with 25% of outstanding financial debt maturing in September 2024 (callable starting September 2021) and 75% of financial debt maturing in January 2027
- Overall improvement in covenants
James F. Park, Chief Executive Officer of GeoPark, said: “Congratulations and thanks to our team for these successful results from our deleveraging initiative and continuous balance sheet management efforts. It demonstrates the support and credibility we have earned in the international capital markets from our consistent track-record of performance and financial discipline, and it puts us in a stronger, more flexible, less risky and less costly position for the longer term. Exactly, one year ago, the WTI oil price closed at negative $37 per barrel and yesterday the markets rewarded GeoPark for the manner we performed through the storms of this year, including the improvements we made to our Company, with another record-low cost for our bonds.”
Breakdown of Notes Outstanding3
The following table provides detail of outstanding GeoPark Notes as of December 2020 (last reporting date) and pro-forma upon closing of these transactions:
|Notes Outstanding||Dec 31, 2020||Pro-forma|
|2024 Notes (6.500% Coupon)||$425 million||$170 million|
|2027 Notes (5.500% Coupon)||$350 million||$500 million|
|Total Outstanding||$775 million||$670 million|
This press release does not constitute an offer to sell or a solicitation of an offer to buy these securities, nor will there be any sale of these securities, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state or jurisdiction. The new notes have not been registered under the Securities Act, or any applicable state securities laws, and will be offered only to qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act and outside the United States to non-U.S. persons in accordance with Regulation S under the Securities Act. Unless so registered, the new notes may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and any applicable state securities laws.