REG - Kosmos Energy Ltd - Pricing of Senior Notes Offering

Kosmos EnergyAnnouncement

06/03/2024 07:00

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RNS Number : 7843F  Kosmos Energy Limited  06 March 2024

 

Kosmos Energy Ltd. Prices Upsized Offering of $350 Million 3.125% Convertible
Senior Notes Due 2030

 

March 6, 2024

 

Dallas, March 6, 2024 - Kosmos Energy Ltd. (NYSE/LSE: KOS) ("Kosmos" or the
"Company"), announced today that it has priced a private offering of $350
million aggregate principal amount of its 3.125% convertible senior notes due
2030 (the "notes"), which represents a $50 million increase in principal
amount from the previously announced offering size. The Company also granted
the initial purchasers an option to purchase up to an additional $50 million
aggregate principal amount of notes, for settlement within a 13-day period
beginning on, and including, the date on which the notes are first issued. The
offering is expected to close on March 8, 2024, subject to customary closing
conditions.

 

The notes will be senior, unsecured obligations of the Company. The notes will
rank pari passu with the Company's existing senior notes and the Company's
revolving credit facility. The notes will be guaranteed (i) on a senior,
unsecured basis by certain of the Company's existing subsidiaries that
guarantee on a senior basis the Company's revolving credit facility and the
Company's existing senior notes, and (ii) on a subordinated, unsecured basis
by certain of the Company's existing subsidiaries that borrow under or
guarantee the Company's commercial debt facility and guarantee on a
subordinated basis the Company's revolving credit facility and the Company's
existing senior notes. Upon conversions of the notes, the Company will satisfy
its conversion obligation by paying cash up to the aggregate principal amount
of the notes to be converted, and paying or delivering, as the case may be,
cash, shares of the Company's common stock or a combination of cash and shares
of the Company's common stock, at the Company's election, in respect of the
remainder, if any, of its conversion obligation in excess of the aggregate
principal amount of the notes to be converted. The notes will have an initial
conversion rate of 142.4501 shares of the Company's common stock per $1,000
principal amount of notes (which is subject to adjustment in certain
circumstances). This is equivalent to an initial conversion price of
approximately $7.02 per share. The initial conversion price represents a
premium of approximately 30.0% to the $5.40 per share closing price of the
Company's common stock on The New York Stock Exchange on March 5, 2024.

 

The notes will accrue interest at an annual rate of 3.125%, payable
semi-annually in arrears on March 15 and September 15 of each year, beginning
on September 15, 2024. The notes will mature on March 15, 2030, unless earlier
repurchased, redeemed or converted. Prior to December 15, 2029, the notes will
be convertible at the option of the holders only upon the occurrence of
specified events, and thereafter until the close of business on the second
scheduled trading day immediately preceding the maturity date, the notes will
be convertible at any time. In the event of certain tax law changes, the
Company may redeem the notes in whole, but not in part. In addition, the
Company may redeem for cash all or any portion of the notes (subject to a
partial redemption limitation), at the Company's option, on or after March 22,
2027 and prior to the 41st scheduled trading day immediately preceding the
maturity date, if the last reported sale price per share of the Company's
common stock has been at least 130% of the conversion price for a specified
period of time. The redemption price will be equal to the principal amount of
the notes to be redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date.

 

The Company estimates that the net proceeds from this offering will be
approximately $340.4 million (or approximately $389.0 million if the initial
purchasers exercise in full their option to purchase additional notes), after
deducting discounts payable to the initial purchasers. The Company intends to
use the net proceeds from the sale of the notes to (i) repay a portion of
outstanding indebtedness under the Company's commercial debt facility; (ii)
pay the cost of the capped call transactions described below, using net
proceeds of approximately $43.6 million; and (iii) pay fees and expenses
related to the offering.

 

In connection with the pricing of the notes, the Company entered into
privately negotiated capped call transactions with certain of the initial
purchasers of the notes or their respective affiliates and certain other
financial institutions (the "option counterparties"). The capped call
transactions are expected generally to reduce potential dilution to the
Company's common stock upon any conversion of the notes and/or offset any cash
payments the Company is required to make in excess of the principal amount of
converted notes, as the case may be, with such reduction and/or offset subject
to a cap.  The cap price of the capped call transactions will initially be
$10.80, which represents a premium of 100.0% above the last reported sale
price of the Company's common stock on The New York Stock Exchange on March 5,
2024, and is subject to customary anti-dilution adjustments. If the initial
purchasers of the notes exercise their option to purchase additional notes,
the Company expects to enter into additional capped call transactions with the
option counterparties and use a portion of the net proceeds from the sale of
the additional notes to pay the cost of such additional capped call
transactions.

 

In connection with establishing their initial hedges of the capped call
transactions, the Company expects the option counterparties or their
respective affiliates to enter into various derivative transactions with
respect to the Company's common stock concurrently with or shortly after the
pricing of the notes, and may unwind these various derivative transactions and
purchase the Company's common stock in open market transactions shortly after
the pricing of the notes. This activity could increase (or reduce the size of
any decrease in) the market price of the Company's common stock or the notes
at that time.

 

In addition, the option counterparties or their respective affiliates may
modify their hedge positions by entering into or unwinding various derivatives
with respect to the Company's common stock and/or purchasing or selling the
Company's common stock or other securities of the Company in secondary market
transactions following the pricing of the notes and prior to the maturity of
the notes (and are likely to do so during any observation period related to a
conversion of notes). This activity could also cause or avoid an increase or a
decrease in the market price of the Company's common stock or the notes, which
could affect the ability of noteholders to convert the notes and, to the
extent the activity occurs during any observation period related to a
conversion of the notes, it could affect the number of shares and value of the
consideration that noteholders will receive upon conversion of the notes.

 

The offering is being made to persons reasonably believed to be qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act"). The offer and sale of the notes, the
guarantees and any shares of the Company's common stock issuable upon
conversion of the notes have not been and will not be registered under the
Securities Act, or under any state securities laws, and the notes and such
shares may not be offered or sold in the United States except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws.

 

This announcement does not constitute an offer to sell or the solicitation of
an offer to buy the notes in the offering, nor shall there be any sale of such
notes in any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such jurisdiction.

 

Forward-Looking Statements
 

This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of historical
facts, included in this press release that address activities, events or
developments that Kosmos expects, believes or anticipates will or may occur in
the future are forward-looking statements, including the potential offering of
convertible senior notes and the effects of entering into the capped call
transactions. Kosmos' estimates and forward-looking statements are mainly
based on its current expectations and estimates of future events and trends,
which affect or may affect its businesses and operations. Although Kosmos
believes that these estimates and forward-looking statements are based upon
reasonable assumptions, they are subject to several risks and uncertainties
and are made in light of information currently available to Kosmos. When used
in this press release, the words "anticipate," "believe," "intend," "expect,"
"plan," "will," "may," "potential" or other similar words are intended to
identify forward-looking statements. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond the control
of Kosmos, which may cause actual results to differ materially from those
implied or expressed by the forward-looking statements. Further information on
such assumptions, risks and uncertainties is available in Kosmos' Securities
and Exchange Commission filings. Kosmos undertakes no obligation and does not
intend to update or correct these forward-looking statements to reflect events
or circumstances occurring after the date of this press release, except as
required by applicable law. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
press release. All forward-looking statements are qualified in their entirety
by this cautionary statement.

 

About Kosmos Energy Ltd.

 

Kosmos is a full-cycle deepwater independent oil and gas exploration and
production company focused along the Atlantic Margins. The Company's key
assets include production offshore Ghana, Equatorial Guinea and the U.S. Gulf
of Mexico, as well as a world-class gas development offshore Mauritania and
Senegal. Kosmos also maintains a sustainable proven basin exploration program
in Equatorial Guinea and the U.S. Gulf of Mexico. Kosmos is listed on the New
York Stock Exchange and London Stock Exchange and is traded under the ticker
symbol KOS.

Kosmos Energy Ltd. is headquartered in Dallas, TX.

 

Investor Relations

Jamie Buckland

+44 (0) 203 954 2831

jbuckland@kosmosenergy.com (mailto:jbuckland@kosmosenergy.com)

 

Media Relations

Thomas Golembeski

+1-214-445-9674

tgolembeski@kosmosenergy.com (mailto:tgolembeski@kosmosenergy.com)

 

SOURCE: Kosmos Energy Ltd.
 

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