(Talos, 25.Jan.2024) — Talos Energy Inc. (NYSE: TALO) announced that its wholly owned subsidiary Talos Production Inc. priced an upsized offering of $625mn in aggregate principal amount of new 9.000% Second-Priority Senior Secured Notes due 2029 and $625mn in aggregate principal amount of new 9.375% Second-Priority Senior Secured Notes due 2031 (collectively, the “New Notes”).
The company intends to use the net proceeds from the offering to (i) fund a portion of the cash consideration for the company’s recently announced pending acquisition of QuarterNorth Energy, Inc., (ii) fund the redemption of all of the outstanding 12.00% Second-Priority Senior Secured Notes due 2026 issued by the company and all of the outstanding 11.750% Senior Secured Second Lien Notes due 2026 issued by Talos Energy Ventures GOM LLC (f/k/a Energy Ventures GoM LLC) and Talos Finance Corporation (f/k/a EnVen Finance Corporation), each a wholly owned subsidiary of the company (the “11.750% Notes,” and collectively with the 12.00% Notes, the “Existing Notes”), and (iii) pay any premiums, fees and expenses related to the Redemptions and the issuance of the New Notes. The company intends to use any remaining net proceeds for general corporate purposes, which may include the repayment of a portion of the outstanding borrowings under its senior reserves-based revolving credit facility (the “Credit Facility”). The offering is expected to close on or about 7 Feb. 2024, subject to customary closing conditions.
An aggregate of $340mn principal amount of the New Notes will be subject to a “special mandatory redemption” in the event that the transactions contemplated by the definitive agreement to acquire QuarterNorth (the “QuarterNorth Merger Agreement”) are not consummated on or before 31 May 2024 (or up to 30 Sep. 2024 solely in the event the parties require additional time to satisfy certain requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, pursuant to the terms of the QuarterNorth Merger Agreement), or if the company notifies the trustee of the New Notes that it will not pursue the consummation of the Acquisition.
It is expected that the New Notes will be guaranteed on a senior basis by Talos and certain of the company’s existing and future subsidiaries and will initially be secured on a second-priority basis by substantially the same collateral as the company’s existing first-priority obligations under its Credit Facility.
The New Notes are being offered in the United States only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside the United States only in compliance with Regulation S under the Securities Act. The New Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security, nor shall there be any sale of the New Notes or any other security of the company, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. This press release does not constitute a notice of redemption under the optional redemption provisions of the indentures governing the Existing Notes.