Oil and gas credit Unit Corporation is working with Barclays to hold a meeting with credit investors tomorrow (17 July) in New York, according to two sources familiar with the matter. The company faces a subordinated bond maturity in just under two years.
The company, which runs drilling and natural gas gathering operations as well as a processing business, will be looking to gauge interest in a potential refinancing of its next maturity, a USD 650m issue of 6.625% senior subordinated notes due in May 2021, the sources said.
The notes were originally issued as a USD 250m offering in 2011, to repay credit facility borrowings and fund general corporate purposes, before being upsized by USD 400m in 2012 to fund Unit’s acquisition of assets from Noble Energy.
They last traded on 11 July at 89.25 to yield 13.418%, down roughly a point from trades at 90.5 at the beginning of July, according to MarketAxess.
Unit’s leverage is roughly 1.9x, based on USD 366m of LTM EBITDA and USD 690m of total debt, which includes USD 40m of revolver borrowings, according to a recent investor presentation.
Unit generated USD 366m of LTM EBITDA as of 31 March, but the company’s USD 523m capex spend and USD 32m of interest costs pushed it to a cash burn of USD 189m for that period, according to figures drawn from the presentation.
However, the company said in the presentation that it generated positive cash flow in 2018, based on cash from operations, plus proceeds from divestitures, minus capex.
Unit has USD 389m of liquidity, based on USD 4m of cash and USD 385m of availability on its USD 425m RBL facility, which matures in 2023.
Unit and Barclays did not respond to messages seeking comment.