Whiting explores non-deal roadshow with SunTrust

Whiting Petroleum began a non-deal roadshow earlier this month via Suntrust in an effort to gauge debt and equity investor interest in the company’s next financial steps, according to two sources familiar with the situation.

On the near-term maturity front, the energy company has USD 262m of 1.25% convertible senior notes due April 2020, after giving effect to a recent cash tender offer. A little under after the converts come due, a USD 873m 5.75% senior note matures in March 2021. The 2021 notes last traded at 95.75 yielding 9.1%, while the converts last traded on Monday (28 October) at 98.125 to yield 5.824%, according to MarketAxess.

The borrower could have a tough time refinancing the 2020 and 2021 debt stack in a traditional way, given that later-dated securities trade at distressed levels. The Whiting USD 1bn 6.625% senior unsecured notes due 2026 last traded today at 65.5 to yield 15.461%, down from recent trades in the 66/67 context.

One tool management could have at its disposal to address the 2020 notes is to further tap its revolver, or explore a secured debt exchange, one of the sources and an additional source said. As of 30 June, Whiting had USD 6.7m of cash and USD 1.7bn of available borrowing capacity under the credit facility.

Debtwire affiliate Xtract Research recently dug into the company’s ability to uptier its 2021 notes into secured debt, noting that “any refinancing (including with Revolver draws or Permitted Refinancing Debt) or repayment – including at stated final maturity – would be blocked if the pro forma total leverage test or minimum availability test cannot be met. […] “If the company has not dealt with the 21s prior to their stated maturity and it fails to satisfy all the debt prepayment conditions, it would have to obtain consent from RBL lenders to repay them,” the report continues.

Leverage at 27 September stood at 2.3x.

The company is scheduled to report 3Q19 earnings on Tuesday (5 November).

SunTrust declined to comment. Whiting did not respond to a request for comment.

2019 Debtwire

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