AEPB closes notes offering, acquisition

American Energy Partners LP

American Energy – Permian Basin LLC (AEPB), an affiliate of American Energy Partners LP, reports the initial closing of an offering by its immediate parent, American Energy Permian Holdings LLC, of $515 million of 8.0% exchangeable junior subordinated notes due 2022, the net proceeds of which are being contributed to AEPB in exchange for preferred units. 

In addition, AEPB has closed on a major acquisition of assets from Tall City Exploration LLC, which is backed by private equity sponsor Denham Capital Management LP, for $440 million, in cash and notes. The assets include approximately 14,000 net acres of leasehold primarily located in Reagan County, Texas, and 1,400 barrels of oil equivalent (boe) per day of production.

The notes were offered and are being issued in a series of separate but related transactions, consisting of $250 million in aggregate principal amount of notes to qualified institutional buyers; $156 million in aggregate principal amount of notes to Tall City as partial consideration for the Tall City acquisition; $26 million in aggregate principal amount of notes to Aubrey K. McClendon and other members of AEPB's management; and $83 million in aggregate principal amount of notes to one or more affiliated funds managed by AEPB's sponsors, the Energy & Minerals Group and First Reserve Management LP.

The issuance of notes to Tall City and McClendon and other members of management settled concurrently with the delivery of notes to qualified institutional buyers. The purchase of notes by the sponsors is expected to close by Dec. 5.

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