New Source Energy Partners LP (NYSE: NSLP), a Delaware limited partnership, has priced its public offering of 1,760,000 of its 11.00% Series A cumulative convertible preferred units at a price of $25 per unit. The offering is expected to close on May 8.
The Partnership has granted the underwriters a 30-day option to purchase up to an additional 264,000 Series A preferred units from the Partnership at the public offering price less the underwriting discount. Distributions will be payable on the Series A preferred units at an initial rate of 11.00% per annum of the stated liquidation preference of $25.
The Partnership expects to receive net proceeds of approximately $40.4 million (or approximately $46.6 million if the underwriters exercise their option to purchase an additional 264,000 Series A preferred units), after deducting underwriting discounts and estimated offering expenses, from the offering, and intends to use all of the net proceeds from the offering to repay a portion of the indebtedness outstanding under its revolving credit facility.
In accordance with the Consent Letter, dated April 8, relating to the Partnership's revolving credit facility, the Partnership may not declare and pay distributions on its common units unless it reduces total outstanding borrowings under its revolving credit facility to at least $55 million. Although the Partnership expects to receive net proceeds at the closing of the offering in a sufficient amount to reduce total outstanding borrowings to at least $55 million, it may not declare a distribution on its common units until such repayment occurs.
Stifel is serving as lead book-running manager and Baird is serving as joint book-running manager for the offering. Janney Montgomery Scott, Oppenheimer & Co. and Wunderlich are serving as co-leads for the offering.