SandRidge Energy to repurchase and exchange $525M in senior debt

SandRidge Energy Inc. (NYSE: SD) has entered into privately negotiated purchase and exchange agreements under which it will repurchase $250 million aggregate principal amount of its senior unsecured notes for $94.5 million cash and exchange $275 million of notes into new convertible notes.

Outlining the plan, Global Hunter Securities analysts said, “The process of rebuilding the balance sheet continues at SD as the company is repurchasing debt at a substantial discount and exchanging other debt for convertible notes. SD will retire $250MM in face value of debt at a price of $94MM and eliminate ~$19MM in interest expense annually. The $275MM in exchanged notes will convert into SD equity at a price of $2.75 initially.”

SandRidge President and CEO James Bennett commented, "This represents a significant first step in reducing SandRidge's debt and improving our balance sheet. In this transaction, we addressed $525 million of senior unsecured debt by repurchasing senior unsecured notes at a substantial discount to face value, also immediately eliminating approximately $19 million in annual interest expense, and modifying additional outstanding debt to convert into equity at a significant premium to the current share price."

Specifically, the company will repurchase $29.3 million aggregate principal amount of its 8.75% senior notes due 2020, $111.6 million aggregate principal amount of its 7.5% senior notes due 2021, $26.1 million aggregate principal amount of its 8.125% senior notes due 2022, and $83 million aggregate principal amount of its 7.5% senior notes due 2023 for an aggregate of $94.5 million in cash.

The company will exchange $15.9 million aggregate principal amount of the 2020 outstanding notes, $40.7 million aggregate principal amount of the 2021 outstanding notes, $101.8 million aggregate principal amount of the 2022 outstanding notes, and $116.6 million aggregate principal amount of its 2023 outstanding notes for $158.4 million aggregate principal amount of its new 8.125% convertible senior notes due 2022 and $116.6 million aggregate principal amount of its new 7.5% convertible senior notes due 2023.

In addition, SandRidge and its banks amended its first lien revolving credit agreement to facilitate the repurchase and exchange transactions.

 

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