Goodrich Petroleum Corp. (NYSE: GDP) entered into separate, privately negotiated exchange agreements under which it will retire US $109.3 million of its outstanding convertible senior notes due 2029 in exchange for its issuance of a new series of convertible senior notes due 2032 of $109.3 million.
The 2032 notes will mature on Oct. 1, 2032. Following these transactions, $109.3 million of the 2029 notes will remain outstanding with terms unchanged. The exchange is expected to close on Aug. 26, subject to customary closing conditions.
Many terms of the 2032 notes will remain the same as the 2029 notes they replace, including the 5% annual cash interest rate and the conversion rate of 28.8534 shares of the company's common stock per $1,000 principal amount of notes or equivalent to an initial conversion price of $34.6580 per share of common stock, subject to adjustment in certain circumstances.
Unlike the 2029 notes, the principal amount of the 2032 notes will accrete at a rate of 2% per year commencing Aug. 26, compounding on a semi-annual basis, until Oct. 1, 2017. The accreted portion of the principal is payable in cash upon maturity but does not bear cash interest and is not convertible into the company's common stock. Holders have the option to require the company to purchase any outstanding 2032 notes on each of Oct. 1, 2017, Oct. 1, 2022 and Oct. 1, 2027, at a price equal to 100% of the principal amount plus the accretion thereon. Accretion of principal will be reflected as a non-cash component of interest expense on the company's statement of income during the term of the 2032 notes.
The company has the right to redeem the 2032 notes on or after Oct. 1, 2016 at a price equal to 100% of the principal amount, plus accrued but unpaid interest and accretion thereon. The 2032 notes also provide the company with the option, at its election, to convert the new notes in whole or in part, prior to maturity, into the underlying common stock, provided the trading price of the company's common stock exceeds $45.06 or 130% of the then applicable conversion price for the required measurement period. If the company elects to convert the 2032 notes on or before Oct. 1, 2016, holders will receive a make-whole premium.
Goodrich Petroleum Corp. is an independent energy company engaged in the exploration, development, and production of oil and natural gas. The company is based in Houston.