Southwestern Energy Co. (NYSE: SWN) announced Jan. 12 that it is commencing registered underwritten public offerings of about 20.3 million shares of its common stock and 26 million depositary shares.
Each represents a 1/20th interest in a share of Houston-based Southwestern's series B mandatory convertible preferred stock, with a liquidation preference of $1,000 per share (equivalent to a $50 liquidation preference per depositary share).
Proceeds will be used to partially repay borrowings under Southwestern's $4.5 billion 364-day bridge term loan facility.
Southwestern will grant the respective underwriters a 30-day option to purchase up to about 3 million additional shares of its common stock and, solely to cover over-allotments, up to 3.9 million additional depositary shares.
The offering of the common stock is not contingent upon the offering of the depositary shares, and the offering of the depositary shares is not contingent upon the offering of the common stock.
The depositary shares entitle the holders, through the bank depositary, to a proportional fractional interest in the rights and preferences of the series B mandatory convertible preferred stock, including conversion, dividend, liquidation and voting rights, subject to certain limited exceptions.
Unless converted earlier at the option of the holders, each share of series B mandatory convertible preferred stock (and, correspondingly, each depositary share) will automatically convert into a variable number of shares of common stock on or around Jan. 15, 2018. The conversion rates, dividend rate and other terms of the series B mandatory convertible preferred stock will be determined at the time of pricing of the offering of the depositary shares.
Currently, no public market exists for the depositary shares. Southwestern intends to apply to list the depositary shares on the New York Stock Exchange (NYSE) under the symbol "SWNC." If the application is approved, Southwestern expects trading of the depositary shares on the NYSE to commence within 30 days after the initial delivery of the depositary shares.
BofA Merrill Lynch, Citigroup, J.P. Morgan, Wells Fargo Securities and BMO Capital Markets are joint book-running managers for the offering of the common stock.
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