HOUSTON - Crescent Energy Company (NYSE: CRGY), a U.S.-based energy firm, announced its plan to issue $750 million in senior notes due 2033 through its subsidiary Crescent Energy Finance LLC. The notes, which are subject to market conditions, will be offered to eligible purchasers under specific securities regulations.
The company intends to use the proceeds from the sale of these senior notes primarily to finance the cash consideration for its impending merger with SilverBow Resources (NYSE:SBOW), Inc. Any remaining funds will be directed towards repaying SilverBow's existing debt post-transaction. Additionally, pending specific applications, a portion of the proceeds may be used to pay down amounts under Crescent's revolving credit facility.
The proposed notes will be guaranteed on a senior unsecured basis by the issuer's subsidiaries that also guarantee its existing notes and indebtedness under its revolving credit facility. The notes and related guarantees will not be registered under the Securities Act or any state securities laws and will be offered only to qualified institutional buyers and to persons outside the United States in compliance with applicable laws.
If the merger with SilverBow is not completed by May 22, 2025, or if certain adverse conditions arise beforehand, Crescent will be required to redeem all outstanding notes at their initial issue price, plus accrued and unpaid interest.
The information provided in this article is based on a press release statement from Crescent Energy.
In other recent news, Raymond James has upgraded the company's stock target to $18, citing the beneficial financial implications of the merger. Truist Securities also increased its price target to $20, highlighting the anticipated boost to Crescent Energy's free cash flow and other essential metrics.
The SilverBow acquisition is set to position Crescent as the second-largest producer in the Eagle Ford (NYSE:F) region, with the deal expected to close by the end of the third quarter of 2024. SilverBow shareholders will have the option of receiving Crescent stock or cash per share.
Furthermore, Crescent Energy reported a strong financial performance in the first quarter of 2024, with record production and significant cash flow. The company exceeded market expectations, reporting higher than anticipated EBITDA and free cash flow, and raised its full-year production outlook.
InvestingPro Insights
Crescent Energy Company (NYSE: CRGY), currently navigating a complex merger with SilverBow Resources, shows a mixed financial canvas according to recent data. With a market capitalization of $1.36 billion, the company's valuation metrics present a challenging picture. The P/E ratio stands at a negative -46.14 for the last twelve months as of Q1 2024, reflecting Crescent's struggles to maintain profitability over the past year. However, the PEG ratio of 0.8 suggests potential for future earnings growth, aligning with the InvestingPro Tips that forecast Crescent's net income to increase this year.
On the operational front, Crescent's gross profit margin remains robust at 54.67%, indicating a strong ability to control costs relative to sales. Yet, the company's financial health is a concern, as highlighted by an InvestingPro Tip pointing out that Crescent operates with a significant debt burden. This is particularly relevant as the firm plans to issue $750 million in senior notes, which could further impact its leverage ratios. Additionally, the company's short-term obligations outweigh its liquid assets, which could raise liquidity risk in the near term.
For investors looking to delve deeper into Crescent's financials and future outlook, there are additional InvestingPro Tips available. For example, while the company has not been profitable over the last twelve months, analysts predict profitability this year, and three analysts have revised their earnings upwards for the upcoming period. These insights could prove valuable in assessing Crescent's potential for a financial turnaround post-merger.
Interested readers can find more detailed analysis and tips on Crescent Energy by visiting InvestingPro. Additionally, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 7 InvestingPro Tips that provide further guidance on investing in Crescent Energy.
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