BPZ Resources Inc. (NYSE: BPZ) closed its underwritten public offering of $125 million 8.5% convertible senior notes due 2017 as well as the repurchase of $85 million outstanding 6.5% convertible senior notes due 2015.
The company granted the underwriter a 30-day option to purchase additional $18.8 million notes to cover over-allotments, if necessary. In addition, the International Finance Corp. (IFC) holds the right to participate in the offering for up to 45 days after being notified of the terms of the offering, which, if exercised would increase the size of the offering.
Net proceeds will be used to repurchase and retire $85 million of its existing $170.9 million principal amount of 6.5% convertible senior notes due 2015 in individually negotiated transactions, on potentially varying terms, and for general corporate purposes, including to fund its E&P efforts or other projects or to reduce or refinance its outstanding debt. The company will also use cash on hand following the closing of the offering to repay the remaining $36 million balance under its secured bank debt facility.
The notes will be convertible by holders under certain circumstances and during certain periods into shares of the company's common stock at an initial conversion rate of 249.5866 shares of common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of $4.01 per share of common stock, subject to adjustment. Upon conversion, holders will receive, at the company's discretion, cash, shares of the company's stock, or a combination thereof.
The 2017 notes were issued via an underwritten public offering, resulting in net proceeds of $31.3 million, after repurchases of outstanding notes and estimated offering expenses. Interest on the 2017 notes will be paid semi-annually on April 1 and Oct. 1 of each year.
Raymond James is sole book-running manager. The 2017 notes offering is being made only by means of a prospectus, forming a part of the company's effective shelf registration statement, related prospectus supplement and other related documents.
BPZ Resources Inc. focuses on the exploration, development, and production of oil and natural gas in Peru and Ecuador. The company is headquartered in Houston.
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