Diversified Energy Company PLC Securitised Financing and RBL Redetermination (2119N)
30 May 2022 - 4:01PM
UK Regulatory
TIDMDEC
RNS Number : 2119N
Diversified Energy Company PLC
30 May 2022
30 May 2022
Diversified Energy Company PLC
("Diversified" or the "Company")
Diversified Closes Securitised Financing and Borrowing Base
Redetermination
Diversified Energy Company PLC (LSE: DEC) is pleased to announce
that on 27 May 2022 it closed an asset backed securitisation
("ABS") of substantially all remaining unsecuritised upstream
producing natural gas and oil Appalachia assets (the "Assets").
This financing is linked to key performance indicators (KPI) based
on emissions reduction targets and represents the Company's third
ESG-aligned ABS in 2022. The Assets were previously pledged as
collateral under the Company's Revolving Credit Facility ("RBL").
In conjunction with the closing of the $445 million ABS and
reflective of the transfer of the collateral, Diversified's
16-member bank group, led by KeyBank National Association,
redetermined the Company's RBL borrowing base at $300 million.
Diversified will use the ABS proceeds to repay all outstanding
borrowings under its RBL and for general corporate purposes,
resulting in liquidity(a) of approximately $500 million pro forma
as of 31 March 2022.
Transaction Highlights
-- Key terms:
ABS note amount of $445 million ($423 million, net of a certain
fees and approximately $15 million in restricted cash interest
reserve)
Fixed coupon of 5.78% (notes issued at par)
A rating of BBB (Fitch Ratings, Inc.)
Fully-amortised maturity of December 2030 (b)
-- Sustainable Fitch provided an assessment and Second Party
Opinion of Diversified's KPI-linked framework and determined the
notes align with the ICMA's framework for sustainability-linked
bond principles
o The KPI-linked notes include certain emissions reduction
targets based on targets from the Company's 2021 Sustainability
Report(c)
-- Favourable hedge structure:
Long-dated natural gas swaps at a weighted average price of
$3.91/MMBtu
Long-dated NGL swaps at a weighted average price of
$43.27/bbl
Purchased natural gas put spreads in the outer years, providing
downside price protection while preserving exposure to higher
natural gas prices. The Company includes the fair market value of
the put spreads on its balance sheet.
-- Redetermined borrowing base and increased liquidity:
Undrawn RBL borrowing base of $300 million
$150 million increase in the Company's liquidity since its 1Q22
trading statement(d)
Liquidity(a) of approximately $500 million, as of 31 March 2022
and pro forma for recent acquisitions, comprised of RBL
availability and approximately $200 million in cash on hand
Rusty Hutson, Jr., CEO of the Company, commented:
"We are pleased to close another fixed-rate, fully-amortising
and liquidity-enhancing ABS, at a tighter spread to prevailing
interest rates than our prior ABS notes despite a rising rate
environment. We are especially excited to include many new
investors as we further expand the investor universe for
high-quality E&P securitisations, and we look forward to
working with these financial institutions including those that have
invested in our prior securitisations. We plan to remain active in
the ABS market given the supportive commodity price backdrop,
strong investor demand for seasoned-issuers like Diversified and
our desire to transition long-term assets from our RBL into low
fixed-rate, fully-amortising notes."
Citigroup Global Markets Inc. acted as Sole Structuring Agent,
Sole Ratings Advisor, and Left Lead Placement Agent. Donovan
Ventures, LLC acted as Joint Lead Placement Agent and Sole ESG
Structuring Advisor. Truist Securities, Inc. acted as Joint
Placement Agent for the transaction.
Footnotes (for Company-specific items, refer also to the
Glossary of Terms and/or Alternative Performance Measures found in
the Company's 2020 Annual Report):
(a) Calculated as the revised borrowing base of $300 million and
inclusive of cash on hand and letters of credit
(b) Legal final maturity of May 2039
(c) The notes' coupon can increase if emissions targets are not
met starting with the first measurement period in 2026
(d) Published via RNS on 16 May 2022
For further information, please contact:
Diversified Energy Company
PLC +1 251 508 5901
Wren Smith ir@dgoc.com
www.div.energy
FTI Consulting deccommunications@fticonsulting.com
US & UK Financial Public Relations
About Diversified Energy Company PLC
Diversified Energy Company PLC is an independent energy company
engaged in the production, marketing and transportation of
primarily natural gas related to its synergistic US onshore
upstream and midstream assets.
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