EP Energy Corp.'s Stock Is Getting Rocked by an Exchange Offer

Shares of EP Energy (NYSE: EPE) plunged on Tuesday, and were down nearly 20% at 2:45 p.m. EST. Driving the downdraft was the company's offer to exchange up to $1.2 billion in new debt for some of its existing debt to push out the maturity date.

EP Energy launched an exchange offer to swap up to $1.2 billion of new 9.375% senior secured notes due in 2024 for some of its legacy notes. The company's top choice would be to exchange these bonds for the roughly $1.2 billion of 9.375% senior notes coming due in 2020, which would push back its nearest-term debt maturity by four years. It's willing to pay 100% of the face value of those notes with the new ones. The company said that if the holders of those bonds don't agree to the exchange, it will accept a portion of its 7.75% notes due in 2022 and the 6.375% notes that mature in 2023. However, it's only willing to pay between $0.725 and $0.70 on the dollar for the other two series of bonds.

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Source: Fool.com