Carrizo Oil & Gas, Inc. announced that it has commenced an underwritten public offering, subject to market and other conditions, of approximately $275 million in aggregate principal amount of convertible senior notes due 2028 (the "Notes") under its existing shelf registration statement. The Notes will bear interest at a fixed rate and be convertible during certain periods and under certain circumstances. Upon any conversion, holders of the Notes will receive cash up to the principal amount and any excess conversion value will be delivered in shares of Carrizo's common stock. The underwriters of the Notes will have a 30-day option to purchase up to $41.3 million of additional Notes.
Carrizo intends to use the estimated $268.8 million of net proceeds from the offering (net of underwriting discounts) to repay in full the outstanding borrowings under its second lien credit facility and to fund, in part, its capital expenditure program for 2008, including drilling and land acquisition programs in the Barnett Shale, the Marcellus Shale and elsewhere, and for other corporate purposes. Pending this partial funding of the capital expenditure program, Carrizo expects to use the remaining proceeds to repay borrowings outstanding under its senior revolving credit facility.
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