Business Context and Reporting Period
Company: Matador Resources Company
Filing Type: Form 8-K (Current Report)
Date of Report: August 21, 2018
Event: Entry into a Material Definitive Agreement and creation of a direct financial obligation via the issuance of Senior Notes.
Key Financial Metrics
| Metric | Value |
|---|---|
| Aggregate Principal Amount Issued | $750,000,000 |
| Net Proceeds Received | $740,000,000 |
| Interest Rate (Coupon) | 5.875% |
| Maturity Date | September 15, 2026 |
| First Interest Payment Date | March 15, 2019 |
| Payment Frequency | Semiannually in arrears |
Note: This filing does not provide revenue, profit, cash flow, or margin data for the reporting period.
Material Changes
The Company entered into a purchase agreement on August 7, 2018, and closed the transaction on August 21, 2018, resulting in:
- Issuance of $750 million in 5.875% Senior Notes due 2026.
- Receipt of $740 million in net proceeds after deducting discounts and estimated offering expenses.
- Execution of an Indenture with Wells Fargo Bank, National Association, as trustee.
- Execution of a Registration Rights Agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Guidance, Outlook, and Covenants
Redemption Terms:
- Equity Redemption: Prior to September 15, 2021, the Company may redeem up to 35% of the Notes at 105.875% of principal using net proceeds from equity offerings.
- Make-Whole Redemption: Prior to September 15, 2021, the Company may redeem all or part of the Notes at 100% of principal plus a make-whole premium.
- Scheduled Redemption: On or after September 15, 2021, redemption prices decline from 104.406% to 100.000% by September 15, 2024.
Change of Control: Holders may require the Company to repurchase the Notes at 101% of principal plus accrued interest upon a Change of Control.
Covenants: The Indenture restricts additional debt, dividends, asset sales, and mergers. Many covenants will terminate if the Notes are rated investment grade by both Moody's and S&P.
Registration Rights: The Company must file a registration statement to exchange the Notes for registered notes within 365 days of August 21, 2018, or pay additional interest.
Investor Verification Checklist
- Verify the exact amount of offering expenses deducted from the $750 million principal to confirm the $740 million net proceeds.
- Review the full text of the Indenture (Exhibit 4.1) for specific definitions of "Change of Control" and "Restricted Subsidiaries."
- Confirm the Company's current credit rating status to determine if covenants are currently active or terminated.
- Monitor the timeline for the required registration statement filing to avoid additional interest penalties.
- Assess the impact of the new debt service obligations on the Company's existing liquidity and leverage ratios.