Chevron Corp. terminated its debt swap offer with bondholders of PDC Energy Inc. after receiving a low turnout, according to a statement Monday.
Earlier this month, the oil giant offered to exchange PDC’s 5.75% notes due 2026 for new notes with the same coupon and maturity issued by one of its units. Bondholders who agreed to participate by an early August 16 deadline could have received $1,001 of new Chevron notes for every $1,000 of PDC debt they paid off.
But noteholders said the compensation for the exchange was not enough, Bloomberg reported. A substantial majority of PDC bondholders said they would not tender their bonds after Chevron’s acquisition of the company because the compensation for the swap was too low.
PDC intends to redeem the notes on or after May 15, 2024, according to a regulatory filing on Monday.
The compensation fell short of the 101 cents on the dollar level often required by bond filings after a “change in control,” such as an acquisition. Under the terms of PDC’s bonds, the Chevron deal did not trigger the change-of-control clause because the debt was not downgraded, according to materials from bond advisory group the Credit Roundtable.
Chevron agreed in May to buy PDC in an all-stock deal valued at $6.3 billion. The acquisition of the Denver-based oil and natural gas producer closed earlier this month and is part of an effort to expand its drilling in Colorado’s Denver-Julesburg Basin.
