| Item 1.01 | Entry into a Material Definitive Agreement. |
On September 22, 2020, CNX Resources Corporation (the “Company”) completed a private offering (the “Notes Offering”) of $200,000,000 aggregate principal amount of 7.250% senior notes due 2027 (the “New Notes”), at a price of 103.5% of par with an effective yield of 6.34%, along with the related guarantees of the New Notes (the “Guarantees”).
The New Notes and Guarantees were issued pursuant to an Indenture (the “Indenture”), dated March 14, 2019, among the Company, the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee (the “Trustee”), pursuant to which the Company issued $500,000,000 aggregate principal amount of 7.250% senior notes due 2027 in March 2019 (the “Initial Notes” and, together with the New Notes, the “Notes”). The New Notes constitute “Additional Securities” (as such term is defined in the Indenture) and were issued pursuant to and in compliance with the Indenture.
The New Notes accrue interest from September 14, 2020 at a rate of 7.250% per year. Interest on the New Notes is payable semi-annually in arrears on March 14 and September 14 of each year, beginning March 14, 2021. The Notes mature on March 14, 2027.
The Notes rank equally in right of payment with all of the Company’s existing and future senior indebtedness and senior to any subordinated indebtedness that the Company may incur. The Guarantees rank equally in right of payment to all of the Guarantors’ existing and future senior indebtedness.
On or after March 14, 2022, the Company may redeem all or part of the Notes at the redemption prices set forth below, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the rights of holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date), beginning on March 14 of the years indicated:
| | | | |
Year | | Percentage | |
2022 | | | 105.438 | % |
2023 | | | 103.625 | % |
2024 | | | 101.813 | % |
2025 and thereafter | | | 100.000 | % |
Prior to March 14, 2022, the Company may on one or more occasions redeem up to 35% of the principal amount of the Notes with an amount of cash not greater than the amount of the net cash proceeds from one or more equity offerings at a redemption price equal to 107.250% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, as long as at least 65% of the aggregate principal amount of the Notes originally issued on the issue date (excluding notes held by the Company or its affiliates) remains outstanding after each such redemption and the redemption occurs within than 180 days after the date of the closing of the equity offering.
At any time or from time to time prior to March 14, 2022, the Company may also redeem all or a part of the Notes, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium, as defined in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the rights of holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date).
The Indenture contains covenants that limit the ability of the Company and the Guarantors to (i) incur, assume or guarantee additional indebtedness or issue preferred stock; (ii) create liens to secure indebtedness; (iii) make distributions on, purchase or redeem the Company’s common stock or purchase or redeem subordinated indebtedness; (iv) make investments; (v) restrict dividends, loans or other asset transfers from the Company’s restricted subsidiaries; (vi) consolidate with or merge with or into, or sell substantially all of its properties to, another person; (vii) sell or otherwise dispose of assets, including equity interests in subsidiaries; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications. If the Notes achieve an investment grade rating from either of Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. and no default under the Indenture exists, many of the foregoing covenants will terminate.
