On September 26, 2023, Sitio Royalties Corp. (NYSE: STR) (the “Company”) issued a press release announcing the pricing of $600.0 million aggregate principal amount of 7.875% senior notes due 2028 of Sitio Royalties Operating Partnership, LP (the “Partnership”) and Sitio Finance Corp. (“Finance Corp” and, together with the Partnership, the “Issuers”), subsidiaries of the Company. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated into this Item 8.01 by reference.
Purchase Agreement
On September 26, 2023, the Issuers entered into a Purchase Agreement (the “Purchase Agreement”), by and among the Issuers, certain subsidiary guarantors named therein (the “Guarantors”) and BofA Securities, Inc., as representative of the several initial purchasers listed in Schedule A thereto (the “Initial Purchasers”), pursuant to which the Issuers agreed to issue and sell to the Initial Purchasers (the “Notes Offering”) $600.0 million in aggregate principal amount of the Issuers’ 7.875% senior unsecured notes due 2028 (the “Notes”). The Notes were priced at par, and the Notes Offering is expected to result in net proceeds to the Issuers of $587.8 million, after deducting the Initial Purchasers’ discount and estimated offering expenses. The Notes will be offered and sold to the Initial Purchasers in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and will be resold to qualified institutional buyers in reliance on Rule 144A and Regulation S of the Securities Act. The closing of the issuance and sale of the Notes is expected to occur on October 3, 2023, subject to customary closing conditions. The Notes are fully and unconditionally guaranteed by the Partnership’s subsidiaries.
The Issuers intend to use the net proceeds from the Notes Offering to (i) fund the redemption of all of the outstanding aggregate principal amount of the Partnership’s senior unsecured notes due 2026, which is expected to occur concurrently with or shortly following the consummation of the Notes Offering and (ii) repay a portion of the outstanding borrowings under the Partnership’s revolving credit facility. Neither this Current Report on Form 8-K nor anything contained herein shall constitute a notice of redemption for the Partnership’s senior unsecured notes due 2026.
The Notes will be issued and sold to the Initial Purchasers pursuant to an exemption from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereunder. The Initial Purchasers intend to resell the Notes only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to certain persons outside the United States in accordance with Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or any securities laws of any other jurisdiction, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other such securities laws. The Notes Offering is expected to close on October 3, 2023, subject to customary conditions.
The Purchase Agreement contains customary representations, warranties and agreements by the Issuers and the Guarantors and customary conditions to closing, obligations of the parties and termination provisions. Additionally, the Issuers and the Guarantors have agreed to indemnify the Initial Purchasers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Initial Purchasers may be required to make because of any of those liabilities. Furthermore, the Issuers and the Guarantors have agreed with the Initial Purchasers not to offer, sell or deliver the Notes to, or for the account or benefit of, United States persons (1) as a part of the Initial Purchasers’ distribution at any time or (2) otherwise until 40 days after the later of the commencement of the Notes Offering or the date the Notes are originally issued. The Initial Purchasers will send to each dealer to whom they sell such Notes during such 40-day period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, United States persons.
