Callon Petroleum (CPE) Note Exchange Offer Complete
A few more holders tendered when the offer was extended by a few days:
As of the expiration date, according to the depositary for the exchange offer, the Company received valid tenders from holders of approximately $184 million aggregate principal amount of Senior Notes. The Senior Notes validly tendered and accepted will be exchanged into approximately $138 million in principal amount of 13% Senior Secured Notes due 2016 and 3,793,928 shares of common stock and 310,412 shares of convertible preferred stock.
Principal amount of debt has increased by $46 million as a result of the exchange, although interest cost won't go down because the new notes have a higher rate.
Only $12 million will need to be paid in December 2010. Easy!
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Principal amount of debt has increased by $46 million as a result of the exchange, although interest cost won't go down because the new notes have a higher rate.
So what was the point of the whole exercise then? Buying time?
When can/do you get paid? And sort of return will that be? Say annualized. If you don't mind.
Another nice find, and thanks again for sharing your ideas. I was not educated in and do not know a lot about finance, so I learn things here.
Good questions.
The transaction had two benefits for them: reducing the principal balance, and postponing most of the principal repayment until 2016.
The old notes, only a small amount of which remain, are due in December 2012.
The big benefit is that since we bought the notes for around 65, we will get 35 extra points of principal when the notes are repaid.
The proper measure of return is called "yield to maturity," which for these bonds is about 55%.
Sorry - old notes are due in Dec 2010 not 2012. I don't know why I wrote that.
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