Daiwa new issue SGY Stone Energy
$250m (+25m) 144a cb pricing tonight from BARC/MER. Terms: 5 yr bullet, 1.5-1.75% up 30-35%, prot UOP= warrant trans & gcp. Stone Energy is a small oil & gas e&p focused on Gulf Coast Basin. $1.5B mkt cap. Low lev of 1.5x and good liquidity; though cash burn to continue in 2012. Pari 8.625% trade ~600 over, so we’ll use L+650 here. Vol is trickier – 50/10 ile is 60/42. Normally, we’d cap vol at 35 (esp given credit quality). But the aggressive repricing (orig 1.75-2.25 up 25-30%) leads up to believe others will use as high as 40. Using 40v = 101. TRAK & 2ndary valuations stand this deal in good stead, tho with credits like this we prefer to leave some room in the model in case it gets rocky. Prefers mids BUY
Independent oil & gas E&P company
PF Cash $280m
PF Debt $870m
LTM EBITDA $591m
LTM FCF -$196m
Leverage 1.5x
Mkt Cap $1,525m
Small oil & gas e&p co concentrated in GOM shelf region. Have been expanding w/onshore oil & gas shale properties recently. Proved res 602Bcfe, up 27% yoy w/prod replacement of 265%. Res & prod now more focused on liquids w/both ~50% for 2012, +w/favorable outlook for crude prices. Liquidity good with $303 avail on $400m secured rev (limit $700m, adj 2x ann for reserve value). Acquiring props & drilling aggressively leading to cash burn, which may continue for 2012.
Our assigned spread L+650
There was a dispute about whether convert guarantees are the same as the straight. Underwriter says it will have the same guarantees.