CALGARY, AB – (TSX: ARX) ARC Resources Ltd. (“ARC” or the “Company”) announced today an offering of Cdn$1.0 billion aggregate principal amount of senior unsecured notes (the “Offering”), consisting of Cdn$450 million aggregate principal amount of 2.354% Senior Unsecured Notes, Series 1 due 2026 (the “Series 1 Notes”) and Cdn$550 million aggregate principal amount of 3.465% Senior Unsecured Notes, Series 2 due 2031 (the “Series 2 Notes”, together with the Series 1 Notes, the “Notes”). The Notes are being offered on a private placement basis to accredited investors in Canada. The closing of the Offering is expected to occur on or about March 10, 2021.
DBRS Morningstar has assigned a provisional rating of BBB with a stable trend to the Notes assuming the successful completion of the business combination with Seven Generations Energy Ltd. (“Seven Generations”) announced on February 10, 2021 (the “Business Combination”). The Business Combination is subject to shareholder approval for both ARC and Seven Generations, regulatory approvals, and other customary closing conditions, and is expected to be completed on or about April 6, 2021.
ARC intends to use the net proceeds of the Offering, together with drawings under its credit facilities, to redeem and/or purchase the outstanding senior notes of Seven Generations in connection with the completion of the Business Combination, and the balance remaining, if any, will be used for general corporate purposes. The issuance of investment-grade debt is expected to reduce the overall cost of capital for the combined company.
The Notes will be direct, unsecured obligations of ARC and will rank equally and pari passu with all other existing and future unsecured and unsubordinated indebtedness of the Company. If the closing of the Business Combination with Seven Generations has not occurred on or prior to 5:00 p.m. (Calgary time) on October 15, 2021, or if, prior to such time, the Business Combination agreement is terminated in accordance with its terms or ARC issues a news release announcing, or notifies the trustee for the Notes, that it does not intend to proceed with the Business Combination, each of the Notes will be subject to a special mandatory redemption at a price equal to 100 per cent of the principal amount of the Notes, plus accrued and unpaid interest on the principal amount of the Notes, if any, from the issue date of the Notes, up to, but not including, the date of such special mandatory redemption.
The Notes are being offered through a syndicate of agents co-led by RBC Capital Markets and CIBC Capital Markets.
The Notes will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and will not be offered or sold in the United States. The Notes are being offered only to persons outside the United States in compliance with Regulation S under the U.S. Securities Act. In Canada, the Notes are to be offered and sold on a private placement basis in each of the provinces of Canada. This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation, or sale in the United States or any jurisdiction in which such an offer, solicitation, or sale would be unlawful. This news release does not constitute an offer to purchase the Notes.