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Baytex Announces Closing of US$575 Million Private Placement Offering of Senior Notes

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Baytex Energy Corp. announced the closing of a private placement offering of US$575 million senior unsecured notes due 2032, with an interest rate of 7.375% per annum. The company intends to use the proceeds to redeem existing notes, repay debt, and for general corporate purposes.
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Baytex Energy Corp.'s recent private placement of senior unsecured notes is a strategic financial move, indicative of the company's proactive debt management. By opting to redeem higher-interest 8.75% notes with the proceeds from the new 7.375% notes, Baytex is capitalizing on the current interest rate environment to lower its cost of capital. This is a common practice among corporations looking to optimize their balance sheets, especially in the energy sector where capital expenditures can be significant.

The decision to address the debt due in 2027 ahead of its maturity suggests a focus on liquidity and balance sheet strength, which is particularly important for energy companies facing volatile commodity prices. Investors should note that the reduction in interest expenses may support Baytex's financial performance in the medium term, potentially improving profitability margins and cash flows available for reinvestment or shareholder returns.

However, it's important to consider the broader market implications. The yield of 7.500% is reflective of the inherent risk associated with the energy sector, which includes fluctuating oil prices and potential regulatory changes. Investors should weigh these risks against the potential benefits of the debt restructuring.

The issuance of the senior unsecured notes by Baytex Energy Corp. provides insights into the company's market perception and investor confidence. The pricing at 99.266% of par to yield 7.500% per annum is a key indicator of investor appetite for energy sector debt, particularly in the context of an industry that is in a state of flux due to energy transition dynamics and geopolitical factors.

Market demand for these notes can also be interpreted as a signal of the market's view on Baytex's creditworthiness. The interest rate offered, while lower than the existing debt it aims to replace, is still significantly higher than what is seen with more stable, investment-grade corporate bonds. This suggests investors are requiring a risk premium to compensate for the sector-specific and company-specific risks.

Additionally, the private placement nature of the offering and the reliance on exemptions such as Rule 144A and Regulation S indicate a targeted approach to raising capital, likely aimed at institutional investors comfortable with the energy sector's risk profile. This move may not directly affect the stock market in the short term, but it reflects the company's broader financial strategy and risk management approach, which can influence investor sentiment and long-term stock performance.

From a legal perspective, Baytex's adherence to the exemptions provided by Rule 144A and Regulation S under the Securities Act of 1933 is a critical component of the offering. These exemptions allow the company to bypass the lengthy and costly process of registration with the SEC, expediting access to capital. However, it limits the pool of potential investors to qualified institutional buyers and non-U.S. investors, which is a strategic choice reflecting the company's targeted fundraising approach.

The legal stipulations also mean that the notes cannot be freely traded in the U.S. secondary markets unless they are subsequently registered or qualify for an exemption. This restriction can impact the liquidity of the notes and may be a consideration for potential investors. The legal framework governing private placements is complex and requires careful navigation to ensure compliance and avoid potential sanctions or legal disputes.

Calgary, Alberta--(Newsfile Corp. - April 1, 2024) - Baytex Energy Corp. (TSX: BTE) (NYSE: BTE) ("Baytex") announced today the closing of its private placement offering (the "Offering") of US$575 million aggregate principal amount of senior unsecured notes due 2032 (the "Notes"). The Notes bear interest at a rate of 7.375% per annum and mature on March 15, 2032. The Notes were priced at 99.266% of par to yield 7.500% per annum.

Baytex intends to use the net proceeds from the Offering to redeem US$409.8 million aggregate principal amount of its outstanding 8.75% notes due April 1, 2027 (the "2027 Notes"), to repay a portion of the debt outstanding on its credit facilities and for general corporate purposes.

Pursuant to the terms of the indenture governing the 2027 Notes, Baytex has issued a notice of redemption to redeem all of the outstanding 2027 Notes.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any Notes, nor shall there be any sale of Notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of the Notes under the securities laws of any such jurisdiction. The Notes will be issued in reliance on the exemption from the registration requirements provided by Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and, outside of the United States, only to non-U.S. investors pursuant to Regulation S under the Securities Act. None of the Notes have been registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. In Canada, the Notes are to be offered and sold on a private placement basis in certain provinces of Canada. This press release does not constitute an offer to purchase the 2027 Notes.

Advisory Regarding Forward-Looking Statements

In the interest of providing Baytex's shareholders and potential investors with information regarding Baytex, including management's assessment of Baytex's future plans and operations, certain statements in this press release are "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements"). In some cases, forward-looking statements can be identified by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "intend", "may", "objective", "ongoing", "outlook", "potential", "project", "plan", "should", "target", "would", "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this press release speak only as of the date thereof and are expressly qualified by this cautionary statement.

Specifically, this press release contains forward-looking statements relating to but not limited to: the use of proceeds of the Offering and the intended redemption of the 2027 Notes.

These forward-looking statements are based on certain key assumptions regarding, among other things, the completion of the Offering. Readers are cautioned that such assumptions, although considered reasonable by Baytex at the time of preparation, may prove to be incorrect.

Actual results will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Such factors include, but are not limited to: the Offering may not be completed on the terms contemplated or at all; the intended use of proceeds of the Offering; and other factors, many of which are beyond the control of Baytex. Additional risk factors are discussed in our Annual Information Form, Annual Report on Form 40-F and Management's Discussion and Analysis for the year ended December 31, 2023, as filed with Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission.

The above summary of assumptions and risks related to forward-looking statements has been provided in order to provide shareholders and potential investors with a more complete perspective on Baytex's current and future operations and such information may not be appropriate for other purposes.

There is no representation by Baytex that actual results achieved will be the same in whole or in part as those referenced in such forward-looking statements and Baytex does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

All amounts in this press release are stated in Canadian dollars unless otherwise specified.

Baytex Energy Corp.

Baytex Energy Corp. is an energy company with headquarters based in Calgary, Alberta and offices in Houston, Texas. The company is engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States. Baytex's common shares trade on the Toronto Stock Exchange and the New York Stock Exchange under the symbol BTE.

For further information about Baytex, please contact:

Brian Ector, Senior Vice President, Capital Markets and Investor Relations

Toll Free Number: 1-800-524-5521
Email: investor@baytexenergy.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/203811

Baytex Energy Corp. closed a private placement offering to raise funds for redeeming existing notes, repaying debt, and general corporate purposes.

The senior unsecured notes issued by Baytex Energy Corp. bear an interest rate of 7.375% per annum.

The senior unsecured notes due 2032 issued by Baytex Energy Corp. mature on March 15, 2032.

Baytex Energy Corp. issued US$575 million aggregate principal amount of senior unsecured notes.

The senior unsecured notes issued by Baytex Energy Corp. were priced at 99.266% of par to yield 7.500% per annum.
Baytex Energy Corp

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About BTE

baytex energy corp. is a dividend-paying oil and gas corporation based in calgary, alberta. the company is engaged in the acquisition, development and production of crude oil and natural gas in the western canadian sedimentary basin and in the williston basin in the united states. approximately 89% of baytex's production is weighted toward crude oil, with a particular emphasis on heavy oil. baytex pays a monthly dividend on its common shares which are traded on the toronto stock exchange and the new york stock exchange under the symbol bte.