Chevron Cancels Debt Exchange With PDC Bondholders After Pushback

Chevron Corp. terminated its debt exchange offer with PDC Energy Inc.’s bondholders after receiving low turnout, according to a statement Monday.

(Bloomberg) — Chevron Corp. terminated its debt exchange offer with PDC Energy Inc.’s bondholders after receiving low turnout, according to a statement Monday. 

Earlier this month, the oil giant offered to exchange PDC’s 5.75% notes due 2026 for new notes with the same coupon and maturity issued by one of its units. Bondholders who agreed to participate by an early deadline of Aug. 16 could have received $1,001 of new Chevron notes for every $1,000 of PDC debt they turned in. 

But noteholders said the compensation for the swap wasn’t sufficient, Bloomberg reported. A substantial majority of PDC bondholders said they wouldn’t tender their bonds following the company’s acquisition by Chevron because the compensation for the swap was too low. 

PDC intends to redeem the notes instead on or after May 15, 2024, according to a Monday regulatory filing.

The compensation fell short of the 101 cents on the dollar level that’s often required by bond documentation following a “change of control”, such as an acquisition. Under the terms of PDC’s bonds, the Chevron deal didn’t trigger the change of control clause because the debt wasn’t downgraded, according to materials from bondholder advisory group, the Credit Roundtable.

Chevron in May agreed to purchase PDC in an all-stock deal valued at $6.3 billion. The acquisition of the Denver-based oil and natural gas producer closed earlier this month and is part of an effort to expand its drilling in Colorado’s Denver-Julesburg basin.

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