Shares of Crescent Energy (NYSE:CRGY) declined 2.6% to $10.95 in premarket trading on Wednesday after the company announced a larger-than-expected convertible bond issuance.
The Houston-based oil and gas producer said late Tuesday it priced a private placement of $600 million in five-year convertible bonds carrying a 2.75% coupon. The deal was expanded from the $400 million offering initially announced on Monday.
The bonds carry an initial conversion price of $14.89 per share, representing a 32.5% premium to the stock’s previous closing price of $11.24. Crescent Energy said it plans to allocate roughly $49 million of the proceeds to fund capped call transactions, which have an initial cap price of $22.48—about double the stock’s last closing price on Tuesday.
Crescent Energy shares had already dropped 6.4% on Tuesday after the company revealed plans to use the proceeds from the offering to redeem all of its outstanding 9.25% notes due in 2028.
The convertible bond sale follows the company’s earlier announcement of a $400 million financing deal aimed at refinancing the higher-yield debt.