Vesta Energy completes exchange offer; S&P Global Ratings boosts rating to CCC+

Vesta Energy Corp. announced today the completion of an exchange offer and consent solicitation made in October to holders of its 8.125% senior unsecured notes due July 2023, offering to swap them for new 10% second-lien senior secured step-up notes due Oct. 15, 2026.

Vesta said that as of the Nov. 12 expiration date, C$197.67 million principal amount, or 98.84% of the outstanding issue, was validly tendered and exchanged for C$197.63 million principal amount of new notes. Vesta also confirmed passage of a simultaneous consent solicitation which, among other things, removed certain covenants and events of default from the old bonds.

Vesta added today that following a semi-annual review of its borrowing base, credit facilities lenders set the borrowing base at $194.2 million, while extending its maturity to May 2023.

Following Vesta's announcement, S&P Global Ratings upgraded the company's issuer rating to CCC+ and a stable outlook, from CCC and CreditWatch Positive. The agency also assigned a final issue level rating of B to the new 10% notes.

S&P Global Ratings said completion of the exchange "alleviates near-term refinancing risk." Ratings projects that Vesta will generate "meaningfully improved" cash flows in 2022, based on assumptions of US$60 per barrel West Texas Intermediate in 2022.

Despite the positive changes, Ratings considers the company's liquidity to be "less than adequate" because of its "reliance on supportive commodity prices" and "its reliance on its banking relationships to maintain the current borrowing base and continue to extend its credit facility."

Vesta is an oil and natural gas company involved in the exploration, development and production of light oil and natural gas reserves in the East Duvernay Shale Basin formation in Canada.