California Resources Corp.: The Tender Offer And The First Lien Second Out

| About: California Resources (CRC)

Summary

California Resources Corp. is out marketing an extremely rare, extremely complex, and extremely sophisticated product of financial engineering: the First Lien Second Out Credit Facility.

Along with the First Lien Second Out Credit Facility, California Resources Corp. is also out marketing a massive tender offer which it believes is productive to long-term model sustainability.

I breakout both the tender offer as well as the First Lien Second Out Credit Facility and give my thoughts on what this means for California Resource Corp investors.

California Resources Corporation (NYSEMKT:CRC) recently announced a massive tender offer contingent on an amending of its existing First Lien Credit Facility as well as the execution of a First Lien Second Out Credit Facility; an extremely rare, extremely complex, and extremely sophisticated product of financial engineering. In an updated screencast session, I breakout the tender offer, the existing First Lien, and the proposed First Lien Second Out. I also breakout what the combined tender offer, amended First Lien, and presumed launch of a First Lien Second Out means to the long-term sustainability of the California Resources Corporation model.

Click to enlarge

Enjoy:

Screencast Highlights…

0:45: Description of Tender Offer - Terms and Structure

2:30: Capturing an Amendment to the 1L

4:00: Interest Coverage Ratio Covenant Breakout - What Goes Down, Must Come Up

6:00: The 1L2O

7:00: Describing Collateral Packages

8:00: Key Takeaways

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.