APA Corporation plans risky private notes offering for 2035 and 2055

On January 7, 2025, APA Corporation, a publicly-traded company on Nasdaq, announced its intention to offer a series of senior notes in a private offering. This decision comes amid the company's strategy to manage its financial obligations effectively, particularly towards its fully-owned subsidiary, Apache Corporation. The notes, due in 2035 and 2055, will be utilized primarily to purchase outstanding senior indebtedness of Apache, as part of ongoing tender offers that began on December 3, 2024. The total amount targeted for these purchases is $869 million, which includes accrued and unpaid interest. The private offering is subject to market conditions and complies with exemptions under the Securities Act of 1933, allowing for the offering to qualified institutional buyers and certain non-U.S. persons. The transaction aims to restructure and alleviate the financial pressure of Apache's outstanding notes. As a further measure, the notes will initially be guaranteed by Apache, contingent on the principal amount of its indebtedness exceeding $1 billion. However, this guarantee could be voided if the outstanding principal falls below this threshold as of the expected settlement date, January 10, 2025. The intended use of the proceeds from this offering reflects APA's broader strategy to optimize its capital structure and enhance its market positioning. By specifically addressing Apache's financial obligations, APA aims to streamline its financial standing and potentially improve its credit profile in the market. Additionally, any remaining proceeds after the purchase of senior notes may be allocated to general corporate purposes, including further acquisitions of senior debt. The announcement includes forward-looking statements indicating APA’s expectations about this initiative. These statements are grounded in the company’s anticipations regarding its operations, capital plans, and overall financial strategy. However, various risks and uncertainties could affect whether these plans are realized, ultimately shaping APA's future and its operational success. Consequently, stakeholders are advised to stay attuned to forthcoming updates regarding the progress of the offering and its implications for APA and Apache's financial health.