California Resources to offer $400 million in notes for Berry merger

LONG BEACH - California Resources Corporation (NYSE:CRC), a $4.61 billion market cap energy company with a strong financial health score of "GREAT" according to InvestingPro, announced Wednesday it plans to offer $400 million in senior unsecured notes due 2034, subject to market conditions.

The energy company, which currently operates with a moderate debt level of $1.09 billion, intends to use the proceeds, along with cash on hand and revolving credit facility borrowings, to repay Berry Corporation’s (bry) existing debt in connection with their pending business combination and to cover related fees and expenses.

The notes will be guaranteed by CRC’s existing subsidiaries that currently guarantee its revolving credit facility and other senior unsecured notes. They will be offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S of the Securities Act.

CRC has included a special mandatory redemption provision if the Berry merger does not occur by March 14, 2026 (with possible extensions), or if the company determines the merger cannot be completed. In such cases, noteholders would receive 100% of the issue price plus accrued interest.

The notes have not been registered under the Securities Act and may not be offered or sold in the United States except pursuant to an exemption from registration requirements.

In connection with the merger, CRC will file a registration statement with the SEC that includes a proxy statement/prospectus for Berry shareholders. The company advised investors to review these documents when available.

This announcement is based on a press release statement from California Resources Corporation regarding its financing plans for the pending Berry merger. The company has demonstrated strong performance with a 27.16% return over the past six months and currently trades at a P/E ratio of 7.65x while offering a 2.82% dividend yield. InvestingPro analysis suggests the stock is currently undervalued, with comprehensive research reports available for subscribers seeking deeper insights into CRC’s financial outlook.

In other recent news, California Resources has been at the forefront of investor discussions following several significant developments. The company announced an all-stock acquisition of Berry Corporation valued at approximately $717 million, a move that analysts at Mizuho regard positively due to the expected $85 million in annualized synergies. This acquisition prompted Mizuho to raise its price target for California Resources to $71 from $65, maintaining an Outperform rating. UBS also adjusted its price target upwards to $70 from $63, citing the acquisition as a demonstration of the company’s commitment to upstream operations in California.

Additionally, UBS reiterated a Buy rating on California Resources after the passage of SB-237, which eases restrictions on new upstream permits in California, viewing it as a positive development for the company. BofA Securities raised its price target for California Resources to $60 from $53, in light of California’s efforts to revive oil and gas permitting. This legislative movement is seen as a favorable factor for both California Resources and Berry Petroleum, with Texas Capital Securities maintaining a Buy rating on Berry Petroleum. These recent developments highlight the dynamic environment surrounding California Resources and its strategic moves in the industry.

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