CNX Resources prices $200 million in senior notes for acquisition

PITTSBURGH – CNX Resources Corporation (NYSE:CNX), an Appalachian natural gas company with a market capitalization of $4.48 billion, today announced the pricing of a $200 million debt offering to support a pending acquisition and other corporate activities. The senior notes, which carry a 7.250% interest rate and mature in 2032, were priced at 100.500% of their par value. According to InvestingPro data, CNX currently maintains total debt of $2.4 billion and generates EBITDA of $1.33 billion.

The notes will be additional to the $400 million of 7.250% senior notes due in 2032 that CNX had previously issued. They will be guaranteed by CNX's restricted subsidiaries and have identical terms to the initial notes, except for the issue date and the first interest payment date. The new notes are expected to be treated as a single class with the initial notes under the same indenture.

The offering is slated to close on January 21, 2025, subject to customary closing conditions. CNX intends to use the net proceeds from the sale for general corporate purposes. These include funding a portion of the transaction costs associated with its pending acquisition of Apex Energy and its affiliates, as well as paying down borrowings under its senior secured revolving credit facility. With a current ratio of 0.37, InvestingPro analysis indicates that CNX's short-term obligations exceed its liquid assets, making this debt management crucial. The acquisition is not contingent upon the completion of the note offering, nor is the offering dependent on the acquisition's finalization. For detailed financial health metrics and comprehensive analysis of CNX's debt structure, investors can access the Pro Research Report, available exclusively to InvestingPro subscribers.

The notes are being offered only to qualified institutional buyers and non-U.S. persons outside the United States, in accordance with Rule 144A and Regulation S under the Securities Act of 1933. They have not been registered under the Securities Act or any state securities laws and may not be offered or sold within the United States absent registration or an applicable exemption from registration requirements.

This press release is based on a press release statement and contains forward-looking statements that involve risks and uncertainties. Despite these risks, InvestingPro data shows CNX has delivered strong returns over the last five years, though current analysis suggests the stock is slightly overvalued at its present price of $30.1. Investors are cautioned not to place undue reliance on these statements, which speak only as of the date of the press release. Actual results may differ materially from those projected due to various factors, including those discussed in CNX's 2023 Annual Report on Form 10-K under "Risk Factors."

In other recent news, CNX Resources Corporation expressed concerns about the final rules for the Section 45V Hydrogen Production Tax Credit issued by the Treasury Department, stating that they do not provide enough incentive for its hydrogen project. Piper Sandler analyst Mark Lear (NYSE:LEA) rates the company as underweight. Despite this, CNX Resources plans to explore alternative incentives for its operations, including voluntary markets, alternative tax incentives, and compliance programs.

On the other hand, Diversified Energy Co. is looking to leverage the new tax credit rules to its advantage. Truist Securities has increased the price target for the company, signaling a positive outlook for its financial future.

In the midst of these developments, CNX Resources Corporation has acquired all membership interests in three entities owned by Apex Upstream, LLC, and Apex WML, LLC, in a cash deal valued at $505 million. This acquisition is expected to close in the first quarter of 2025.

In contrast, Mizuho (NYSE:MFG) Securities has downgraded CNX Resources' stock from Neutral to Underperform, citing a cautious outlook on the company's new ventures. Meanwhile, Truist Securities has adjusted its stance on CNX Resources shares twice, initially increasing the stock's price target following the announcement of the Apex Energy acquisition, but later downgrading the stock from Buy to Hold after CNX Resources' third-quarter financial results.

These recent developments highlight the ongoing changes in the energy market and CNX Resources' adaptability in response to these shifts. The company's next earnings report is scheduled for January 23, 2025, which could provide valuable insights into CNX's strategies.

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