Devon Energy is preparing to issue a $2-3 billion note offering, with both 10-year and 30-year tranches in the next several weeks, according to BW sister publication Loan Market Week. Larry Nichols, the president and ceo of Devon, says the proceeds will be used to finance the purchase of Calgary-based oil and natural gas producer Anderson Exploration. It is also part of a larger financing scheme involving a five-year $6 billion term loan, to finance the cash portion of the acquisition of Mitchell Energy & Development announced last month. Nichols says UBS Warburg and Banc Of America Securities will lead both the note offering and the loan.
Nichols says that as soon as the company can amend its proxy statement with the SEC, it will access the 144A bond markets. A banker familiar with the situation said banks wanting to come in on the bond business are expected to come in on the loan.
Explaining UBS' role on such a large financing, a UBS banker said that the firm was lead merger adviser to the company for both acquisitions, and has historically had an advisory role to the company. PaineWebber advised on Devon Energy's $2.4 billion acquisition of PennzEnergy in 1998. B of A has historically provided loans to Devon the source says.