On February 5, 2026 (the ?Closing Date?), Diversified Energy Company completed the previously announced tap-on offering of $200 million principal amount of 9.75% senior secured bonds due 2029 (the ?Bonds?) by its wholly-owned subsidiary, Diversified Gas & Oil Corporation (?DGOC?), in the Nordic bond market (the ?Tap Bonds?). The Company previously issued $300 million of the Bonds in April 2025 pursuant to the Bond Terms dated April 7, 2025 (the ?Bond Terms?) by and between DGOC and Nordic Trustee AS, as Bond trustee (the ?Bond Trustee?). On the Closing Date, the Tap Bonds were issued pursuant to a Tap Issue Addendum by and between DGOC and the Bond Trustee (?Tap Issue Addendum?).
The Bonds are guaranteed by us and secured by (i) all of the Company?s U.S. bank accounts, (ii) the equity interests in DGOC as well as DGOC?s equity interests in its direct operating subsidiaries and (iii) interests in certain intercompany loans. The Bonds will mature on April 9, 2029. Interest on the Bonds is payable semi-annually in arrears on April 9 and October 9 of each year.
Early redemption of the Bonds prior to April 9, 2027 requires the payment of make-whole amounts, and redemption on or after that date is subject to premiums that decline over time. The Bonds contain the following financial covenants: (i) the leverage ratio shall not exceed 3.5 to 1.00; (ii) the asset coverage ratio shall not be less than 1.20 to 1.00; (iii) book equity shall not be less than $500,000,000; and (iv) liquidity shall not be less than 25% of the outstanding Bonds. The Bonds are also subject to negative covenants as set forth in the Bond Terms. Upon the occurrence of certain change of control or delisting events, as specified in the Bond Terms, each holder of the Bonds will have the right to require that the Company repurchase all or some of such holder?s Bonds in cash at a purchase price equal to 101% of the aggregate principal amount thereof.
The Bond Terms contain certain customary events of default, including, among other things: (i) default in the payment of any amount when due; (ii) default in the performance of any obligation in the Finance Documents, as defined in the Bond Terms, which default continues uncured for a period of 20 business days after the earlier of (1) DGOC?s actual knowledge of such event or (2) DGOC?s receipt of notice from the Bond Trustee; and (iii) certain voluntary or involuntary events of bankruptcy, insolvency or reorganization.
