Quarterly report pursuant to Section 13 or 15(d)

Borrowings

v2.4.0.8
Borrowings
 6 Months Ended
Jun. 30, 2013
Debt Disclosure [Abstract]  
Borrowings
Borrowings

The Company’s borrowings consisted of the following at:
 
 
June 30, 2013
 
December 31, 2012
Principal components:
 
 
 
 
Credit Facility
 
$
—

 
$
10,000

13% Senior Notes due 2016, principal
 
96,961

 
96,961

Total principal outstanding
 
96,961

 
106,961

Non-cash components:
 
 

 
 

13% Senior Notes due 2016 unamortized deferred credit
 
12,092

 
13,707

Total carrying value of borrowings
 
$
109,053

 
$
120,668



Senior Secured Revolving Credit Facility (the “Credit Facility”)

As of June 30, 2013, the Company’s $200,000 Credit Facility had an associated borrowing base of $75,000 and a maturity of March 15, 2016. Regions Bank serves as the administrative agent for the Credit Facility, which also includes Citibank, NA, IberiaBank, Whitney Bank and OneWest Bank, FSB as participating lenders. Amounts borrowed under the Credit Facility may not exceed a borrowing base, which is generally reviewed on a semi-annual basis and is then eligible for re-determination. The Credit Facility is secured by mortgages covering the Company’s major producing fields.

On May 10, 2013, the Company entered into the second amendment to our Fourth Amended and Restated Credit Agreement that allows the Company to pay quarterly Senior Unsecured Debt and Preferred Equity dividends of $5.5 million per quarter, so long as the Company is not in default under the Credit Facility. The amendment became effective with the receipt of the cash proceeds from the preferred equity offering discussed in Note 9.

As of June 30, 2013, no balance was outstanding on the Credit Facility as a portion of the proceeds from the preferred stock offering was used to repay the balance then outstanding. The Credit Facility has an interest rate calculated as the London Interbank Offered Rate (“LIBOR”) plus a tiered rate ranging from 2.5% to 3.0%, which is determined by utilization of the facility. In addition, the Credit Facility carries a commitment fee of 0.5% per annum on the unused portion of the borrowing base, which is payable quarterly.

13% Senior Notes due 2016 (“Senior Notes”) and Deferred Credit

The Senior Notes’ 13% interest coupon is payable on the last day of each quarter. Certain of the Company’s subsidiaries guarantee the Company’s obligations under the unsecured Senior Notes. The subsidiary guarantors are 100% owned, all of the guarantees are full and unconditional and joint and several, the parent company has no independent assets or operations, and any subsidiaries of the parent company other than the subsidiary guarantors are minor. Upon issuing the Senior Notes in November 2009, the Company recorded as a deferred credit the $31,507 difference between the adjusted carrying amount of the Senior Notes that were exchanged and the principal of the Senior Notes. This deferred credit is being amortized as a reduction of interest expense over the life of the Senior Notes at an 8.5% effective interest rate. The following table summarizes the Company’s deferred credit balance:
Gross Carrying
 
Accumulated Amortization at
 
Carrying Value at
 
Amortization Recorded during Current Year as a Reduction of
 
Estimated Amortization to be Recorded during the Remainder of the
 Amount
 
6/30/2013
 
6/30/2013
 
Interest Expense
 
 Current Year
$31,507
 
$19,415
 
$12,092
 
$1,615
 
$1,684


Restrictive Covenants

The indentures governing our Senior Notes and the Company’s Credit Facility contain various covenants including restrictions on additional indebtedness and payment of cash dividends. In addition, Callon’s Credit Facility contains covenants for maintenance of certain financial ratios. The Company was in compliance with these covenants at June 30, 2013.