Quarterly report pursuant to Section 13 or 15(d)

Borrowings

v2.4.0.8
Borrowings
3 Months Ended
Mar. 31, 2014
Debt Disclosure [Abstract]  
Borrowings

Note 4 – Borrowings

 

The Company’s borrowings consisted of the following at:

 

 

 

 

 

 

 

 

 

 

March 31, 2014

 

December 31, 2013

Principal components:

 

 

 

 

 

 

Credit Facility

 

$

68,000 

 

$

22,000 

13% Senior Notes, principal

 

 

48,481 

 

 

48,481 

Total principal outstanding

 

 

116,481 

 

 

70,481 

13% Senior Notes unamortized deferred credit

 

 

4,834 

 

 

5,267 

Total carrying value of borrowings

 

$

121,315 

 

$

75,748 

 

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

 

On March 11, 2014, the Company entered into the Fifth Amended and Restated Credit Agreement to the Credit Facility. The total amount available under the Credit Facility is $500,000,  with an initial associated borrowing base of $95,000 and a maturity of March 11, 2019. JPMorgan Chase Bank, N.A. is Administrative Agent, and participating lenders include Regions Bank, Citibank, N.A., Capital One, N.A., KeyBank, N.A., Whitney Bank, IberiaBank, N.A., OneWest Bank, N.A., SunTrust Bank and Royal Bank of Canada. Amounts borrowed under the Credit Facility may not exceed the borrowing base, which is generally reviewed on a semi-annual basis. The first redetermination is scheduled with an effective date of May 30, 2014, with subsequent redeterminations occurring every six months beginning on September 1, 2014. The Credit Facility is secured by first preferred mortgages covering the Company’s major producing properties.

 

As of March 31, 2014, the balance outstanding on the Credit Facility was $68,000 with a weighted interest rate of 2.41%, calculated as the London Interbank Offered Rate (“LIBOR”) plus a tiered rate ranging from 1.75% to 2.75%, which is determined based on utilization of the facility. In addition, the Credit Facility carries a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the borrowing base.

 

Second Lien Term Loan Facility (the “Second Lien Facility”)

 

The Company also entered into the Second Lien Facility in an aggregate amount of up to $125,000,  including initial commitments of $100,000 and additional availability of $25,000 subject to the consent of two-thirds of the lenders and compliance with financial covenants after giving effect to such increase. The Second Lien Facility, matures on September 11, 2019, and is not subject to mandatory prepayments unless new debt is issued. The Second Lien Facility may be prepaid at our option if we pay a prepayment premium. The prepayment premium is (i) 102% if the prepayment event occurs prior to March 11, 2015, and (ii) 101% if the prepayment event occurs on or after March 15, 2015 but before March 15, 2016, and (iii) 100% for prepayments made on or after March 15, 2016. The Second Lien Facility is secured by junior liens on properties mortgaged under the Credit Facility, subject to an intercreditor agreement.

 

There were no outstanding balances on the Second Lien Facility as of March 31, 2014. The initial draw amount of $62,500 was made on April 10, 2014 with an original issue discount of 1.0%. Subsequent draws, allowable during the first year, are subject to the same 1.0% original issue discount on the drawn amount, applied on the date such draw is funded. Beginning on April 10, 2014, the interest rate is 8.75%, calculated at a rate of LIBOR (subject to a floor rate of 1.0%) plus 7.75% per annum. In addition, the Second Lien Facility carries a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the initial commitment amount until March 11, 2015.

 

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

 

On April 11, 2014, the Company completed a full redemption of the remaining $48,481 principal amount of outstanding Senior Notes using proceeds from the Second Lien Facility. The redemption, which will be accounted for in the quarter ending June 30, 2014, will result in a net $3,204 gain on the early extinguishment of debt (including $4,780 of accelerated deferred credit amortization). The gain represents the difference between the $50,047 paid for the redemption of the Senior Notes ($1,576 of redemption costs, primarily the call premium) and the carrying value of the remaining Senior Notes of $53,261 (inclusive of $4,780 of deferred credit). The Company also paid  $193 for accrued interest through the redemption date. Upon the redemption, the indenture governing the Senior Notes was discharged in accordance with its terms.

 

Interest on the Senior Notes was payable on the last day of each quarter. Certain of the Company’s subsidiaries guaranteed the Company’s obligations under the Senior Notes. The subsidiary guarantors were 100% owned, all of the guarantees were full and unconditional and joint and several, the parent company had no independent assets or operations, and any subsidiaries of the parent company other than the subsidiary guarantors were 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 previous Senior Notes that were exchanged and the principal of the new Senior Notes. This deferred credit was being amortized as a reduction of interest expense over the life of the Senior Notes at an 8.5% effective interest rate.

 

As of March 31, 2014,  the deferred credit balance was $4,834, net of $26,673 of amortization through that date. Amortization recorded as a reduction of interest expense for the quarter ended March 31, 2014 was $433.

 

Restrictive Covenants

 

The indentures governing the Senior Notes, Credit Facility and Second Lien Facility contain various covenants including restrictions on additional indebtedness and payment of cash dividends. In addition, the Credit Facility and Second Lien Facility contain covenants for maintenance of certain financial ratios. The Company was in compliance with these covenants at March 31, 2014.