Annual report pursuant to Section 13 and 15(d)

Borrowings

v2.4.1.9
Borrowings
12 Months Ended
Dec. 31, 2014
Borrowings [Abstract]  
Borrowings

Note 5 – Borrowings

 

The Company’s borrowings consisted of the following at:

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

2014

 

2013

Principal components:

 

 

 

 

 

 

Senior secured revolving credit facility

 

$

35,000 

 

$

22,000 

Secured second lien term loan

 

 

300,000 

 

 

13% Senior Notes, principal

 

 

 

 

48,481 

Total principal outstanding

 

 

335,000 

 

 

70,481 

13% Senior Notes, unamortized deferred credit

 

 

 

 

5,267 

Total carrying value of borrowings

 

$

335,000 

 

$

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 with a maturity date 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. The total notional amount available under the Credit Facility is $500,000. Amounts borrowed under the Credit Facility may not exceed the borrowing base, which is generally reviewed on a semi-annual basis. The Credit Facility is secured by first preferred mortgages covering the Company’s major producing properties. In conjunction with the closing of the Acquisition on October 8, 2014, the borrowing base on the Company’s Credit Facility was amended to $250,000.

 

As of December 31, 2014, the balance outstanding on the Credit Facility was $35,000 with a weighted-average interest rate of 1.91%, calculated as the 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. The Company had $215,000 of available borrowings under the Credit Facility as of December 31, 2014.

 

Term loans

 

On March 11, 2014, the Company entered into a term loan 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 term loan had a maturity date of September 11, 2019, and was not subject to mandatory prepayments unless new debt or preferred stock was issued. It was prepayable at the Company’s option, subject to a prepayment premium. The prepayment amount was (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 term loan was secured by junior liens on properties mortgaged under the Credit Facility, subject to an intercreditor agreement. On April 10, 2014, the Company drew an initial amount of $62,500 with an original issue discount of 1.0%.  

 

On October 8, 2014, the term loan described above was repaid in full using proceeds from a new secured second lien term loan (the “Second Lien Loan”) in conjunction with the closing of the Acquisition, resulting in a loss on early extinguishment of debt of $3,054.  The Second Lien Loan has a maturity date of October 8, 2021. On October 8, 2014, the Company drew an initial amount of $300,000 with a discount of 2.0% and an interest rate of 8.5%,  calculated at a rate of LIBOR (subject to a floor rate of 1.0%) plus 7.5% per annum. The Second Lien Loan may be prepaid at the Company’s option, subject to a prepayment premium. The prepayment amount is (i) 102% if the prepayment event occurs prior to October 8, 2015, and (ii) 101% if the prepayment event occurs on or after October 8, 2015 but before October 8, 2016, and (iii) 100% for prepayments made on or after October 8, 2016. The Second Lien Loan is secured by junior liens on properties mortgaged under the Credit Facility, subject to an intercreditor agreement. The Royal Bank of Canada is Administrative Agent, and participants include several institutional lenders.

 

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 Loan. The redemption resulted in a net $3,205 gain on the early extinguishment of debt (including $4,780 of accelerated deferred credit amortization). The gain represents the difference between the $50,057 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 in accrued interest through the redemption date. Upon the redemption, the indenture governing the Senior Notes was discharged in accordance with its terms.

 

Using a portion of the proceeds from the sale of our interest in Medusa on December 17, 2013, the Company redeemed $48,481 of its Senior Notes, which resulted in a net $3,696 gain on the early extinguishment of debt. The gain represents the difference between the $50,057 paid for the redemption of the Senior Notes (inclusive of $1,576 of redemption expenses, primarily the call premium) and the carrying value of $53,756 (inclusive of the $5,275 of accelerated deferred credit amortization).

 

In June 2012, the Company redeemed $10,000 of its Senior Notes, which resulted in a net $1,366 gain on the early extinguishment of debt. The gain represents the difference between the $10,225 paid for the redemption of the Senior Notes (inclusive of $225 of redemption expenses, primarily the call premium) and the carrying value of $11,591 (inclusive of the $1,591 of accelerated deferred credit amortization).

 

Restrictive covenants

 

The Company’s Credit Facility and Second Lien Loan contain various covenants including restrictions on additional indebtedness, payment of cash dividends and maintenance of certain financial ratios. The Company was in compliance with these covenants at December 31, 2014.