Borrowings
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Jun. 30, 2012
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings |
Borrowings
The Company’s borrowings consisted of the following at:
Senior Secured Revolving Credit Facility (the “Credit Facility”)
On June 20, 2012, Regions Bank increased the Company's Credit Facility to $200,000 with a revised borrowing base under the Credit Facility of $60,000. The Credit Facility maturity was also extended to July 31, 2014 from September 25, 2012. 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 borrowing base was $45,000 at December 31, 2011, and increased to $60,000 with the fourth amendment. As of June 30, 2012, the balance outstanding on the Credit Facility was $10,000 with an interest rate on the facility of 2.75%, calculated as the London Interbank Offered Rate (“LIBOR”) plus a tiered rate ranging from 2.5% to 3.0%, which is based on the amount drawn on the facility. In addition, the Credit Facility continues to carry a commitment fee of 0.5% per annum on the unused portion of the borrowing base, which is payable quarterly. As of August 8, 2012, the balance outstanding on the Credit Facility was $28,000 as the Company drew an additional $18,000 subsequent to June 30, 2012 to fund the previously discussed Reagan County Permian acreage acquisitions and to support the Company's ongoing capital development program following the Company's opportunistic repurchase of $10,000 principal value of Senior Notes discussed below. The Credit Facility is secured by mortgages covering the Company's major producing fields.
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 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:
In June 2012, the Company redeemed $10,000 of its Senior Notes with a carrying value of $11,591, including $1,591 of the Notes’ deferred credit, in exchange for $10,225, comprised of the $10,000 principal of the notes and $225 of redemption expenses. The transaction resulted in a $1,366 net gain on the early extinguishment of debt. The accumulated amortization at June 30, 2012 includes the pro-rata $1,591 of accelerated amortization related to this principal redemption, which as a component of the gain on early extinguishment of debt is excluded from the amount reflected above as amortization recorded during the current year as a reduction of interest expense.
Restrictive Covenants
The indenture governing our Senior Notes and the Company’s Credit Facility contains 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, 2012.
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