APA enters $1.8 billion, £1.5 billion revolvers to replace Apache loan

By Marisa Wong

Los Angeles, May 2 – APA Corp. entered into two syndicated credit agreements on April 29 that replaced and refinanced a syndicated credit agreement of wholly owned subsidiary Apache Corp., according to an 8-K filing with the Securities and Exchange Commission.

APA’s first new credit agreement is denominated in U.S. dollars, and its second new credit agreement is denominated in pounds sterling. JPMorgan Chase Bank, NA is administrative agent for both credit agreements.

In connection with APA’s entry into the new dollar and sterling agreements, Apache terminated $4 billion of commitments under its credit agreement dated March 14, 2018 with JPMorgan as administrative agent.

Apache has guaranteed obligations under each new agreement effective until the aggregate principal amount of debt under senior notes and debentures outstanding under Apache’s existing indentures is less than $1 billion.

The dollar agreement provides for an unsecured five-year revolving credit facility with aggregate commitments of $1.8 billion, including a letter-of-credit subfacility of up to $750 million, of which $150 million currently is committed. Borrowings under the dollar agreement may be made only in U.S. dollars.

APA may increase commitments up to an aggregate $2.3 billion by adding new lenders or obtaining the consent of any increasing existing lenders.

As of April 29, an aggregate $680 million of borrowings under the former Apache facility were deemed borrowings by APA outstanding under the new dollar agreement.

The sterling agreement provides for an unsecured five-year revolving credit facility with aggregate commitments of £1.5 billion for loans and letters of credit. Borrowings under the sterling agreement may be made only in pounds sterling.

Letters of credit are available under each new agreement for credit support needs of APA and its subsidiaries, including in respect of North Sea decommissioning obligations. Letters of credit under each new agreement may be denominated in U.S. dollars, pounds sterling, Canadian dollars and any other foreign currency consented to by an issuing bank.

As of April 29, a letter of credit for $20 million originally issued under the former facility is deemed issued and outstanding under the dollar agreement, and letters of credit totaling £748 million originally issued under the former facility are deemed issued and outstanding under the sterling agreement.

All amounts outstanding under each new agreement are due April 29, 2027, subject to two one-year extension options under each new agreement. However, no lender is obligated to consent to any extension. APA can replace a non-consenting lender and its commitment or repay a non-consenting lender and let its commitment expire upon scheduled maturity. APA can proceed with the extension as to remaining commitments if lenders having at least 51% of total commitments agree, the filing noted.

Borrowers under each new agreement may include APA and certain subsidiaries organized under the laws of, resident of or domiciled in the United States, Canada, England and Wales, the United Kingdom or the Cayman Islands. Apache may borrow under the dollar agreement up to an aggregate principal amount of $300 million outstanding at any given time.

Borrowings bear interest at an applicable margin over adjusted SOFR for the dollar agreement and Sonia for the sterling agreement. The margin varies from 110 basis points to 167.5 bps, depending on the rating for APA’s senior unsecured non-credit enhanced long-term debt or, if that debt is not rated and the Apache guaranty is in effect, Apache’s long-term debt rating.

Each new agreement also requires the borrower to pay quarterly a facility fee that varies from 15 bps to 32.5 bps, also based on the long-term debt rating.

Currently, applicable margin is 160 bps, and the facility fee is 27.5 bps.

Each agreement includes, among other covenants, a financial covenant that requires APA to maintain an adjusted debt-to-capital ratio of not greater than 60% at the end of any fiscal quarter. For purposes of this calculation, capital continues to exclude the effects of non-cash write-downs, impairments and related charges occurring after June 30, 2015.

The new loans will be used for general corporate purposes.

Co-lead arrangers and joint bookrunners for the dollar agreement are JPMorgan, BofA Securities, Inc., RBC Capital Markets, HSBC Securities (USA) Inc., MUFG Bank, Ltd., Wells Fargo Securities, LLC, Goldman Sachs Bank USA, TD Securities (USA) LLC, Bank of Nova Scotia, Houston Branch, Truist Securities, Inc. and Mizuho Bank, Ltd.

Bank of America, NA is syndication agent. Royal Bank of Canada, HSBC Bank USA, NA, MUFG Bank, Wells Fargo Bank, NA, Goldman Sachs Bank USA, Toronto-Dominion Bank, New York Branch, Scotiabank, Houston Branch, Truist Bank and Mizuho Bank are co-documentation agents.

Co-lead arrangers and joint bookrunners for the sterling agreement are JPMorgan, TD Securities, BofA Securities, RBC Capital Markets, HSBC Securities, MUFG Bank, Wells Fargo Securities, Goldman Sachs Bank USA, Scotiabank, Houston Branch, Truist Securities and Mizuho Bank.

Toronto-Dominion Bank, London Branch is syndication agent. Bank of America, Royal Bank of Canada, HSBC Bank USA, MUFG Bank, Wells Fargo Bank, NA London Branch, Goldman Sachs Bank USA, Scotiabank, Houston Branch, Truist Bank and Mizuho Bank are co-documentation agents.

Apache is a hydrocarbon exploration company based in Houston.

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