Legacy Reserves enters $1.5 billion restated secured revolver due 2019

By Marisa Wong

Madison, Wis., April 2 - Legacy Reserves LP entered into an amended and restated $1.5 billion secured revolving credit facility with Wells Fargo Bank, NA as administrative agent, Compass Bank as syndication agent and UBS Securities LLC and U.S. Bank NA as co-documentation agents, according to an 8-K filing with the Securities and Exchange Commission.

The facility matures on April 1, 2019.

The amount available for borrowing at any one time is limited to the borrowing base and contains a $2 million sublimit for letters of credit. The borrowing base is currently set at $800 million and is not conditioned upon the closings of the company's two pending acquisitions announced on March 26.

As of April 1, the closing date, the company had about $360 million drawn under the credit agreement, leaving roughly $440 million of current availability.

The borrowing base is subject to semiannual re-determinations beginning Oct. 1. Additionally, either the company or the lenders may, once during each calendar year, elect to re-determine the borrowing base between scheduled re-determinations.

Legacy also has the right, once during each calendar year, to request the re-determination of the borrowing base upon the proposed acquisition of oil and gas properties where the purchase price is greater than 10% of the borrowing base then in effect.

Interest is equal to one-, two-, three- or six-month Libor or, upon consent of all of the lenders, 12-month Libor plus an applicable margin ranging from 150 basis points to 250 bps. The applicable margin is based on the percentage drawn of the borrowing base then in effect.

The company will also pay a commitment fee of 37.5 bps to 50 bps on the average daily unused amount.

The credit agreement contains restrictive covenants as well as covenants that require the company to maintain specified ratios or conditions as follows:

• Total debt to EBITDA of not more than 4.0 to 1.0; and

• Consolidated current assets, including the unused amount of the total commitments, to consolidated current liabilities of not less than 1.0 to 1.0, excluding non-cash assets and liabilities under FASB Accounting Standards Codification 815, which includes the current portion of oil, natural gas and interest rate swaps.

The company's obligations are secured by mortgages on over 80% of the total value its oil and gas properties as well as a pledge of all of its ownership interests in its operating subsidiaries.

The company used initial borrowings under the credit agreement to pay off in full all borrowings outstanding under its second amended and restated credit agreement dated March 10, 2011 with BNP Paribas as administrative agent.

Legacy Reserves is a Midland, Texas-based oil and natural gas limited partnership.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.