Foothills Resources gives more details on extended forbearance agreement

By Angela McDaniels

Tacoma, Wash., Oct. 21 - Foothills Resources, Inc. said the interest rate on the revolver under its senior secured credit facility increased to Libor plus 400 basis points from Libor plus 200 bps in connection with the company's extended forbearance agreement.

For the term loan portion of the facility, interest increased to Libor plus 850 bps from Libor plus 650 bps. It will increase further to Libor plus 950 bps on Nov. 1 and to Libor plus 1,050 bps on Dec. 1.

On Friday, the company said it amended its credit facility, extending the forbearance regarding defaults on financial covenants to Dec. 31 from Sept. 15 and increasing pricing. Further details were released in an 8-K filing with the Securities and Exchange Commission Monday.

The defaults occurred when Foothills' minimum asset coverage ratio fell below 1.6 to 1 and its leverage ratio exceeded 6.25 to 1 for the quarter ended June 30.

As previously reported, the amendment revised or added financial covenants during the forbearance period, including leverage ratio, minimum EBITDA and minimum production levels.

Specifically, Foothills' leverage must be less than 9.95 to 1 for October, less than 10.25 to 1 for November and less than 10.46 to 1 for December. Its EBITDA must be at least $439,600 for October, at least $540,700 for November and at least $577,800 for December.

However, the asset coverage and interest coverage ratios were suspended during the forbearance period.

In connection with the extension, the company will pay a $500,000 fee by Dec. 31 and $2.5 million more on Dec. 13, 2012, which are in addition to the initial forbearance fee of $150,000. Foothills said that if it complies with specified benchmarks, the lenders will forgive half of the $2.5 million fee.

In addition, the company disclosed that the borrowing base under its revolver was confirmed at $25 million and that the $2 million reserve against the borrowing base imposed under the previous forbearance agreement was terminated.

Restructuring

Also under the amendment, the company must comply with the actions and timetable contained in a restructuring analysis provided to the lenders, which was prepared with the assistance of the company's adviser, Parkman Whaling LLC.

The restructuring analysis provides for the evaluation of a range of possible strategic alternatives, including a sale of a portion of the company's assets, a merger or other business combination or the issuance of equity or other securities.

The company said it is working toward completion of the strategic alternatives initiative at the earliest possible date.

Wells Fargo Foothill, LLC is the administrative agent.

The amendment is effective as of Sept. 15.

Foothills is a Bakersfield, Calif.-based energy company.

© 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.