Sanchez Energy granted interim access to $50 million of DIP financing

By Caroline Salls

Pittsburgh, Aug. 16 – Sanchez Energy Corp. obtained court approval to access $50 million of a proposed $175 million in new-money debtor-in-possession financing on an interim basis, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The final hearing is scheduled for Sept. 5.

As previously reported, Sanchez said it has received commitments from some of its senior lenders for $175 million in new financing, of which $25 million will be used to repay borrowings and replace a letter of credit currently outstanding under its existing revolving credit facility and, along with cash on hand and cash flow generated by ongoing operations, support the business and fund continued capital investment throughout the restructuring process.

The financing package also includes a $175 million roll-up term loan.

Wilmington Savings Fund Society, FSB is serving as administrative agent and collateral agent for the DIP financing.

The new-money financing will accrue interest at a rate of Libor plus 800 basis points, subject to a 2% Libor floor. Roll-up loans will accrue interest at 7¼%, which is the non-default rate of the senior secured notes.

The financing will mature nine months from the bankruptcy filing date.

Sanchez is a Houston-based oil and gas exploration and production company. The company filed bankruptcy on Aug. 11 under Chapter 11 case number 19-34508.

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