EXCO to buy back $577 million notes at 51, issue 12˝% loan in return

By Susanna Moon

Chicago, Oct. 20 – EXCO Resources, Inc. said it will repurchase $577 million of senior notes at an average price of 51% of par in exchange for a 12˝% five-year term loan.

EXCO entered into agreements in which the noteholders agreed to become lenders under the new $291 million senior secured second-lien term loan in exchange for the company repurchasing the notes, according to a company press release.

The company said it will repurchase about $376 million of its $750 million outstanding 7˝% senior notes due 2018 and about $201 million of its $500 million outstanding 8˝% senior notes due 2022.

The deal is part of a series of transactions expected to improve the company’s balance sheet and its financial flexibility, the press release said.

EXCO also inked an agreement with subsidiaries of Fairfax Financial Holdings Ltd. for a $300 million 12˝% five-year senior secured second-lien term loan at par.

Proceeds of the Fairfax term loan will be used to repay some borrowings under the company’s credit agreement.

In connection with the transactions, EXCO also amended its credit agreement to reduce the borrowing base to $375 million and to provide more covenant flexibility.

The transactions are expected to close Oct. 26.

The transactions are expected to reduce net debt by $270 million, or by 18%, to extend weighted average debt maturity by 30% and to improve forward cash flow by about $146 million, the company said.

Credit Suisse Securities (USA) LLC is the restructuring adviser.

EXCO is a Dallas-based oil and natural gas company.

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