New York, March 15 – EXCO Resources, Inc. placed $300 million of 8% 1.5 lien senior secured notes due 2022 as part of a series of transactions intended to improve its capital structure.
The notes were sold to affiliates of Fairfax Financial Holdings Ltd., which bought $151 million, Energy Strategic Advisory Services, LLC, which bought $70 million, Oaktree Capital Management, LP, which bought $40 million, and an unaffiliated investor, according to a news release.
Credit Suisse Securities (USA) LLC was placement agent and bookrunner.
EXCO may pay the coupon in cash at 8% or in kind or in common stock at 11%. After Dec. 31, 2018, the company may be required to pay the coupon in cash if it meets specified liquidity thresholds.
The investors also received financing warrants to buy 323 million shares at $0.93.
In addition, they received either commitment fee warrants to purchase EXCO common stock or cash, resulting in the payment of $4 million in cash and the issuance of 6 million warrants exercisable at $0.01.
The ability to exercise the warrants and to pay interest in shares is restricted until the company obtains shareholder approval.
If that approval is not obtained by Sept. 30 then the interest rate will step up to 15%, or 20% if paid in kind or stock.
Proceeds from the notes will be used to pay all borrowings outstanding under EXCO’s credit agreement, for transaction fees and expenses, and for general corporate purposes.
EXCO also exchanged $683 million of second-lien term loans for 1.75 lien term loans with an option to pay interest in kind in stock or additional debt.
The transactions increased pro forma liquidity by $116 million, the company said, and have the potential to reduce cash interest payments by up to $109 million a year.
In addition, EXCO amended its credit agreement to set a borrowing base of $150 million, to modify covenants and to allow the issuance of the new notes and exchange loans.
“We appreciate the continued support and confidence from our investors that participated in these transactions,” said Harold L. Hickey, chief executive officer and president, in the news release.
“The option to pay interest in-kind in lieu of cash gives us the opportunity to invest cash in the business to create value for our shareholders. We will continue our disciplined approach to the allocation of capital through our process of prioritizing opportunities based on a profitability index.”
In addition to operations, the transactions also allow flexibility for further liability management transactions, such as issuing equity in exchange for debt, repurchasing debt and selling assets.
Further transactions are planned.
EXCO is a Dallas-based oil and natural gas exploration and production company.
| Issuer: | EXCO Resources, Inc.
|
| Issue: | 1.5 lien senior secured notes
|
| Amount: | $300 million
|
| Maturity: | March 20, 2022
|
| Coupon: | 8%, or in kind or in stock at 11%
|
| Warrants: | Financing warrants for 323 million shares at $0.93; commitment fee warrants for 6 million shares at $0.01 and $4 million in cash
|
| Placement agent: | Credit Suisse Securities (USA) LLC
|
| Announcement date: | March 15
|
© 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.
