Alta Mesa gets $125 million second-lien loan at Libor plus 800 bps

By Toni Weeks

San Luis Obispo, Calif., June 3 – Alta Mesa Holdings, LP entered into a $125 million second-lien senior secured term loan agreement on June 2 with Morgan Stanley Energy Capital Inc. as administrative agent, sole lead arranger and sole bookrunner, according to an 8-K filing with the Securities and Exchange Commission.

The loan facility, which matures April 15, 2018, includes an accordion feature for up to $50 million of additional term loans within one year following closing.

Borrowings bear interest at Libor plus 800 basis points.

The agreement includes covenants that require certain ratios, measured on a quarterly basis, including debt to EBITDAX of no more than 4.5 to 1.0, PV-9 of total proved reserves to total secured debt of at least 1.5 to 1.0 and EBITDAX to interest expense of at least 2.5 to 1.0.

Alta Mesa may prepay all or a portion of the term loan facility at any time. The facility is subject to mandatory prepayments of 75% of the net cash proceeds from asset sales or an initial public offering. Such prepayments are subject to a premium that is initially 3% and declines to 1% prior to the maturity date and, if made prior to one year after closing, are also subject to a make-whole premium to ensure that the lenders receive the total amount of interest that would have been paid from the date of prepayment to the first anniversary.

The company drew $125 million under the term loan at closing. Proceeds were used to repay outstanding amounts under the company’s existing credit facility.

In connection with the term loan facility, the company completed the semiannual redetermination of its borrowing base and amended its credit agreement dated May 13, 2010 with Wells Fargo Bank, NA as administrative agent, setting the borrowing base at $300 million and extending the maturity date to Oct. 13, 2017, among other things. Following closing, the company had about $75 million in borrowing base available under the credit facility.

Alta Mesa is a Houston-based onshore oil and gas exploration and production company.

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