MEG Energy repays first-lien term loan, extends revolver to 2024

By Angela McDaniels

Tacoma, Wash., July 30 – MEG Energy Corp. repaid its $219 million first-lien term loan and amended and restated its revolving credit facility and letter-of-credit facility guaranteed by Export Development Canada, according to a company news release.

The maturity date of the revolver and letter-of-credit facility was extended by 2.75 years to July 30, 2024. The maturity date will spring back to 91 days prior to the maturity date of certain material debt of MEG if that debt has not been repaid or refinanced prior to that date.

The company reduced the total credit available under the two facilities to C$1.3 billion, comprised of C$800 million under the revolver and C$500 million under the EDC facility.

The company said the reduction is consistent with its business plan of capital discipline and free cash flow generation and is expected to reduce go-forward credit fees by about C$14 million per year.

The term loan repayment was made subsequent to the second quarter and with a portion of available year-to-date free cash flow.

MEG said it expects to continue to repay outstanding debt as free cash flow becomes available. Annualized 2019 interest savings resulting from the repayment of the term loan is expected to be about C$18 million.

The combined annual cash savings of these two transactions together with the anticipated savings from the disposal or sale of non-core assets are expected to reduce annual cash costs by about C$42 million.

The revolver contains no financial maintenance covenant unless it is drawn in excess of 50%. In that case, MEG is required to maintain a first-lien net debt to LTM EBITDA ratio of 3.5 or less. The financial covenant, if triggered, is tested quarterly.

Following the repayment of the outstanding term loan, MEG has no first-lien debt outstanding.

The new revolver was undrawn at closing and is “more than sufficient to meet our foreseeable liquidity needs,” Eric Toews, chief financial officer, said in the news release.

BMO Capital Markets and RBC Capital Markets acted as joint lead arrangers and joint bookrunners for the revolver.

Calgary, Alta.-based MEG Energy is focused on sustainable in situ thermal oil development and production in the southern Athabasca region of Alberta, Canada.

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