Key Energy amends revolver, modifying size, pricing and covenants

By Sara Rosenberg

New York, Oct. 29 - Key Energy Services Inc. amended its revolving credit facility, reducing the size to $300 million from $400 million, increasing pricing and revising covenants, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Pricing on the revolver can now range from Libor plus 350 basis points to 450 bps based on leverage, up from a range of Libor plus 150 bps to 200 bps.

The unused fee was increased to a range of 50 bps to 75 bps based on leverage from a range of 30 bps to 50 bps.

In addition, the amendment removed the total funded debt to EBITDA requirement and replaced it with requirements that consolidated funded debt be no greater than 45% of adjusted total capitalization and that the senior secured leverage ratio be no greater than 2.50 to 1.00 for the quarter ended Sept. 30 through and including the quarter ending Sept. 30, 2010 and 2.00 to 1.00 thereafter.

Also, the consolidated interest coverage ratio was changed from 3.00 to 1.00 to 1.75 to 1.00 from the fiscal quarter ended Sept. 30 through and including the fiscal quarter ending June 30, 2010; 2.00 to 1.00 for the fiscal quarter ending Sept. 30, 2010; 2.50 to 1.00 for the fiscal quarter ending Dec. 31, 2010; and 3.00 to 1.00 thereafter.

Other terms that were revised included the limitation on capital expenditures, the negative covenant related to acquisitions, the investment basket, the negative covenant related to permitted unsecured debt, the share repurchases covenant and the events of default provisions.

The amendment was completed on Oct. 27.

Bank of America is the administrative agent on the deal.

Key Energy is a Houston-based operator of an onshore, rig-based well servicing contractor.

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