Kosmos Energy closes $300 million revolver, restates debt facility

By Marisa Wong

Madison, Wis., Nov. 29 - Kosmos Energy Ltd. entered into a revolving credit facility agreement with Standard Chartered Bank as facility agent and a lender and BNP Paribas as security and intercreditor agent and a lender on Nov. 23, according to an 8-K filing with the Securities and Exchange Commission.

The revolving credit facility totals $300 million, of which $260 million is available at signing and an additional $40 million is available if the lenders choose to increase their commitments or if commitments from new banks are added.

The revolver, due Nov. 23, 2015, is secured by a first-priority charge over the company's direct subsidiary, Kosmos Energy Holdings, and is guaranteed by indirect subsidiary Kosmos Energy Ghana HC and other indirect subsidiaries that hold interests in Kosmos Energy Ghana.

Any draw under the revolver will be used for general corporate purposes.

Interest is equal to Libor plus 600 basis points and the commitment fee is 240 bps.

At closing, the company also paid a 3% arrangement fee that included waiver fees paid to lenders under the company's existing commercial debt facility.

The company may prepay the principal of any advance without penalty or premium at any time in whole or in part, subject to certain breakage costs, and has the right to cancel all undrawn commitments under the revolver.

The company is required to repay amounts due under the revolver with sales of the Kosmos Energy Ghana units or assets owned by the Ghana units.

Under the revolver, the company is also required, on a consolidated basis, to maintain a net debt to EBITDAX ratio less than or equal to 3.5 to 1.0 and an EBITDAX to net interest expense ratio greater than or equal to 2.25 to 1.0, in each case as tested every six months or on a pro forma basis upon completing some transactions.

Also on Nov. 23, the company amended and restated its existing commercial debt facility, under which the company's indirect subsidiary, Kosmos Energy Finance International, is the original borrower.

Specifically, the company amended the debt facility to:

• Add financial covenants so that the company and its subsidiaries, on a consolidated basis, are required to maintain a net debt to EBITDAX ratio less than or equal to 3.5 to 1.0 and an EBITDAX to net interest expense ratio greater than or equal to 2.25 to 1.0, in each case as tested every six months or on a pro forma basis after completing some transactions;

• Allow proceeds from any project funded by the existing debt facility to be used to pay interest and fees due under the new revolver and other debt incurred by the company;

• Cancel $500 million of unused commitments under the old facility as well as the $1 billion accordion feature;

• Allow the company's subsidiaries (other than the Ghana units) to incur debt and guarantees and grant certain liens over their assets and to permit the Ghana subsidiaries to guarantee the revolver and other debt that may be incurred on a subordinated basis; and

• Exclude some of the company's subsidiaries doing business in Cameroon and Morocco from restrictions contained in the charge granted to the lenders under the existing facility and exclude the receipt of funds from draws under the existing debt facility.

The company said it expects to record a charge of $5.3 million upon entering into the amended and restated facility and cancelling the $500 million of unused commitments under the original facility.

Kosmos is an oil and gas exploration and production company based in Hamilton, Bermuda, with an office in Dallas.

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