Linn capacity cut to $3.6 billion, says amendments add ‘flexibility’

By Wendy Van Sickle

Columbus, Ohio, Oct. 21 – Linn Energy, LLC reduced borrowing availability to $3.6 billion and made other changes under an amendment to its credit agreement, according to a Wednesday press release.

The credit facility of Linn subsidiary Berry Petroleum Co. LLC was similarly amended following Linn’s fall borrowing base redetermination, according to the release.

The facilities’ amendments include allowing for junior lien indebtedness, a reduction in the minimum interest coverage ratio and increased ability for Linn to divest assets that do not contribute to its borrowing base.

Linn and Berry may incur up to $4 billion and $500 million, respectively, of junior lien indebtedness, in each case subject to borrowing base reductions in certain circumstances.

In addition, Linn’s minimum interest coverage ratio has been reduced through Dec. 31 2016 to 2.0x from 2.5x, increasing to 2.25x through June 30, 2017 and returning to 2.5x on July 1, 2017.

The amendments “provide additional flexibility in the current market environment,” Linn said.

Linn’s lenders have approved a potential combination of its and Berry’s credit facilities under certain conditions, up to a total borrowing base of $4.05 billion. Linn currently has undrawn capacity of about $790 million based on its borrowings outstanding as of Sept. 30.

Also resulting from the redetermination, Berry’s borrowing base was reduced to $900 million, including $250 million of restricted cash previously posted as collateral with Berry’s lenders.

Linn Energy is a Houston-based oil and gas company.

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