Magnum Hunter closes $100 million term loan, $167.5 million revolver

By Susanna Moon

Chicago, Sept. 29 - Magnum Hunter Resources Corp. said it resized its credit facility to $267.5 million from the $250 million expansion planned earlier in the month. The total amount borrowed under the new terms can be as much as $350 million.

The company added a $100 million five-year term loan, up from $75 million, and changed the revolving credit facility amount to $167.5 million, down from $175 million.

Interest on the term loan initially will be Libor plus 700 basis points, with a floor of 1.00%. Interest on the revolver will be Libor plus 225 bps to 325 bps, based on the amount drawn.

The revolver has an $82.5 million accordion, subject to semiannual borrowing base redeterminations and lender approval.

The company may redeem the term loan during the first 12 months with no prepayment penalty.

As of Sept. 29, the company had total liquidity of about $140 million, including cash and availability under the facilities and its Eureka Hunter credit facility, according to a company press release.

Bank of Montreal is the administrative agent for the revolver; Capital One, NA is the syndication agent; and Amegy Bank NA, KeyBank NA and UBS Securities LLC are the documentation agents. BMO Capital Markets is the lead arranger and bookrunner. Lenders include Citibank, NA, Credit Suisse AG, Deutsche Bank Trust Co. Americas, Goldman Sachs Bank USA, SunTrust Bank, and Union Bank, NA.

BMO Capital Markets and Capital One, NA are joint lead arrangers and joint bookrunners on the term loan. Capital One, NA is the administrative agent; Bank of Montreal is the syndication agent; and Citibank, NA is documentation agent. Lenders include Credit Suisse AG, Deutsche Bank Trust Co. Americas, SunTust Bank, and Union Bank, NA.

"These combined credit facilities will fund our capital budget for the remainder of 2011 and all of 2012," Gary C. Evans, chairman and chief executive officer of Magnum Hunter, said in the release.

"Our goal is to be self-funding through cash flow for our capital budget requirements in fiscal year 2013. In addition, the structure of the term loan facility, with no pre-payment penalty during the first 12 months, allows us maximum flexibility in structuring our future financial plans."

Magnum Hunter said on Sept. 6 that it planned to upsize its credit facility to $250 million from $187.5 million by adding a new $75 million five-year term loan and revising the revolver amount to $175 million.

Under the original term, the term loan had a $25 million accordion feature, and the revolver had a $75 million accordion feature.

As of Aug. 31, the company had about $151 million of outstanding debt under its existing revolver. The combination of existing cash and the borrowing capacity under the new credit facility structure provided pro forma liquidity exceeding $110 million.

Magnum Hunter is a Houston-based independent exploration and production company engaged in the acquisition, development and production of oil and natural gas.

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