Magnum Hunter gets asset-based revolver with $265 million loan base

By Susanna Moon

Chicago, Dec. 18 - Magnum Hunter Resources Corp. obtained an asset-based senior secured revolving credit facility maturing April 13, 2016 with an initial borrowing base of $265 million.

The company amended its credit agreement on Dec. 13 with Bank of Montreal as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The terms include a semiannual borrowing base redetermination derived from the company's proved crude oil and natural gas reserves, and the borrowing base may be decreased or increased up to a maximum commitment level of $750 million, with periodic redeterminations beginning May 1, 2014.

The terms of the credit agreement provide that the revolver may be used for loans and, subject to a $10 million sublimit, letters of credit. The unused fee is 50 basis points.

Interest on the loans will be Libor plus 200 bps to 325 bps.

The covenants require the company to maintain availability under the borrowing base in an amount greater than the greater of 2.5% of the borrowing base then in effect or $5 million and a basket of $45 million per year, the company said.

The company also must maintain a ratio of consolidated current assets to consolidated current liabilities of not less than 1 time; a ratio of EBITDAX to interest expense of not more than 2 times for the fiscal quarter ending Dec. 31, 2013, 2.25 times for the fiscal quarter ending March 31, 2014 and 2.5 times for the fiscal quarter ending June 30, 2014 and for each fiscal quarter ending thereafter; beginning with the fiscal quarter ending June 30, 2014, a ratio of total debt to EBITDAX of not more than 4.5 times for the fiscal quarters ending June 30, 2014 and Sept. 30, 2014 and 4.25 times for the fiscal quarter ending Dec. 31, 2014 and for each fiscal quarter ending thereafter; and a ratio of total debt (less the outstanding principal amount of the company's 9¾% senior notes due 2020) to EBITDAX of not more than 2 times.

Magnum Hunter is a Houston-based independent exploration and production company.

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