Magnum Hunter Resources given until June 19 to raise $65 million

By Angela McDaniels

Tacoma, Wash., May 29 – Magnum Hunter Resources Corp.’s first-lien lenders gave the company more time to meet its obligation to raise $65 million, according to an 8-K filing with the Securities and Exchange Commission.

The company now has until June 19, extended from May 29, to raise $65 million of net cash proceeds from the sale of equity securities, asset sales or the entry into a joint venture.

The company must raise the funds as a condition to an amendment and waiver granted by the lenders on April 20 that, among other things, waives the company’s compliance with the current ratio and total secured net debt ratio covenants for the quarter ended March 31 and any default or event of default that may have occurred as a result of non-compliance with the accounts payable aging limitation in effect prior to the amendment.

Magnum Hunter believes it will be able to meet the June 19 deadline through one or more liquidity-enhancing transactions.

Subsidiary Triad Hunter, LLC has agreed to sell some acreage in West Virginia to Antero Resources Corp. and expects the net proceeds to be about $40.8 million. In addition, the company said it is considering options that include selling a portion of its equity interest in Eureka Hunter Holdings, LLC and issuing common stock through at-the-market offerings or otherwise.

More amendments

The company entered into an additional amendment on Thursday to extend the amount of time it may have accounts payable outstanding after the date of invoice from 90 days to 180 days for any day on or prior to June 19. After June 19, the restriction will revert back to 90 days.

Under the April 20 amendment, the date had been May 29 rather than June 19.

The latest amendment also removes the condition, added by a prior amendment, that required the company to raise $65 million of funds before it could pay cash dividends on its three outstanding series of preferred stock for the month of May. Magnum Hunter may now pay the dividends as scheduled on June 1 without regard to the condition.

Finally, the lenders agreed to extend the deadline for Magnum Hunter to satisfy the waiver condition to June 19 from May 29.

Bank of Montreal is the administrative agent.

Magnum Hunter is a Houston-based oil and gas exploration and development company.

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