Miller Energy closes $250 million three-year reserve-based revolver

By Susanna Moon

Chicago, June 3 - Miller Energy Resources, Inc. said it obtained a $250 million three-year senior secured reserve-based revolving credit facility.

The facility has an initial borrowing base of $60 million and is priced using a sliding scale of Libor plus 300 basis points to 400 bps, based on the level of borrowing, according to a company press release.

KeyBanc Capital Markets Inc. was the bookrunner and lead arranger. The syndicate also includes CIT Finance LLC, Mutual of Omaha Bank and OneWest Bank NA.

The company drew $20 million under the revolver at closing, which will be used to provide working capital for development drilling in Alaska.

"This new facility allows us to access development capital at rates far lower than previously available," John Brawley, Miller's chief financial officer, said in the press release. "Moreover, it is designed for our borrowing base to grow in conjunction with increased production and well-bore diversification, further reducing our average cost of capital over time."

"With this transaction, the company has dramatically transformed its debt profile from its previous mezzanine structure, with 18% interest rates, to a conforming revolving credit line at interest rates of less than 5%, coupled with our second-lien facility with an interest rate of 11.75%," he noted. "Together, we expect these two facilities will bring our average cost of debt below 10%."

Miller Energy is an oil and natural gas exploration, production and drilling company based in Knoxville, Tenn.

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