Southwestern Energy gets $2 billion credit agreement with JPMorgan

By Sarah Lizee

Olympia, Wash., April 27 – Southwestern Energy Co. entered into a credit agreement that provides for total commitments of $2 billion, an initial borrowing base of $3.2 billion and a total maximum revolving credit amount of $3.5 billion.

The company entered into the agreement on Thursday with JPMorgan Chase Bank, NA as administrative agent and lender, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement matures on April 26, 2023, provided that if the company has not amended, redeemed or refinanced at least $700 million of its 2022 senior notes on or before Dec. 14, 2021, the credit agreement will mature on Dec. 14, 2021.

Borrowings bear interest at Libor plus a margin that ranges from 150 basis points to 250 bps and the commitment fee ranges from 37.5 bps to 50 bps, in each case based on facility usage.

The agreement requires a minimum current ratio of no less than 1 to 1, a maximum total net leverage ratio of no less than 4.5 to 1 for each fiscal quarter ending during the period from June 30 through March 31, 2019, 4.25 to 1 for each fiscal quarter ending during the period from June 30, 2019 through March 31, 2020 and 4 to 1 for each fiscal quarter ending on or after June 30, 2020.

Southwestern’s existing credit agreements dated Dec.16, 2013 and June 27, 2016 were terminated, and the company repaid the $1,191,000,000 secured term loan balance under the credit agreement dated June 27, 2016 with cash on hand and borrowings under the new credit agreement.

The company’s initial borrowings under the new credit agreement were $360 million, a portion of which related to other working capital needs.

All outstanding letters of credit under the credit agreement dated June 27, 2016 were converted into letters of credit under the new credit agreement.

JPMorgan, Citibank, NA, Merrill Lynch, Pierce, Fenner And Smith Inc., Mizuho Bank, Ltd., RBC Capital Markets, LLC, MUFG Bank, Ltd. and Wells Fargo Securities, LLC are joint lead arrangers and bookrunners. Bank of America, NA, Citibank, Mizuho, Royal Bank of Canada, MUFG and Wells Fargo Bank, NA are co-syndication agents.

Southwestern Energy is a Houston-based natural gas and oil company.

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