C&J Energy cuts revolver to $400 million, adjusts financial covenants

By Wendy Van Sickle

Columbus, Ohio, Sept. 30 – C&J Energy Services Ltd. entered into a waiver and second amendment to the credit agreement governing its senior secured credit facilities, reducing its revolving facility to $400 million from $600 million, according to a Wednesday press release.

In addition to the revolver reduction, other changes include the following:

• An increase to the applicable rate on outstanding revolver borrowings by 50 basis points in the event that the company’s most recently reported total leverage ratio is greater than 4.0x and less than or equal to 4.5x and 100 bps if its most recently reported total leverage ratio is greater than 4.5x. Because its unused commitment fees will drop with the $200 million availability reduction, the company said this will result in little or no additional interest expense;

• Suspension of the quarterly maximum leverage ratio test and the quarterly minimum interest coverage ratio test through the quarter ending June 30, 2017, at which time the tests will be reinstated with the quarter ending Sept. 30, 2017, initially at higher levels and tightening through Sept. 30, 2018; and

• Implementation of a quarterly minimum EBITDA covenant through the quarter ending June 30, 2017, based on negotiated EBITDA levels and with accumulating cushion baskets available for any EBITDA shortfalls through the third quarter of 2016, providing enhanced flexibility for compliance.

The revolver matures March 24, 2020.

No changes were made to the pricing or maturity of C&J’s term loan B facility.

“As we noted in our second quarter earnings conference call, like our competitors, our operational and financial results have been significantly impacted by the current downturn, which in turn impacts our ability to continue to comply with the financial covenants of the credit facility,” Randy McMullen Jr., C&J Energy Services’ president and chief financial officer, said in the release. “We were able to negotiate for maximum financial flexibility, using current visibility to obtain greater relief for a longer period of time.

“Also, by agreeing to reduce the size of our revolver to $400 million, we were able to negotiate a more favorable covenant structure with little-to-no immediate impact on our current cash interest expense.”

The company said it has $94 million drawn and $12.6 million of letters of credit outstanding under the revolver, along with $1.057 billion outstanding under a term loan B facility, comprised of a $573.5 million term loan B-1 and a $483.8 million term loan B-2, and approximately $20 million of cash on hand.

C&J Energy is a Houston-based provider of hydraulic fracturing, coiled tubing, cased-hole wireline, pumpdown and other oilfield services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.