Callon talks $275 million second-lien loan at Libor plus 675-700 bps

By Sara Rosenberg

New York, Sept. 17 – Callon Petroleum Co. launched on Wednesday its $275 million second-lien term loan with price talk of Libor plus 675 basis points to 700 bps with a 1% Libor floor and an original issue discount of 99, according to a market source.

The term loan has hard call protection of 102 in year one and 101 in year two, the source said.

J.P. Morgan Securities LLC is the lead bank on the term loan.

Proceeds will be used to help fund the $212.6 million acquisition of certain undeveloped acreage and oil and gas producing properties located in Midland, Andrews, Martin and Ector counties in Texas, to refinance an existing second-lien term loan and to pay down revolving credit facility borrowings.

Other funds for the transaction will come from the sale of 12.5 million shares of common stock.

In addition, the company plans to amend its revolver to increase the borrowing base to $250 million.

Pro forma debt to EBITDA is expected around 2.6 times.

Closing is expected in early October, subject to customary conditions.

Callon is a Natchez, Miss.-based energy company focused on the acquisition, development, exploration and operation of oil and gas properties in the Permian Basin in West Texas.

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