HighPeak Energy closes on $1.2 billion senior secured term facility

By Mary-Katherine Stinson

Lexington, Ky., Sept. 15 – HighPeak Energy, Inc. closed on a senior secured term loan credit agreement, providing for a total commitment capacity of $1.2 billion, and a collateral agency agreement on Sept. 13, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement matures Sept. 30, 2026.

Loans under the agreement bear interest at adjusted term SOFR plus an applicable margin of 750 basis points.

Mandatory prepayments are required, including quarterly installments of $30 million beginning March 31, 2024, the prepayment of gross proceeds from any unpermitted debt, the prepayment of net cash proceeds for asset sales and hedge terminations more than $20 million within one calendar year and prepayments of excess cash flow beginning with the fiscal quarter ending March 31, 2024.

Optional prepayments are allowed subject to a concurrent payment of the make-whole amount for any optional prepayment before 18 months after closing, 1% of the principal amount being repaid before 24 months after closing and without any premium after 24 months.

Financial covenants require the company to maintain an asset coverage ratio of at least 1.5x and a total net leverage ratio not exceeding 2x as of the last day of any fiscal quarter.

Texas Capital Bank is the administrative agent, and Chambers Energy Management, LP is the collateral agent.

TCBI Securities, Inc. is the lead arranger and bookrunner.

On Sept. 12, the company entered into a collateral agency agreement with Texas Capital, Chambers Energy and Mercuria Energy Trading SA as first-out representative. The agreement appointed Texas Capital as collateral agent for the present and future holders of the first-lien obligations.

The company’s 2020 credit agreement with Wells Fargo Bank, NA was terminated as of closing of the new credit agreement. All outstanding obligations under the existing agreement have been paid in full.

Based in Fort Worth, HighPeak Energy is an independent oil and natural gas company engaged in the acquisition, development and production of oil, natural gas and NGL reserves.

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