Carbon Natural ups Prudential facility borrowing base to $41 million

By Marisa Wong

Morgantown, W.Va., May 2 – Carbon Natural Gas Co. subsidiary Carbon California Co., LLC entered into an amendment on May 1 to its existing senior secured note credit facility with Prudential Insurance Co. of America and Prudential Insurance Legacy Co. of New Jersey to increase the borrowing base and to permit an acquisition, according to an 8-K filing with the Securities and Exchange Commission.

The amendment increases the borrowing base available under the facility to $41 million for the senior revolving notes due Feb. 15, 2022.

On Tuesday the company completed an acquisition of oil and gas producing properties and related facilities located in the Ventura Basin of California for about $43 million.

Carbon California also entered into on Wednesday a securities purchase agreement with Prudential Capital Energy Partners, LP for the issuance and sale of $3 million of senior subordinated notes due Feb. 15, 2024 and the issuance of 585 class A units of Carbon California as partial consideration for the subordinated notes.

In addition, Carbon California issued an additional 5,000 class A units of Carbon California to Prudential Capital Energy Partners under the securities purchase agreement in exchange for a $5 million capital contribution and an additional 5,000 class A units of Carbon California to Carbon in exchange for a $5 million capital contribution.

The maximum principal amount available under the senior revolving notes is based on the borrowing base attributable to Carbon California’s proved oil and gas reserves, which is to be determined at least semiannually.

Borrowings under the note purchase agreement bear interest at Libor plus an applicable margin based on utilization.

The note agreement provides limits on the maximum allowable ratios of Carbon California’s total indebtedness and indebtedness represented by the outstanding senior revolving notes compared to EBITDA, as well as requirements that it maintain some minimum financial ratios with respect to EBITDA compared to payments in cash of interest with respect to any indebtedness for the quarter and a specified minimum ratio of current assets to current liabilities.

The subordinated notes issued in connection with the securities purchase agreement bear interest at a fixed rate of 12% per year.

Proceeds from the financing transactions were used for the acquisition. Specifically, the company borrowed $25 million under the credit facility for the acquisition. The remainder of the proceeds will be used to fund field development projects, to fund future complementary acquisitions and for general working capital purposes.

The oil and gas company is based in Denver.

© 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.