June 18, 2019 – The Debtors requested Court authority to (i) access $350.0mn in debtor in possession (“DIP”) financing consisting of (a) a new money revolving loan facility in an aggregate amount of up to $100.0mn (the “New Money Facility”), $35.0mn of which would be available on an interim basis and which will include a sub-facility of up to $1.0mn for the issuance of letters of credit, and (b) a refinancing term loan in the amount of $250.0mn; and (ii) use cash collateral [Docket No. 17].
The motion states, “As a result of a vigorous marketing process, the Debtors were able to obtain a post petition financing facility, the DIP Facility (as defined below) and the DIP Loans thereunder (as defined below) in an aggregate principal amount of up to $350.0 million, consisting of: (a) a new money revolving loan facility in the aggregate principal amount of $100.0 million in commitments from the certain Existing RBL Lenders (collectively, the ‘New Money DIP Lenders’), inclusive of a sub-facility of up to $1.0 million for the issuance of letters of credit, which shall reduce availability under the DIP Facility on a dollar for dollar basis (the ‘New Money Facility’); and (b) a refinancing term facility in the aggregate principal amount of up to $250.0 million (the ‘Refinancing Facility’ and the loans thereunder, the ‘Refinanced Loans’) of Existing RBL Loans (the holders of such Refinanced Loans, the ‘Refinancing DIP Lenders’ and together with the New Money DIP Lenders, the ‘DIP Lenders’).
If approved, the Debtors would use the proceeds of the DIP Facility to, among other things: (a) provide needed liquidity to fund general corporate and operating needs, including without limitation, working capital needs during the pendency of these chapter 11 cases in accordance with the DIP Loan Documents and the Interim Order, and upon entry of the Final Order, the Final Order; (b) upon entry of the Interim Order, roll-up $87.5 million of the Existing RBL Loans into the Refinancing Facility and (c) upon entry of the Final Order, roll-up an additional $162.5 million of the Existing RBL Loans. Without access to the proposed DIP Facility and their cash collateral, the Debtors would have no access to cash and would potentially be forced to take extensive measures during these chapter 11 cases, which would, in turn, devastate their turnaround plan and lead to business disruption that would irreparably damage the Debtors’ estates.”
Key Terms of DIP Facility
- DIP Facility: An aggregate principal amount of up to $350.0mn, consisting of: (a) the New Money Facility in the aggregate principal amount of $100.0mn in commitments from the New Money DIP Lenders (the ‘Commitments’), inclusive of a sub-facility of up to $1.0mn for the issuance of letters of credit (the ‘DIP LC Sub-Facility’), which shall reduce availability under the DIP Facility on a dollar-for-dollar basis (and the loans thereunder, the ‘New Money Loans’), and (b) a refinancing term facility in the aggregate principal amount of up to $250.0mn
- Borrower: Legacy Reserves LP
- Guarantors: (a) Legacy Reserves Operating LP, (b) Legacy Reserves Operating GP LLC, (c) Legacy Reserves Services LLC, (d) Legacy Reserves Energy Services LLC, (e) Dew Gathering LLC, (f) Pinnacle Gas Treating LLC, (g) the Parent Guarantors (as defined in the Existing RBL Credit Facility) and (h) each Material Domestic Subsidiary (as defined in the Existing RBL Credit Facility) formed or acquired prior to the Petition Date.
- DIP Agent: Wells Fargo Bank, National Association.
- Term: The maturity date of the DIP Facility will be (and, except as provided herein with respect to the Refinanced Loans, all DIP Loans and obligations under the DIP Facility shall be repaid in full in cash and the Commitments shall terminate on) the stated maturity (the “Maturity Date”), which shall be the date that is the earliest of: eight (8) months after the Petition Date; effective date of a Plan; the closing of a sale of substantially all of the equity or assets of the Debtors (unless done pursuant to a confirmed Plan); and termination of the DIP Facility during the continuation of an event of default or termination under the DIP Credit Agreement or the Interim Order or Final Order (whichever order is currently in force).
- Interest Rates: New Money Loans: (a) Eurodollar: Adjusted LIBO Rate plus 5.25% per annum payable monthly in cash and subject to default interest of additional 2% per annum and (b) ABR: ABR plus 4.25% per annum payable monthly in cash and subject to default interest of additional 2% per annum.
- Roll-Up: The proposed DIP Facility includes a refinancing of $2.50 for every $1.00 of New Money Loans. The proposed Interim Order requests a refinancing of $87.5mn of Existing RBL Loans provided by the DIP Secured Parties, while the proposed Final Order requests a refinancing of an additional $162.5mn, for a total Refinancing Facility of $250.0mn.
- Fees:
- Commitment Fee: The Borrower will pay to the DIP Agent monthly in arrears for the account of each New Money Lender (subject to Section 4.03(c)(i) of the DIP Credit agreement and in accordance with each such New Money Lender’s Applicable Percentage a commitment fee, which shall accrue at the rate of 1.00% per annum on the average daily amount of the unused amount of the Commitment of such New Money Lender during the period from and including the Interim Facility Effective Date to but excluding the Termination Date, provided, that, during the Interim Period, the commitment fee shall be calculated based on the Interim Facility Cap
- Up-Front Fee: 1.75% on the total amount of the New Money Loans, payable to the Agent, for the ratable benefit of each New Money Lender.
- DIP Agent Fee: An amount agreed between the DIP Agent and the Debtors.
- Letter of Credit Fees: (i) participation fee payable to the DIP Agent, which shall accrue at the same Applicable Margin (as defined in the DIP Credit Agreement) used to determine the interest rate applicable to Eurodollar Loans (as defined in the DIP Credit Agreement) on the average daily amount of such Lender’s exposure under the Letters of Credit; (ii) a fronting fee equal to 0.50% per annum on the face amount of each Letter of Credit payable to each bank that issues a Letter of Credit (each, an ‘Issuing Bank’); and (iii) standard fees payable to each Issuing Bank with respect to the amendment, renewal or extension of any Letter of Credit issued by such Issuing Bank.
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The post Legacy Reserves Inc. – Seeks $350.0mn in DIP Financing Comprised of $100.0mn in New Money ($35.0mn on Interim Basis) and $250.0mn Roll-Up appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.