Channel: Daily Bankrupt Company Updates | Bankrupt Company News
Viewing all articles
Browse latest Browse all 4593

Sanchez Energy Corporation – Seeks $350mn of DIP Financing From Prepetition Secured Noteholders, $175mn in New Money ($50mn on Interim Basis) and $175mn Roll-Up


August 12, 2019 – The Debtors requested Court authority to (i) access up to $350.0mn in debtor-in-possession (“DIP”) financing to be provided by certain of the Debtors' pre-petition secured noteholders and (ii) use cash collateral [Docket No. 26].  The DIP financing will consist of of (i) a $175.0mn "new money," term loan credit facility, $50.0mn to be available upon the issuance of an interim DIP financing order, (the “New Money DIP Loans”) and (ii) upon issuance of a final DIP financing order, a roll-up of $175.0mn of obligations in respect of the Debtors' secured notes Indenture (the “Roll-Up Loans”) and (ii) use cash collateral [Docket No. 26]. 

The Debtors' DIP financing motion stated: "After a hard-fought, arm’s length negotiation with the Secured Notes Ad Hoc Group, the parties ultimately agreed to the terms of a superpriority, priming, senior secured delayed-draw term loan credit facility (the ‘DIP Facility’ and the loans thereunder, the “DIP Loans”), in an aggregate principal amount of $350 million, consisting of: (i) a new money term loan credit facility in the aggregate principal amount of $175 million (the “New Money Facility” and the loans thereunder, the “New Money Loans”), backstopped by the members of the Secured Notes Ad Hoc Group, $50 million of which will be available for the Debtors to draw on an interim basis (the “Interim DIP Draw”); and (ii) subject to the entry of the Final Order and the Challenge Period (as defined in the Interim Order), a roll-up of $175 million of the obligations arising under the Secured Notes Indenture held by the DIP Lenders (as defined below), or held by funds or accounts managed or held by such DIP Lenders(the “Roll-Up Loans”). As described in more detail herein, a portion of the Interim DIP Draw will be used to effect a Discharge of First-Out Obligations (as defined below)by repaying $7.9 million in principal amount outstanding under the Prepetition Credit Agreement (as defined below) and cash collateralizing an approximately $17.1million Prepetition L/C (as defined below), which if drawn upon by the beneficiary would give rise to a secured claim against the Debtors’ estates.

The Debtors' DIP financing motion states: “…the Debtors currently project that absent the DIP Loans and assuming the Debtors would be able to utilize all cash collateral without restriction, they will fall below minimum liquidity levels needed to safely operate by January 2020. The Debtors’ preexisting cash balances and cash generated from operations simply are not sufficient to fund business operations and the administration of these cases, and a significant cash infusion is critical to the continued operation of the Debtors’ businesses and the preservation of going concern value.

Key Terms of the DIP Financing

  • Borrower: Sanchez Energy Corporation
  • Guarantors: Each of the Restricted Subsidiaries (as defined in the DIP Credit Agreement and collectively, with the Borrower, the “Loan Parties”).
  • Administrative Agent: Wilmington Savings Fund Society, FSB (the “DIP Agent”).
  • DIP Lenders: The financial institutions listed in Schedule 2.01 of the DIP Credit Agreement (the “DIP Lenders” and together with the DIP Agent, collectively, the “DIP Secured Parties”).
  • Term: 9 months following the Petition Date.
  • Principal Amount of Loan: The aggregate principal amount of the DIP Facility shall be $350.0mn consisting of: (i) New Money Loans: $175.0mn ($50.0mn on an interim basis) and (ii) Roll-Up Loans: $175.0mn.
  • Interest Rates: The DIP Facility shall bear interest at the following rates: (i) New Money Loans: LIBOR plus 8.0% per annum (the “Applicable Margin”), (ii) Roll-Up Loans: 7.25% per annum (i.e., the contract non-default rate provided under the Secured Notes Indenture).
  • Default Rate: (i) New Money Loans: Applicable Margin plus 2.00% per annum and (ii) Roll-Up Loans: 8.25% per annum.
  • Fees: 
    • DIP Agent and DIP Lender Expenses: All reasonable and documented out of pocket costs and expenses of the DIP Agent incurred in connection with the preparation and execution and delivery of, and any amendment, waiver, supplement or modification to, the DIP Credit Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby.
    • Professional Fees and Expenses: Reasonable and documented fees and expenses of the professionals retained by any of the DIP Agent and the DIP Lenders, including, without limitation, the reasonable and documented fees and expenses.
    • Agent Fee Letter: Certain fees to the DIP Agent in the amounts and at the times specified in the letter agreement between the Borrower and the DIP Agent.
    • Backstop Fee: A one-time backstop fee to each Initial Lender (as defined in the DIP Credit Agreement) equal to the product of (i) 5.00% and (ii) each Initial Lender’s commitment for the New Money Loans.
    • Commitment Fee: A Commitment Fee in the amount of 0.5% per annum, payable monthly upon entry of the Final Order on account of any New Money Commitments that are not drawn.
    • Exit Fee: A nonrefundable exit fee in an amount equal to 1.00% of the aggregate amount of the New Money Loans.

Pre-Petition Capital Structure



 Principal Amount

First-Out Senior Secured Revolving Credit Facility



7.25% Senior Secured Notes



Aggregate Secured Debt



7.75% Senior Notes



6.125% Senior Notes



Aggregate Unsecured Debt



Aggregate Total Debt



About the Debtors

Sanchez Energy Corporation (OTC Pink: SNEC) is an independent exploration and production company focused on the acquisition and development of U.S. onshore unconventional oil and natural gas resources, with a current focus on the Eagle Ford Shale in South Texas. Through organic and significant acquisition activities, the Debtors have assembled a strategic, highly concentrated position in the Eagle Ford Shale and are generally considered among the most active operators in the basin. The Debtors, along with certain of their non-Debtor subsidiaries, also hold certain other producing properties and undeveloped acreage, including in the Tuscaloosa Marine Shale (the “TMS”) in Mississippi and Louisiana.

For more information about Sanchez Energy Corporation, see: www.sanchezenergycorp.com and the Debtors' SEC filings.

Read more Bankruptcy News

The post Sanchez Energy Corporation – Seeks $350mn of DIP Financing From Prepetition Secured Noteholders, $175mn in New Money ($50mn on Interim Basis) and $175mn Roll-Up appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.

Viewing all articles
Browse latest Browse all 4593

Latest Images

Trending Articles

Latest Images