American Eagle Energy Announces Facility with Morgan Stanley
American Eagle Energy said it has closed on a senior credit facility with Morgan Stanley Capital Group. The senior secured reserve based credit facility has a maximum potential commitment of up to $200 million.
Initially, $68 million is committed and available for funding. An additional $40 million is earmarked for the purpose of purchasing additional interests in the Spyglass Project area from a joint venture partner. The availability of the $40 million is contingent upon the closing of the Spyglass Transaction and the company meeting certain financial covenants and conditions precedent. An additional $92 million is initially uncommitted.
The credit facility has a five-year term and carries a variable interest rate ranging from approximately 5.5% to 10.5%. The variable interest rate is based primarily on the ratio of the company’s proved developed reserves to its debt for a given period. As of the closing, the applicable variable interest rate on the credit facility is 10.5%. The credit facility is collateralized by, among other things, the company’s oil and gas properties and future oil and gas sales derived from such properties, and contains various financial and operational covenants that are typical of such borrowing agreements. The company did not provide royalty consideration in connection with the credit facility.
In connection with the Credit Facility, KLR Group acted as advisors to American Eagle.
David Lazarus, executive director, Morgan Stanley Capital Group, stated, “We are excited to provide American Eagle Energy with a new credit facility that meets the company’s current needs while also providing future flexibility. We look forward to working with management as it continues to grow American Eagle’s assets.”
The company plans to draw the full $68 million available to retire the Macquarie Bank Limited swap facility, which it entered into at the end of last year, for approximately $18 million and to pay fees and expenses associated with the credit facility. American Eagle will use the remaining proceeds for working capital, to fund the company’s well development program, to acquire additional acreage, and for other general corporate purposes.
Denver, CO-based American Eagle Energy is an independent exploration and production operator that is focused on acquiring acreage and developing wells in the Williston Basin of North Dakota and Montana, targeting the Bakken and Three Forks shale oil formations.