Daily News: February 7, 2014

Apollo Provides $175MM Facility for Miller Energy

Energy Resources announced it entered into a $175 million second lien credit facility with Apollo Investment Corporation and Highbridge Principal Strategies and closed a previously announced North Fork Unit acquisition.

The new credit facility was fully drawn at closing, with $75.3 million used to refinance Miller’s previous credit facility, $56.6 million used to finance the acquisition of the North Fork Unit and the remainder available for general corporate purposes and expenses.

The second lien credit facility contains the following key terms:

Principal amount: $175 million issued at 98.0% of face value
Senior debt: ability to insert up to $100 million of first lien senior debt
Interest rate: LIBOR plus 9.75%, with a 2.0% LIBOR floor
Maturity: four years, provides for extension for an additional year following the closing of a first lien facility
Covenants: customary second lien covenants, including the following: leverage ratio, interest coverage ratio, current ratio and change of management control
Share repurchase: $25 million of proceeds are available to repurchase shares, subject to the terms of the facility

In addition, Miller secured the ability to pay the prepayment premium for the previous facility’s Tranche A loans in four quarterly payments starting June 30, 2014 and ending March 31, 2015. No prepayment premium for the 9.0% Tranche B loans was required.

“The new second lien credit facility provides the necessary capital to execute our near-term plan and close the acquisition of North Fork at a reduced cost versus the previous facility, while retaining the flexibility to add senior capital at an even lower rate,” stated Scott M. Boruff, CEO of Miller. “The terms, flexibility and size of this transaction illustrate the value of our close relationship with Apollo and our ability to attract world-class new investors, such as Highbridge. Over the past five years, we have continually demonstrated our ability to lower our cost of capital and execute on our drilling plan, while consistently delivering excess returns to our equity holders compared to our peers.”