MEG Energy engaged in a comprehensive refinancing to support a strengthened balance sheet and increased production and reduced costs. The refinancing plan retains the covenant-lite flexibility of its current debt structure.
The comprehensive refinancing plan includes the following:
- An extension of the maturity date on substantially all of the commitments under the company’s covenant-lite revolving credit facility, which will be extended two years to November 5, 2021. The commitment amount of the facility will be reduced to $1.4 billion.
- MEG’s $1.2 billion term loan will be refinanced to extend its maturity
- MEG’s existing $750 million of unsecured notes due 2021 will be refinanced and extended with new second lien indebtedness
- Raising $357 million of equity in the form of subscription receipts on a bought deal basis from a syndicate of underwriters
According to a related MEG Energy news release dated November 5, 2014, BMO Capital Markets and Barclays Bank acted as joint lead arrangers and joint bookrunners for the revolving credit facility, which, at the time, was expanded from $2 billion to $2.5 billion. On the refinancing package outlined above, BMO Capital Markets acted as financial advisor to MEG on all elements of the transactions noted above.
Closings of the various components of the transactions are all expected to be mutually conditional. MEG expects to close all elements of the comprehensive refinancing plan by mid-February 2017.
“This comprehensive refinancing provides us with a five-year window to grow the business and to pursue additional deleveraging alternatives. The amended covenant-lite credit facility, which at closing remains undrawn, is sufficient to meet our foreseeable liquidity needs,” said Eric Toews, chief financial officer.