Daily News: March 12, 2014

JPMorgan Agents Callon Petroleum Expanded Credit Facilities

Callon Petroleum announced the closing of an amended $500 million revolving credit facility and a new $125 million senior secured second lien term loan facility. The company entered March 11, 2014 into the amended credit facility with JPMorgan Chase Bank acted as administrative agents. The facility has commitments from ten lending institutions.

Each facility will have a maturity date in 2019. Callon intends to use a portion of the net proceeds from an initial draw of the second lien facility to redeem the remaining $48.5 million principal amount of its outstanding 13% senior notes due 2016.

The amended facility contains the following key provisions:

  • A $500 million facility, with an initial borrowing base of $95 million based on the Company’s December 31, 2013 reserve report.
  • The first scheduled borrowing base redetermination to be based on a reserve report as of May 30, 2014, with subsequent redeterminations occurring every six months beginning on September 1, 2014.
  • Interest expense calculated based on a pricing grid providing for Eurodollar advances ranging from LIBOR plus 1.75% to 2.75%, depending on utilization.
  • A maturity date of March 11, 2019.
  • In conjunction with the amended credit facility, the company entered into the second lien facility with JPMorgan Chase Bank as administrative agent. The second lien facility is structured as a multiple-advance, term loan facility with commitments from five institutions. The initial draw of the second lien facility will be used in part to redeem the outstanding principal amount of the senior notes. Key provisions of the second lien facility include:

  • A $125 million facility, with initial commitments of $100 million,
  • Flexibility to make periodic draws for one year in addition to the initial draw of $62.5 million.
  • Prepayable at any time, with a premium of 102% in the first year, 101% in the second year and no premium thereafter.
  • Interest expense on Eurodollar advances calculated at a rate of LIBOR plus 7.75% per annum.
  • Maturity date of September 11, 2019.
  • “We are pleased to have secured these facilities which will reduce our cost of capital and significantly enhance our financial flexibility, supporting our long-term capital program and allowing us to take advantage of other future growth opportunities,” said Fred Callon, Chairman and CEO. “These facilities represent a strong show of support from our new and existing lenders and we appreciate their continued confidence in Callon.”