HighPeak Energy entered into a senior secured term loan credit agreement with Texas Capital Bank as administrative agent and Chambers Energy Management as collateral agent. The term loan has an aggregate principal amount of $1.2 billion and a maturity date of Sept. 30, 2026. In addition, the term loan provides the company with the ability to enter into a super senior revolving credit facility in an amount up to $100 million, providing HighPeak with flexibility to further increase the company’s committed financing.
The company used a portion of the net proceeds from the term loan to fully repay its 10% senior notes due Feb. 2024, its 10.625% senior notes due Nov. 2024, its outstanding borrowings under its reserve-based credit facility dated as of Dec. 17, 2020, and intends to utilize the remaining proceeds for general corporate purposes. In connection with the termination of the 2020 credit agreement, all outstanding obligations for principal, interest and fees under the 2020 credit agreement were paid in full, and all liens securing such obligations and any letters of credit and hedging obligations, and guarantees of such obligations, were released.
Loans under the term loan bear interest at a rate per annum equal to the adjusted term SOFR (as defined in the 2023 term loan) plus an applicable margin of 7.50%. The loans are guaranteed by the company and are secured by a first lien security interest in substantially all assets of the company.
Key highlights of this refinancing include:
- Debt maturity extension: The term loan streamlines the company’s capital structure, extends its debt maturities to September 2026 and secures its financial position in an everchanging banking market by providing financial certainty and removing the risks associated with standard borrowing base redeterminations.
- Increased liquidity: The refinancing, coupled with the ongoing increase in commodity prices, has significantly increased the company’s liquidity and financial flexibility. HighPeak is currently generating free cash flow and expects to begin reducing its debt balance moving forward. Proforma for this refinancing and our recent public equity offering, the company’s liquidity at June 30, 2023 would have been approximately $200 million.
“This refinancing marks a pivotal moment in our company’s journey,” Jack Hightower, Chairman and CEO of HighPeak, said. “The combination of this debt refinancing and the equity offering completed in July demonstrates that stakeholders on all sides of the capital structure have a high level of confidence in our team and our asset base. We would like to thank Texas Capital, Chambers Energy and the diversified, sophisticated energy lender group who did a tremendous amount of due diligence and analysis on our assets. This unparalleled transaction is one of the largest privately arranged financings for a public energy company. The unique structure provides the company with the ability to have a long-term capital plan, financial security and great flexibility to repay the loan in advance. We are stronger, more resilient and equipped to seize opportunities in this dynamic energy market. We believe this newfound financial strength will enable the company to pursue strategic opportunities and drive shareholder value.”