C&J Energy Services announced it has entered into a waiver and second amendment and a third amendment and, together with the waiver and second amendment to the credit agreement governing its existing senior secured credit facilities to provide the company with increased financial flexibility through the third quarter of 2018.

According to a related 8-K filing, Bank of America is serving as the administrative agent for the lender group.

The amendments include, among other things, the following terms:

  • Reduction in revolving credit facility commitment from $600 million to $400 million, subject to ongoing compliance with a newly implemented collateral coverage covenant, anticipated to provide sufficient liquidity
  • Suspension of the quarterly maximum leverage ratio test and the quarterly minimum interest coverage ratio test, commencing with the quarter ending September 30, 2015 through the quarter ending June 30, 2017, at which time such tests will be reinstated with the quarter ending September 30, 2017, initially at higher levels and tightening through September 30, 2018
  • Implementation of a quarterly minimum EBITDA covenant, commencing with the quarter ending September 30, 2015 and running through the quarter ending June 30, 2017, based on negotiated EBITDA levels and with accumulating cushion baskets available for any EBITDA shortfalls through the third quarter of 2016, providing enhanced flexibility for compliance
  • Increase to the applicable rate on outstanding revolver borrowings by (i) 50 basis points in the event that the Company’s most recently reported total leverage ratio is greater than 4.0x and less than or equal to 4.5x and (ii) 100 basis points in the event that the company’s most recently reported total leverage ratio is greater than 4.5x; however, unused commitment fees will decrease with the $200 million availability reduction, resulting in little-to-no additional interest expense
  • No changes to the pricing terms or maturity dates of the term loan B facility
  • Effective as of September 29, 2015, maintaining the Revolver’s original scheduled maturity date of March 24, 2020

Currently, the company has $94.0 million drawn and $12.6 million of letters of credit outstanding under the revolver, along with $1.057 billion outstanding under a term loan B facility (comprised of a $573.5 million term loan B-1 and a $483.8 million term loan B-2) and approximately $20 million of cash on hand.