Lilis Energy, an exploration and development company operating in the Permian Basin of West Texas, closed $140 million in new financings, consisting of a $125 million convertible second lien term loan facility funded by Värde Partners and $15 million in incremental term loans under Lilis’s existing first lien credit facility.

The funds will be used to fuel the company’s continued expansion in the Permian Basin through leasing activity and acquisitions and to fund Lilis’s drilling program. The funds will also be used to repay approximately $38 million of the company’s existing debt and for general corporate purposes.

The $125 million financing from Värde consists of an $80 million convertible second lien term loan that funded at closing on April 26, and a $45 million delayed-draw term loan on the same terms, to fund future acreage acquisitions.

The delayed-draw term loan is committed to Lilis for leasing activity within defined parameters and available either in a single draw or in multiple draws to fund future acreage acquisitions. Both tranches earn interest at 8.25% annually, paid-in-kind, through a four-year maturity. The term loans are convertible, subject to certain terms and conditions, at $5.50 per share. The new $15 million term loan was structured as an amendment to the company’s existing first lien term loan facility.

“Värde is a welcomed partner who sees our vision, and recognizes our progress and commitment to increasing value for all stakeholders. We are drilling wells that are among the best in the country on a BOE per lateral foot basis. We have surpassed our June 30 acreage target of 10,000 net acres in the core of the Delaware Basin, well ahead of schedule. Our goals are to continue our rapid growth through the drill bit, aggressive leasing, and accretive acquisitions. This financing gets us the dry powder we need to accelerate our efforts,” said Avi Mirman, Lilis’s CEO.

KES 7 Capital acted as the company’s adviser for the new first lien credit facility financing. Bracewell served as legal advisor to the company, and Kirkland & Ellis served as legal advisor to Minneapolis-based Värde.