Daybreak Oil cuts interest rate to 12%, boosts revolver to $90 million

By Susanna Moon

Chicago, Sept. 3 - Daybreak Oil and Gas, Inc. amended its loan and security agreement, cutting interest rates to 12% and lifting the revolving credit facility to $90 million, according to an 8-K filing with the Securities and Exchange Commission.

The company entered into the amended agreement on Aug. 28 in connection with the acquisition of land from App Energy, LLC.

The revolver is divided into borrowing sublimits: one for $50 million and the other for $40 million.

Interest on the loans was reduced from 18%, with a monthly commitment fee of 50 basis points per month of the outstanding principal balance of the loans kept unchanged.

The agreement will mature on Aug. 28, 2017.

The obligations under the agreement continue to be secured by a perfected first-priority security interest in substantially all of the assets of the company, including the company's leases in Kern County, Calif.

The loan agreement with the $40 million sublimit has a minimum commitment of $2.65 million with an initial advance bearing interest at 16.8%. Subsequent loans will have an interest rate of 12%. The monthly commitment fee is 0.6% per month of the outstanding principal balance of the loans.

The obligations under the loan agreement are secured by a perfected first-priority security interest in substantially all of the assets, including the company's leases in Lawrence County, Ky.

Proceeds of the initial borrowing of $2.65 million were used to repay debt and to finance the drilling of three wells in the Kentucky assets in which the company has a 25% working interest. Future advances will be used for oil and gas exploration and development activities.

Daybreak acquired a 25% working interest in about 6,100 acres in two large contiguous acreage blocks in the Twin Bottoms Field in Lawrence County, Ky. from App Energy.

Daybreak is a Spokane, Wash.-based oil and natural gas exploration company.

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