Dune Energy forbearance extended; credit agreement terminates Jan. 31

By Caroline Salls

Pittsburgh, Jan. 6 – Dune Energy, Inc. entered into an amended and restated forbearance agreement and fifth amendment to its credit agreement with Bank of Montreal as administrative agent, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

On Sept. 30, the lenders agreed to provide a limited forbearance through Dec. 31.

Under the amendment, the lenders agreed to extend the limited forbearance until the business day immediately following the earliest of the occurrence of any other default on the credit agreement, 6 p.m. ET on Jan. 16 unless Dune delivers documents proving that transactions with EOS Petro, Inc. and payment in full of the credit agreement are likely to be completed in a timely manner, abandonment or termination of an agreement and plan of merger with EOS Petro, Inc. and EOS Merger Sub, Inc. after the delivery of the transaction documents or any changes or waivers to the merger agreement that would result in the credit agreement not being paid in full, failure to deliver documents by specified deadlines and Jan. 31.

Also under the amendment, Dune’s borrowing base will be maintained at $40 million during the forbearance period, and interest payments will be due Jan. 2, Jan. 31 and the last day of each calendar month after that.

All commitments of the lenders under the credit agreement will terminate on Jan. 31 without further notice, according to the 8-K.

As previously reported, the company determined that it did not meet the required total-debt-to-EBITDAX ratio under the credit agreement for the four immediately preceding quarters ended June 30, 2014 and Sept. 30.

Dune also informed the lenders that it was unable to comply with a minimum current ratio requirement as of Sept. 30.

Under the credit agreement, the failure to observe any financial covenant constitutes an event of default, and Bank of Montreal, at the request of the majority lenders, may terminate the commitments under the credit agreement and accelerate the company’s obligations.

Dune is a Houston-based energy company.

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