Resolute Energy agrees $150 million second-lien loan with Highbridge

New York, Dec. 31 – Resolute Energy Corp. said it entered into a $150 million second-lien secured term loan with Highbridge Principal Strategies.

The debt matures in November 2019, and Resolute will pay interest at a rate of Libor plus 1,000 basis points with a 1% Libor floor.

Resolute can issue up to $200 million of additional second-lien debt for 60 days following the initial closing.

BMO Capital Markets was arranger for the facility.

Proceeds of $134 million after fees, expenses and discounts will be used to repay part of the borrowings under the company’s senior revolving credit facility.

Resolute Energy said in a news release that the loan “has materially advanced the company’s current liquidity position.”

“This new second-lien secured term loan provides Resolute with significantly enhanced liquidity and capital resources,” Nicholas Sutton, Resolute’s chief executive officer, said in a news release.

“Following closing, the company has total borrowing base availability of approximately $92 million. As a result, the company has much greater financial strength to withstand the current low commodity price environment and, as oil prices rebound, the flexibility to execute on drilling programs in the Permian and Powder River basins.”

Resolute also amended its revolver. Changes include setting the initial borrowing base at $330 million, eliminating the total debt-to-EBITDA covenant and conforming the covenant package in the senior revolving credit facility to that of the new second-lien facility.

Covenants in the second-lien facility and the amended revolver include requiring secured debt to EBITDA of no more than 3.5 to 1.0, PV-10 of total proved reserves to total secured debt of at least 1.1 to 1.0, rising over time to 1.5 to 1.0, and PV-10 of proved developed reserves to total secured debt of at least 1.0 to 1.0.

The second-lien loan can be prepaid at any time, and Resolute must use 75% of the net cash proceeds from asset sales and 100% of the proceeds from specified debt or equity issuances for mandatory prepayments.

Prepayments are subject to an initial premium of 10%, declining to 2% during the first 36 months after closing. An additional payment may be required to ensure that the lenders achieve a 1.25 to 1.0 minimum multiple of their invested capital.

Resolute Energy is a Denver-based oil and gas company.

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