Rooster Energy again amends notes due 2018, still weighing options

By Wendy Van Sickle

Columbus, Ohio, July 18 – Rooster Energy Ltd. entered into a second amendment and waiver to the amended and restated note purchase agreement, under which it issued $60 million of secured notes due June 25, 2018, according to a press release.

The notes are secured by a first priority security interest, lien and mortgage on all of the assets of the company. The amendment waives the EBITDA and leverage ratio covenants of the credit facility for the quarters ending Sept. 30 and Dec. 31. Also, the scheduled loan amortization has been waived for the remainder of fiscal year 2016 and replaced with a requirement for principal repayments of at least $7,532,000 for the six months ending Dec. 31.

As previously reported, the first amendment entered in March waived all of the financial and performance covenants of the credit facility and scheduled loan amortization for the quarters ending March 31 and June 30.

The notes bear interest at Libor plus 1,150 basis points, subject to a minimum interest rate of 13%, plus an additional 8% payable in kind during the waiver period.

Also, Rooster has agreed to enter into fixed price commodity swap agreements covering 50% of its estimated proved developed producing natural gas production for a 24-month period through August 2018.

“The [amendment] demonstrates our lenders’ confidence in the company’s ability to implement its unique strategy during this low commodity price environment,” Robert P. Murphy, chief executive officer of Rooster, said in the release.

Murphy added that Rooster “continues to evaluate new business opportunities from both the production and decommissioning arenas.”

If Rooster is unable to restructure the financial and performance covenants of its credit facility or again extend the term of the waiver by the end of the fiscal quarter ending Dec. 31, it may be in default of one or more of the covenants of the notes and holders may exercise their remedies against the company in that event, according to the release.

If the company is unable to reach agreement with the noteholders on the consequences in the event of any possible default, it said its ability to continue as a going concern may be threatened.

Rooster Energy is a Houston-based oil and gas exploration production company combined with a well service intervention/plugging and abandonment company.

© 2015 Prospect News.
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