EXCO Resources gets OK to alter debt amount, type issued for 7½% notes

By Susanna Moon

Chicago, Nov. 25 – EXCO Resources, Inc. said it secured the needed consents to amend its 7½% senior notes due 2018.

As a result, EXCO entered into a supplemental indenture to the notes, which became operative Wednesday, according to a company notice.

As previously announced, the company sought consents from holders of at least a majority of the outstanding notes to amend the notes as follows:

• To eliminate the reduction in the amount of secured debt permitted under EXCO’s credit facilities upon principal payments that result in a permanent reduction in borrowing capacity of EXCO and its subsidiaries; and

• To change the definition of credit facilities to include debt securities as a permitted form of additional secured debt.

The consent solicitation ended at 5 p.m. ET on Nov. 24. The solicitation began on Nov. 10.

With the first amendment, EXCO said it was looking to set a fixed $1.2 billion floor on the amount of debt that may be incurred under its credit facilities that will not be subject to reduction; provided, however, that the alternative method for calculating EXCO’s maximum permitted secured debt based on ACNTA is not changed.

The second proposed amendment allows flexibility as to the form of the secured debt, including allowing the company to offer secured notes in lieu of secured credit facility debt, which could have the effect of broadening EXCO’s investor base, the company previously said.

The consent fee will be $10.00 per $1,000 principal amount.

In addition, EXCO said it agreed to pay a soliciting dealer fee of $2.50 for each $1,000 of notes.

Credit Suisse Securities (USA) LLC (800 820-1653 or 212 538-2147) is the solicitation agent. D.F. King & Co., Inc. (212 269-5550, 800 884-5197, dfking.com/exco or at exco@dfking.com) is the information, tabulation and paying agent.

EXCO Resources is an oil and natural gas company based in Dallas.

Recent news

EXCO said on Nov. 2 that it had reached an agreement to exchange some additional notes for a 12½% five-year senior secured second-lien term loan.

The company agreed to repurchase $252 million of notes at an average price of 43% of par, and the holders of the notes will become lenders for $109 million under the second-lien term loan.

The notes to be repurchased are about $175 million, or 47%, of the $374 million outstanding 7½% senior notes due 2018 and about $76 million, or 26%, of the $299 million outstanding 8½% senior notes due 2022.

As previously reported, the company agreed in October to repurchase about $376 million of the 7½% notes and about $201 million of the 8½% notes at an average price of 51% of par, and the noteholders agreed to become lenders under the second-lien term loan.

After the closing of the transactions, EXCO will have $199 million and $223 million, respectively, of the 7½% notes and 8½% notes outstanding.

The company said the transactions are part of its ongoing strategic improvement plan.

On Oct. 26, EXCO closed on a series of transactions that enhanced liquidity and reduced debt that included the following:

• Issuing $591 million of 12½% senior secured second-lien term loans;

• Repurchasing $577 million of notes for $291 million; and

• Amending its credit agreement.

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