Vanguard Natural enters into $175 million acquisition financing loan

By Sara Rosenberg

New York, Nov. 17 - Vanguard Natural Resources LLC plans on getting a $175 million one-year term loan to help fund its acquisition of Denbury Resources Inc.'s ownership interests in Encore Energy Partners LP, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

Pricing on the term loan is Libor plus 550 basis points

BNP Paribas acted as the lead arranger, bookrunner and administrative agent on the deal that is dated Nov. 16 and will be drawn when the acquisition closes.

The term loan, according to a market source, is a "six-bank club" and, therefore, no bank meeting was held.

Under the agreement, Vanguard is buying the interests in Encore for $380 million.

Other funds for the transaction will come from $125 million in borrowings under Vanguard's existing senior secured credit facility and up to $80 million of Vanguard common units valued at $25.50 that may be issued to Denbury.

The acquisition is expected to close on Dec. 31.

Following the close, Vanguard's leverage will be less than 3.0 times on a pro forma basis.

In connection with the transaction, the company amended its existing credit facility to allow for the new term loan.

The amendment was completed on Nov. 16 and Citibank is the administrative agent on the deal.

Vanguard is a Houston-based limited liability company focused on the acquisition, production and development of natural gas and oil properties. Encore is a Dallas-based master limited partnership with assets primarily consisting of producing and non-producing oil and natural gas properties.

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