Eagle Rock amends facility for temporary step-up in leverage ratios

By Marisa Wong

Madison, Wis., Feb. 27 - Eagle Rock Energy Partners, LP entered into a third amendment to its amended and restated credit agreement dated June 22, 2011 with Wells Fargo Bank, NA as administrative agent on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The amendment provides for, among other things, a temporary step-up in the total leverage ratio to 5.85 times from 5.25 times for the first quarter of 2014. The total leverage ratio will then decline to 5 times for the quarter ending June 30, 4.75 times for the quarter ending Sept. 30, 2014 and to 4.5 times for the quarters ending Dec. 31, 2014 and after. The total leverage ratio was 5.5 times for the quarter ended Dec. 31.

In addition, the amendment provides for a step-up in, and an extension of the applicable period for, the temporary requirement to maintain a senior secured leverage ratio to 3.40 times from 3.10 times in the first quarter of 2014. The senior secured leverage ratio then declines to 3.05 times for the quarter ending June 30 and 2.95 times for the quarter ending Sept. 30, 2014.

Eagle Rock also made the following changes to its credit agreement:

• The partnership now has the ability to increase the multiplier applicable to the midstream attributed value and midstream component for the four fiscal quarter periods ending with the fourth quarter 2013 and the first quarter 2014 to 4 times from 3.75 times.

• The upstream component redetermination previously scheduled for April 1 has been temporarily postponed, and the upstream component is fixed at $380 million until that redetermination takes place. The redetermination is next scheduled to take place on the earlier of (a) the close of the partnership's previously announced contribution of its midstream business to Regency Energy Partners, LP or June 1;

• Fees and expenses incurred in connection with the partnership's strategic review and contribution have been eliminated from the definition of adjusted EBITDA; and

• A fee was paid to the lenders in connection with the amendment, and under some specified circumstances the borrowing rates may increase.

The midstream and upstream oil and natural gas company is based in Houston.

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