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EEX seeks new credit facility after abandoning notes offering
New York, Nov. 2 - EEX Corp. said it is looking to replace its revolving credit facility with a new borrowing based facility after a planned sale of $350 million of junk bonds was abandoned following the market disruption in the wake of the Sept. 11 terrorist attacks on the U.S. But it added that it is still interested in raising capital in the fixed-income market.
"EEX will continue to evaluate the bond market with the intent of recommencing its debt offering when market conditions are favorable," the company said in a filing with the Securities and Exchange Commission Friday.
EEX said that the senior notes offering had been part of a plan to simplify its capital structure and restructure its debt.
Now, EEX added in the SEC filing, the company has begun talking to the agent banks on its revolving credit facility about a replacement.
The new facility would be secured by oil and gas properties with borrowings limited to a borrowing base determined by the amount of reserves, EEX said.
The restructuring, it added, may include prepayment of the company's gas sales obligation.
EEX said there is no assurance it will be able to negotiate an acceptable credit facility.
If it fails, it said it may be unable to meet some of the revolving credit facility covenants, which could restrict is ability to draw further funds or accelerate the maturity of the outstanding debt.
The current $350 million revolving credit line matures on June 27, 2002. At Sept. 30, $180 million was outstanding, which had risen to $210 million on Oct. 31.
Borrowing costs depend on the company's debt to capital ratio and range from Libor plus 55 basis points to Libor plus 130 basis points plus a facility fee of 20 to 45 basis points.
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