Energy XXI gets revolver upsizing, bridge loan commitments for EPL buy

By Sara Rosenberg

New York, March 12 - Energy XXI has received commitments to increase its revolving credit facility to $1,675,000,000 from $1,087,500,000 and for a $400 million unsecured bridge loan to help fund its acquisition of EPL Oil & Gas Inc., according to a news release.

The bridge loan would supplement the revolver if EPL's bonds are repurchased and the plan would be to retire any bridge loan through the issuance of high-yield notes.

The acquisition is expected to trigger change-of-control provisions in the indenture governing EPL's existing senior notes, allowing noteholders to receive a 101 payment, plus accrued and unpaid interest.

Any of EPL's notes not tendered under the change-of-control offer are expected to remain outstanding following the transaction.

The company said in a presentation on Wednesday that it anticipates issuing $300 million of high-yield debt, drawing $545 million under its revolver and using $141 million of cash on hand to fund the acquisition. The amount of EPL debt assumed is expected to be $707 million.

Under the agreement, EPL is being purchased for $2.3 billion, including the assumption of debt.

The consideration to be received by EPL stockholders is valued at $39.00 per share, and the aggregate consideration will be paid 65% in cash, or about $1 billion, and 35% in Energy XXI common shares, or around 23.4 million common shares.

Upon closing, Energy XXI shareholders are expected to own about 77% of the combined company and EPL shareholders are expected to own the remaining 23%.

Closing is targeted for the second quarter, subject to shareholder approval at both companies, receipt of regulatory approvals and customary conditions.

Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC acted as financial advisers to Energy XXI, and Barclays acted as financial adviser to EPL.

Energy XXI and EPL are both Houston-based oil and natural gas exploration and production companies.

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