Rex Energy may tap $50 million under term loan at Libor plus 600 bps

By Susanna Moon and Angela McDaniels

Chicago, Dec. 29 - Rex Energy Corp. may initially borrow up to $50 million under its $100 million senior secured second-lien term loan facility closed Dec. 22 with KeyBank NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The company may request another $50 million of incremental borrowings under the facility.

The credit agreement matures on March 28, 2016. The maturity of incremental loans will be determined at the time of the borrowings.

Interest on the loans is Libor plus 600 basis points through the first anniversary of the initial loans and 7% afterward.

Proceeds will be used to finance the acquisition of oil and gas leases in Ohio and Pennsylvania, to pay debt outstanding under the company's existing senior credit agreement and for general corporate purposes.

Wells Fargo Bank, NA is syndication agent, and UnionBanCal Equities, Inc. and SunTrust Bank are co-documentation agents.

More terms

In some circumstances, the company will be required to prepay debt under the agreement.

Covenants restrict the company's ability to materially change its business, make dividends, enter into transactions with affiliates, create or acquire additional subsidiaries, incur debt, sell assets, make loans to others, make investments, enter into mergers, incur liens, and enter into agreements regarding swap and other derivative transactions.

The agreement also requires the company to meet, on a quarterly basis, minimum ratios of consolidated current assets to consolidated current liabilities, EBITDAX to interest expense and total debt to EBITDAX, and, on a semiannual basis or more frequently, minimum ratios of the present value of proved reserves to total debt.

Obligations under the agreement are secured by mortgages on the oil and gas properties of the company's subsidiaries. The company is required to maintain liens covering the oil and gas properties of the company and its subsidiaries representing at least 80% of the total value of all oil and gas properties of the company and its subsidiaries.

In connection with the agreement, the company and its wholly owned subsidiaries Rex Energy I, LLC, Rex Energy Operating Corp., PennTex Resources Illinois, Inc., Rex Energy IV, LLC and R.E. Gas Development, LLC entered into a guaranty and second-lien collateral agreement.

Senior agreement changes

The company amended its credit agreement on Dec. 22 with KeyBank as administrative agent that

• Permitted the company to enter into the second-lien credit agreement and incur obligations under the facility;

• Increased the borrowing base of the company's senior credit facility to $255 million from $240 million; and

• Relaxed the leverage ratio permitted under the senior credit agreement for one year.

The banks reset the borrowing base semiannually using their estimates of the company's reserves and future oil and gas prices, according to a company press release.

The company said the current expansion of the credit facility is based primarily on its drilling results to date and production and reserves added throughout the year.

Rex Energy is a State College, Pa.-based independent oil and gas company.

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