Rex Energy amends credit agreement, waives current ratio covenant

By Tali Rackner

Norfolk, Va., March 15 – Rex Energy Corp. informed administrative agent Royal Bank of Canada that it does not expect to be in compliance with the quarterly financial covenant its amended and restated credit agreement dated March 27, 2013, that requires the ratio of consolidated current assets to consolidated current liabilities to be less than 1 time as of the last day of the fiscal quarter ending March 31, according to an 8-K filing with the Securities and Exchange Commission.

The company entered into a tenth amendment to the agreement to, among other things, waive the current ratio covenant for the fiscal quarter ending March 31.

The amendment also allows Rex Energy to issue up to $681 million in new senior secured second-lien notes in connection with its exchange offer. The amount is inclusive of the amount of additional new notes resulting solely from any holder’s election to receive additional new notes in lieu of shares of common stock under the exchange offer.

In addition, the tenth amendment: (a) States that in the event that holders of at least 80% of Rex Energy’s senior unsecured notes exchange their notes for new notes, the maximum ratio of net senior secured debt to EBITDAX will be reduced to 2.75 times from 3 times; (b) increases the requirement for mortgages on oil and gas properties from 90% to 95%, and for certain properties in the Moraine East and Warrior North Areas, to 100%; and (c) restricts cash held on the balance sheet to a maximum of $15 million, with any excess used to pay down the outstanding balance under the credit agreement.

Separately, the company and its lenders agreed to reduce the borrowing base to $190 million from $200 million, effective April 1, as a part of a semiannual borrowing base redetermination.

State College, Pa.-based Rex is an independent oil and gas exploration and production company operating in the Appalachian and Illinois Basins.

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