Rex Energy gives details of $300 million four-year delayed-draw loan

By Susanna Moon

Chicago, May 2 – Rex Energy Corp. gave details of its $300 million four-year first-lien delayed-draw term loan announced Monday.

The credit agreement provides for a $143.5 million secured term loan facility and a $156.5 million secured delayed-draw term loan facility, which includes a letter-of-credit subfacility, according to an 8-K filing with the Securities and Exchange Commission.

The company entered into a credit agreement on April 28 with Angelo, Gordon Energy Servicer, LLC as administrative agent; AGES as collateral agent; and Macquarie Bank Ltd. as issuing bank. Lenders also are funds advised by AB Private Credit Investors LLC, including AB Energy Opportunity Fund LP; Canyon Partners, LLC; an affiliate of MSD Partners, LP; and TSSP.

The loans will mature on the earlier of April 28, 2021 and the date that is six months before the maturity of the company’s 1%/8% senior secured second-lien notes due 2020 unless less than $25 million of the notes is outstanding and no event of default has occurred.

The commitments under the delayed-draw term facility expire if not drawn before April 28, 2018.

If there is an event of default, interest on the loans will include another 400 bps over the then-effective rate.

The credit agreement requires the company to prepay the loans with 100% of the net cash proceeds received from some asset sales, swap terminations, incurrence of borrowed money debt and casualty events and equity issuances. Prepayments based on 75% of excess cash flow are required until no more than $287.95 million of second-lien notes remain outstanding, at which time, prepayments based on 50% of excess cash flow will be required.

The company said on May 1 that it had obtained the term loan at Libor plus 875 basis points.

Rex said it drew about $144 million to repay its previous senior secured credit facility and to place about $19.3 million of cash on the balance sheet, according to a previous company announcement.

The new facility also included about $46.5 million for outstanding undrawn letters of credit.

After the debt repayment, the company said it will have about $110 million of term loans to use for the development of the company’s core assets and for general corporate purposes.

The term loan allows for the issue of up to another $100 million of secured first-lien debt for “reserve development and acquisitions, positioning Rex Energy well for years to come,” the company previously said.

“This transaction will further ensure the execution of our two-year development plan in the Appalachian Basin,” Tom Stabley, Rex Energy’s president and chief executive officer, said in the press release.

“The term loan provides Rex Energy with additional liquidity to continue to develop our high-return locations and the potential to access the M&A market.”

Rex is an oil and gas exploration and production company based in State College, Pa.

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