Rice Energy to amend revolver, use borrowings for Vantage acquisition

By Marisa Wong

Morgantown, W.Va., Sept. 26 – Rice Energy Inc. obtained commitments on Monday from Wells Fargo Bank, NA as administrative agent and lenders under its senior secured revolving credit facility to amend the facility in connection with its acquisition of Vantage Energy, LLC and Vantage Energy II, LLC, according to a 424B5 filing with the Securities and Exchange Commission.

The amendments would, among other things, permit the completion of the Vantage acquisition and, effective upon closing of the acquisition, increase the borrowing base to $1 billion from $875 million, extend the maturity date to the fifth anniversary of the closing date of the Vantage acquisition from Jan. 29, 2019, adjust the interest rate, replace the existing interest coverage ratio of 2.5 to 1.0 with a leverage ratio of 4.0 to 1.0 and increase the proved reserves mortgage threshold to 85% from 80%.

Rice Energy plans to use proceeds from an offering of common stock to help fund the acquisition, valued at $2.7 billion. Total consideration includes about $1.02 billion in cash. The company said that if it is unable to complete the stock sale, it expects to draw on its senior secured revolver to fund the balance of the Vantage acquisition.

Concurrent with Rice Energy’s acquisition of Vantage Energy, Rice Midstream Partners LP will purchase the midstream assets associated with the Vantage acquisition from Rice Energy for total consideration of $600 million, according to a press release.

Rice Midstream intends to fund the midstream asset acquisition through borrowings under its revolving credit facility and potential equity and debt financings prior to closing, or the issuance to Rice Energy of up to $250 million of common units representing limited partner interests.

In connection with the midstream asset acquisition, Rice Midstream obtained on Monday commitments from Wells Fargo Bank as administrative agent and lenders under its revolving credit facility to amend the facility, according to the 424B5 filing.

The amendment would, among other things, permit the completion of the midstream assets acquisition and, effective upon closing of the acquisition, increase Rice Midstream’s ability to borrow under the facility to $850 million from $650 million and adjust the interest rate.

The acquisitions are expected to close concurrently in the fourth quarter.

The independent oil and gas company is based in Canonsburg, Pa.

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