Magnum Hunter redeeming all remaining 10% notes

New York, Nov. 10 - Magnum Hunter Resources, Inc. (B2) said it would redeem the remaining $60 million of its outstanding 10% senior notes due 2007.

The redemption will take place at 5 pm ET on Dec. 3, subject to possible extension, when noteholders will be paid the redemption price of 103.333%, or a total of $62 million, plus accrued and unpaid interest through the redemption date.

Magnum Hunter, an Irving, Texas-based independent energy exploration and production company, said that earlier this year it had redeemed $80 million principal amount of the 10% notes. With the current redemption, the 10% notes will then be completely retired. It noted that about $4.8 million of the outstanding 10% notes are already owned by an unrestricted subsidiary of Magnum Hunter.

The company also said that effective Oct. 31, Magnum Hunter's commercial bank lenders approved certain amendments to its senior bank credit facility, including an increase in the borrowing base from $300 million to $350 million. In conjunction with the amendments, two new financial institutions, Bank of America and Societe Generale, have joined the Magnum Hunter commercial bank lending group, bringing the total number of participating financial institutions up from sixteen to eighteen.

Magnum Hunter noted that this year, its senior commercial bank lenders had agreed to increase their commitments to Magnum Hunter by $100 million to $350 million from $250 million previously, which let the company retire its entire $140 million of 10% notes originally placed back in 1997. It said that annual interest expense will now be reduced by about $9.5 million per year, or nine cents per share after tax, on a fully diluted basis, due to "the substantial arbitrage that currently exists between the interest rate charged on our senior bank credit facility and the 10% coupon rate of interest on the senior notes being redeemed."

The company additionally said that from a long-term debt perspective, the pro-forma Sept. 30 financial statements will reflect that Magnum Hunter now has approximately 45% of its outstanding debt on a floating interest basis and 55% of total outstanding debt under its 9.6% senior notes due 2012.

"The reconfiguration of our debt structure will immediately provide us with interest savings and more flexibility to pay-down debt in the future with cash flow generated from operations. The increase in our borrowing base will also allow us to continue to maintain sufficient liquidity for our ongoing operations," Magnum Hunter said in its statement.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.