Trans Energy unit inks $200 million facility via Morgan Stanley Capital

By Susanna Moon

Chicago, May 22 - Trans Energy, Inc. subsidiary American Shale Development, Inc. entered into a credit agreement on Wednesday with Morgan Stanley Capital Group Inc. as the administrative agent and arranger, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement provides for loans of up to $200 million, including an initial draw of $102.5 million, a contingent committed amount of $47.5 million and an uncommitted amount of $50 million.

Trans Energy is a guarantor as is Prima Oil Co., Inc., another wholly owned subsidiary.

Interest on the loans is initially 900 basis points plus the greater of 1% or Libor. The spread ranges from Libor plus 600 bps to 900 bps, based on the ratio of the value of its proved developed producing properties to its funded debt, less cash and other liquid assets.

The initial draw under the facility was used primarily to repay all of the outstanding debt under American Shale's credit facility with Chambers Energy Management, LP.

The initial loan was advanced as a single funding of $102.5 million on the funding date. Additional amounts up to $47.5 million may be drawn within the two-year period after the funding date.

The principal will be due on Dec. 31, 2018, and scheduled amortization of the principal amount of the loans may begin on May 1, 2015, unless the net debt ratio exceeds the parameters, in which case scheduled amortization may begin as late as May 1, 2016.

More loan terms

No amortization is required if American Shale's net debt ratio meets the criteria. The minimum amortization required each month will be the greater of (i) 0.75% of the outstanding balance after May 1, 2016 or (ii) the amortization amount that would be required for American Shale to achieve a predetermined net debt ratio within six months.

The principal amount of the loans may be prepaid, but not redrawn.

If the loans are prepaid by the first anniversary of the funding date, a make-whole amount will be charged equal to 4% of the principal balance of the loans plus the sum of the remaining scheduled payments of interest prior to the first anniversary.

Up to $25 million of prepayments from specified sources will be exempt from this provision if payments are made prior to the first anniversary.

If the loans are prepaid on or after the first anniversary but prior to the second anniversary, a make-whole amount will be charged equal to 4% of the principal balance of the loans.

Prepayments between the second and third anniversary will be charged 3% of the principal balance of the loans.

Trans Energy is an oil and gas exploration and production company based in St. Mary's, W.Va.

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