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$250 million First Lien term loan, with $202.5 million of new funds – Exchange of $69.6 million of unsecured high yield notes for $47.2 million of first lien debt
Warren Resources, Inc. (Nasdaq:WRES) today announced the closing of a $250 million strategic refinancing with funds sponsored by Franklin Square Capital Partners and sub-advised by GSO Capital Partners LP, the credit division of Blackstone, providing Warren with both liquidity and a platform to continue its growth initiatives.
The first lien term loan provides Warren with $202.5 million of new money, including $172.5 million borrowed at closing for working capital and to repay Warren’s existing revolving credit facility, a $30 million delayed draw first lien commitment, and $47.2 million of additional first lien term loans through the exchange of $69.6 million of unsecured notes at an exchange price of 65% of par. The new first lien loan has a term of five years, and a coupon rate of LIBOR plus 8.5%, with a LIBOR floor of 1%. The transaction also allows Warren to exchange additional unsecured debt at a discount into second lien debt, subject to incurrence tests. As of May 26, 2015, Warren has $14.7 million of cash on hand.
“Today we are extremely pleased to announce a new strategic refinancing that not only enhances the financial health of the company, but also provides Warren with the ability to pursue acquisitions and continue our strategy of transformational growth. GSO is a highly respected institution that can provide significant resources as we acquire and develop oil and natural gas assets,” said Lance Peterson, interim Chief Executive Officer of Warren.
Mr. Peterson highlighted the benefits to Warren of the transaction, commenting, “While there were many alternatives available to Warren, we took our time and structured the right strategic deal for the company. Rather than just taking on new debt to provide additional liquidity, we are converting a significant amount of high yield bonds to first lien debt at a favorable discount, while also generating sufficient funding to grow our business. By paying off our existing first lien credit line, we gain more flexibility over the terms of our facility, and we will not be subject to the uncertainty of future redeterminations. The new credit agreement also provides Warren with flexibility to pay down and redraw debt under certain situations.”
Mr. Peterson continued, “Warren would also like to extend our thanks to the bank group, led by BMO Capital Markets, that worked with Warren at a key time during its development and growth.”
Mr. Robert Horn, Senior Managing Director of GSO, commented, “We are excited to provide Warren with additional liquidity as it continues to grow its business. The company’s assets provide a solid foundation, and we look forward to working with Warren as they expand their presence in the market.”
