Bonanza Creek Energy filed with the U.S. Bankruptcy Court a motion for entry of an order approving its restructuring support agreement (RSA) with the Debtors’ revolving lenders and granting related relief.
The motion explains, “The Debtors and the Lenders ultimately negotiated a form of credit agreement, the ‘Exit RBL’…which provided that each Lender would receive on account of its claim payment in full in cash and its ratable share of participation in the Exit RBL. The Exit RBL provides the Debtors with a four-year $191,666,666.66 reserve based lending exit facility with a borrowing base of the same amount upon emergence from chapter 11 and a borrowing base redetermination holiday until April 1, 2018. It also provides the Debtors with a $15 million letter of credit sub-facility and competitive interest rates. Under the Exit RBL, the Debtors are subject to a maximum leverage ratio of 3.50 to 1.00, a minimum interest coverage ratio of 2.50 to 1.00 and a minimum current ratio of 1.00 to 1.00, each of which is not tested until June 30, 2017 (or if later, the last day of the first full fiscal quarter ended after the effective date of the Exit RBL), and a minimum asset coverage ratio of 1.35 to 1.00 that is only tested prior to the first borrowing base redetermination, which is scheduled to occur on the earlier of April 1, 2018 and the date, if any, on which the Debtors fail to meet such asset coverage ratio test.”
In addition, “The Debtors believe in their business judgment that the Exit RBL will provide them with sufficient liquidity to finance their businesses after their emergence from chapter 11. In order to ensure a smooth confirmation process and the closing of the Exit RBL, the Debtors and the Lenders also negotiated and entered into the RBL Restructuring Support Agreement. The RBL Restructuring Support Agreement provides that so long as the Prepackaged Plan comports with the terms of the RBL Restructuring Support Agreement, the Lenders will support confirmation of the Prepackaged Plan and commit to providing the Debtors with exit financing in accordance with the Exit RBL.”
The Court scheduled a March 17, 2017 hearing on the motion, with objection due by March 10, 2017.
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