Lilis Energy Inc. (NASDAQ: LLEX), announced Jan. 13 that it secured a credit facility with Heartland Bank, of Little Rock, Ark., as administrative agent for up to $50 million.
Lilis is a Denver-based E&P company focused in the Denver-Julesburg (D-J) Basin.
The company's number one priority is to utilize the capital to increase production and drive reserve growth, said Avi Mirman, Lilis CEO, in a statement.
"We believe that the current oil and gas market provides tremendous opportunities to pursue acquisitions of producing and reserve-rich assets at favorable valuations in the D-J Basin and in other attractive opportunities throughout North America," Mirman said.
Funds will be used to purchase oil and gas assets, finance certain lender-approved development projects, fund a debt service reserve account, pay all costs and expenses arising in connection with the negotiation and execution of the credit agreement and finance the company's general working capital needs.
The credit agreement provides for a three-year senior secured term loan in an initial aggregate principal amount of $3 million, which principal amount may be increased to a maximum principal amount of $50 million, subject to certain conditions, including lender approval of additional advances.
The credit facility will bear interest at the Prime Rate plus an applicable margin ranging from 6.25-8.5%.
The credit facility has a maturity date of Jan. 8, 2018, with all outstanding principal due at maturity, subject to a 3% prepayment premium on prepayments made prior to Jan. 8, 2016.
The amount the company can borrow under the credit facility is based upon a debt-to-EBITDAX calculation and a debt coverage ratio based on the value of oil and gas reserves. All of Lilis Energy's assets, including all of its properties, have been designated as collateral under the arrangement.
The company paid a nonrefundable commitment fee to Heartland Bank in the amount of $75,000 in connection with the loan, and agreed to issue to Heartland Bank 75,000 five-year warrants at $2.50 per share, for every $1 million funded. An initial warrant to purchase up to 225,000 shares of the company's common stock was issued in connection with closing.
"I would like to thank the Heartland Bank team and especially Greg White, senior credit analyst, and Phil Thomas, chief lending officer, for their efforts in helping us put together this financing package that we believe will allow us to continue to execute on our business strategy," Mirman added.
Roth Capital Partners sourced the credit facility and was exclusive financial advisor to Lilis Energy in the transaction.
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