Warren Resources Inc. (WRES) closed a $250 million strategic refinancing with funds sponsored by investment firm Franklin Square Capital Partners, the company said May 26. GSO Capital Partners LP, the credit division of Blackstone, also participated.
There is a $202.5 million first-lien term loan. This includes $172.5 million, borrowed at closing, for working capital and revolving credit facility repayments. It also includes 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 first-lien loan has a five-year term.
Warren can also exchange additional unsecured debt into second-lien debt.
On May 26 Warren had $14.7 million in cash on hand.
Jefferies LLC was Warren’s financial adviser.
Lance Peterson, interim CEO, said the transaction will support asset acquisitions and growth. The company had alternatives, but chose the refinancing. “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."
Peterson said that BMO Capital Markets led the bank group.
New York-based Warren Resources Inc. acquires and develops oil in California’s Los Angeles Basin and natural gas in the Marcellus Shale and Wyoming’s Washakie Basin.
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