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Eagle Rock Energy warns that it may fall out of compliance with leverage ratio in 2010
By Sara Rosenberg
New York, Nov. 5 - Eagle Rock Energy Partners LP believes it may have some difficulty meeting the leverage covenant under its credit facility in the latter part of 2010 and is, therefore, focusing on reducing debt, company officials said in a conference call on Thursday.
Currently, the company's leverage ratio is 4.75 times and the maximum allowed under the facility is 5.0 times.
Compliance with the covenant for this year and early 2010 is not a concern at this point, officials remarked.
However, to remain in compliance in the remainder of 2010, the company needs to pay down debt or see an improvement in its business.
Alternatives to enhance liquidity and address the covenant issue are being considered, including potential asset sales.
In addition, the company has received proposals from Natural Gas Partners and Black Stone Minerals Co., which would, among other items, involve the sale of its minerals business and the potential issuance of new equity.
During the third quarter, the company repaid $30 million of its revolver debt, reducing total debt outstanding under the facility to $774.4 million.
Eagle Rock is a Houston-based natural gas and natural gas liquids company.
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