Linn Energy retires term loan due 2021 via asset sale, amends revolver

By Susanna Moon

Chicago, June 1 – Linn Energy, LLC said it retired its term loan due 2021 with pricing at Libor plus 750 basis points and amended its revolving credit agreement, effective Wednesday.

The company said on May 30 that it planned to retire the debt under its revolving credit facility and term loan using proceeds of its second sale of non-core assets.

Linn agreed to sell its interest in properties located in the Salt Creek Field in Wyoming to Denbury Resources Inc. for a contract price of $71.5 million.

The following day, on May 31, the company closed on the Jonah sale for a contract price of $581.5 million, bringing the total tally for 2017 to $916 million, according to a company update on Thursday.

On Wednesday, the company also amended its credit agreement as follows:

• Removed the non-conforming borrowing base resulting in a fully conforming revolving credit facility with an initial borrowing base of $1 billion;

• Permitted the disposition or contribution of assets in exchange for equity interests;

• Permitted share repurchases and payments of dividends in an amount up to $75 million for the next 12 months without limitation and subject to a leverage and liquidity test after that;

• Amended asset sale and exchange covenants to provide more flexibility;

• Specified the borrowing base reduction to be attributed to each of the company’s announced non-core asset sales;

• Moved the first scheduled borrowing base redetermination to October 2017 from April 2018;

• Amended the leverage ratio covenant to provide for a maximum of 4 times beginning September 2017 through maturity from a range of 6.75x to 4.50x; and

• Added a current ratio test requiring the company to maintain a ratio of current assets to current liabilities of no less than 1:1 beginning September.

Linn Energy, a Houston-based oil and gas company, filed for bankruptcy on May 11, 2016. The Chapter 11 case number is 16-60040.

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