Legacy Reserves enters into new four-year reserves-based revolver

By Wendy Van Sickle

Columbus, Ohio, Dec. 17 – Legacy Reserves Inc. entered into a credit agreement on Dec. 11 in connection with its emergence from Chapter 11 bankruptcy, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement provides for a new reserves-based revolving credit facility with initial aggregate commitments of $1.5 billion, subject to a borrowing base, which is initially $460 million.

The credit agreement will mature on Dec. 11, 2023.

Borrowings will bear interest at Libor plus a margin that will range from 225 basis points to 325 bps, depending on utilization. There is a fee of 50 bps on unused commitments.

Legacy’s obligations are guaranteed by all of its material domestic subsidiaries and secured by substantially all of the assets of Legacy and its guarantors, including at least 95% of the net present value of Legacy and the guarantors’ proved oil and gas properties, subject to certain exceptions.

Legacy must maintain a maximum total net leverage ratio of 3.5x and a minimum current ratio of 1x.

Wells Fargo Bank, NA is the administrative agent. RBC Capital Markets, Wells Fargo Securities, LLC, BMO Capital Markets Corp., Barclays Bank plc, BofA Securities, Inc., JPMorgan Chase Bank, NA, Citigroup Global Markets, Inc. and Credit Agricole CIB are the joint lead arrangers and bookrunners.

RBC is the syndication agent.

BMO Harris Financing, Inc. and Barclays are the co-documentation agents.

Legacy will use initial proceeds of the loans and letters of credit made to refinance in full its pre-petition credit agreement and its debtor-in-possession facility, to refund, refinance and replace the existing letters of credit outstanding and to pay transaction expenses. Future proceeds will be used for the acquisition, development and exploration of oil and gas properties, for working capital needs and for other general corporate purposes.

Legacy Reserves is a Midland, Tex.-based company focused on the acquisition and development of oil and natural gas properties.

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