Vanguard amends covenants, adds event of default; borrowing base cut

By Marisa Wong

Morgantown, W.Va., May 26 – Vanguard Natural Resources, LLC said it amended its revolving credit facility and has completed the semiannual redetermination of its borrowing base.

The new terms include a one-time current ratio waiver for the second quarter of 2016 and an increase in the mortgage requirement to 95% from 80%.

Also, under the amended facility, an event of default would occur should Vanguard make any payment of principal, accrued interest or fees to any senior notes or second-lien debt on or after Sept. 15 if the company’s pro forma liquidity after giving effect to that payment is less than $50 million.

The redetermination, which includes the impact of a recently closed divestiture, resulted in a borrowing base of $1,325,000,000, a 26% decrease from the previous level of $1.8 billion.

As of May 26, Vanguard has $1,424,000,000 of outstanding borrowings and about $4.5 million of outstanding letters of credit, resulting in a deficiency of about $103.5 million, not including current cash on hand of roughly $40 million.

Under the terms of the credit agreement, the company will make six equal monthly installments of $17.3 million beginning on June 27.

Based on its updated 2016 financial outlook, Vanguard anticipates that its excess cash flow forecasted for the remainder of the year will allow it to satisfy this requirement.

Vanguard is a Houston-based oil and gas exploration and development company.

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