Quest Energy Partners Announces Loan Amendments and Borrowing Base Confirmationadmin
Quest Energy Partners L.P. announced that it had finalized agreements with its lenders to amend the terms of its senior credit agreement and second lien senior term loan agreement. Among other terms of the amendments, the lenders agreed to waive any potential non-compliance in prior periods that was a direct or indirect consequence of the questionable transfer of approximately $10 million of funds from the Quest entities to an entity controlled by QELP’s former chief executive officer.
QELP’s senior credit agreement consists of a $250 million revolving credit facility with availability tied to a borrowing base that is re-determined by the lenders every six months based on third party reserve reports. On November 5, 2008, the lenders reviewed and affirmed the existing borrowing base of $190 million, consistent with the borrowing base at the time of the PetroEdge acquisition in July 2008. With the reconfirmation of the borrowing base, QELP has $7 million of availability under the revolving senior credit facility. QELP has not borrowed on the facility since the Quest entities announced the questionable transfer of funds on August 25, 2008.
QELP’s $45 million second lien senior term loan was amended to extend its maturity from January 11, 2009 to September 30, 2009. The amended second lien senior term loan limits fiscal 2009 capital expenditures to $30 million and, for as long as the second lien senior term loan is outstanding, limits the maximum quarterly distribution QELP may declare and pay on its outstanding common units to $0.40 per common unit. The amendments also require QELP to make quarterly principal payments of $3.8 million beginning November 15, 2008 on the second lien senior term loan.
The interest rate payable under QELP’s credit facilities is a variable rate equal to, at QELP’s option, either the Eurodollar rate or the base rate, plus an applicable margin. The amendments increased the margins payable under each credit facility. After giving effect to the amendments, the current interest on the revolving credit facility was increased from 5.75% to 6.875% and the interest rate on the second lien senior term loan was increased from 9.875% to 12.5%.
QELP paid a 25 basis point amendment fee on the committed amounts of the credit agreements. The full amendments to the loan agreements were filed with the Securities and Exchange Commission on November 7, 2008.
David Lawler, president of QELP said, “We are pleased to complete these amendments that give us additional time to repay our second lien senior term loan and allow us to continue to make distributions to our common unit holders. We are committed to limiting capital expenditures in 2009 to a maintenance level and using excess cash flow generated by our operations to reduce debt.”