Finance & Investing | Debt | Capital Markets

Magnum Hunter Amends Credit Facilities

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 Magnum Hunter Resources Corporation has received and accepted a firm commitment from Bank of Montreal, which is the administrative agent and lead lender under the Company's senior secured revolving credit facility, to (i) consent to certain amendments and waivers with respect to the Facility and (ii) assume the interests under the Facility of each other current member of the Facility's lending syndicate that may not choose to consent to the Amendments contemplated by the new Commitment.

The Amendments will, among other things, permanently eliminate the Company's obligation under the Facility to raise $65 million in net cash proceeds from certain specified transactions by July 10, 2015. As of the date of the Commitment, the Company had raised an aggregate of approximately $55.6 million in net cash proceeds from certain of these specified transactions in connection with this obligation, to which the Company will no longer be subject following the effective date of the Amendments. In addition, the Amendments will include waivers of compliance by the Company with the current ratio and total secured net debt to EBITDAX ratio covenants currently existing under the Facility until the earlier of (i) the fiscal quarter ending December 31, 2015 or (ii) the fiscal quarter during which the Company closes on the sale of all or substantially all of the Company's equity ownership interest in Eureka Hunter Holdings, LLC ("Eureka Hunter"). The Company previously announced its intention to pursue the sale of 100% of its equity ownership interest in Eureka Hunter pursuant to a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on June 25, 2015. Based upon current market conditions, the Company believes that a sale of all of its equity interest in Eureka Hunter could generate up to approximately $600 - $700 million in gross cash proceeds to Magnum Hunter.

The Commitment of Bank of Montreal and the Amendments contemplated thereby are subject to the satisfaction of certain customary conditions, including, with respect to the Amendments, the requisite consent of the other lenders under the Facility. Pursuant to the terms and conditions of the Commitment, Bank of Montreal has agreed to assume 100% of the other bank commitments under the Facility of each other current lender that may choose to cease being a lender under the Facility in connection with the Amendments outlined herein.

Magnum Hunter expects to close on the Amendments contemplated by the Commitment on or before July 10, 2015.

Mr. Gary C. Evans, Chairman of the Board and Chief Executive Officer of Magnum Hunter, commented, "This new amendment under our existing senior bank loan facility provides Magnum Hunter the freedom and flexibility to continue down the liquidity enhancing path we have been on all year without minimum short-term mandated requirements. We believe the actions we are currently undertaking will significantly enhance our balance sheet and improve our liquidity position which will allow us to continue exploiting our vast Appalachian lease acreage position later this year."