Effective July 15, 2004, Magnum Hunter's commercial bank lenders approved certain amendments to its senior bank credit facility, including an increase in the borrowing base from $275 million to $480 million. The amended facility includes the following financial institutions and their respective management roles:
Financial Institution Title Deutsche Bank Trust Company Americas Administrative and Collateral Agent BNP Paribas Documentation Agent Bank of America Co-Syndication Agent BMO Nesbitt Burns Financing, Inc. Co-Syndication Agent Fortis Capital Lead Manager Bank of Scotland Lead Manager Bank of Nova Scotia Lead Manager
Commenting on this early retirement of indebtedness, Mr. Chris Tong, Senior Vice President and Chief Financial Officer stated, "Due to our ability to continue the Company's operational and financial success, our senior commercial bank lenders have agreed to increase their commitments to Magnum Hunter by $205 million from $275 million to $480 million. This will allow the Company to complete the previously announced property acquisition from Tom Brown, Inc. as scheduled and redeem $105 million of 9.6% Senior Notes. Annual interest expense savings due to this redemption will be approximately $6.6 million per year or $.05 per share after tax, on a fully diluted basis.
From a long-term debt perspective, the pro forma March 31, 2004 balance sheet would reflect a debt to total capitalization ratio of 53.8%, after giving effect to this redemption and the property acquisition. This redemption is just the latest step in our efforts to continue our goal of improving Magnum Hunter's balance sheet. During 2003, Magnum Hunter retired all of our $140 million 10% Senior Notes resulting in annual interest expense savings of $9.6 million. The reconfiguration of our debt structure will immediately provide us with additional interest savings and more flexibility to reduce debt in the future with cash flow generated from the Company's operations. The borrowing base increase will also allow us to continue to maintain sufficient liquidity under our credit line for our ongoing operations. We are very pleased with the confidence in our business plan that continues to be reflected by the support received from our senior bank group."
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