Proceeds from the sale of its Canadian interests will be used to reduce debt outstanding under its revolving credit facility and for general corporate purposes. Pro forma for the sale of Canada, net debt at September 30, 2004 of $631 million is reduced 42 percent to about $365 million. This reduces Vintage's net debt-to-book capitalization ratio to approximately 38 percent, with net debt representing approximately 1.1 times 2005 targeted cash flow of $320 million and less than one times 2005 targeted EBITDAX of $440 million.
Vintage also announced today that its bank group has completed its semi-annual review of the borrowing base under the company's bank credit facility. After the sale of its Canadian properties, the borrowing base remains unchanged at $325 million. Approximately $130 million of the proceeds from the sale will be used to reduce outstanding advances to zero, creating unused availability under the $300 million bank credit facility of approximately $297 million, net of outstanding letters of credit.
"We are pleased with the closing of this transaction as it represents a significant step in the execution of our 2004 plan to improve shareholder value," said Charles C. Stephenson, Jr., CEO. "The proceeds and book gain from this sale will result in reducing our net debt-to-book capitalization ratio below the 40 percent range, thus achieving our stated financial target, and the enhancement of our flexibility to fund future production growth," added Mr. Stephenson.
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