Pioneer Drilling has entered into an amendment to its revolving credit agreement that will increase the Company's flexibility under certain covenants. The amendment, among other things:
As of October 5, 2009, the aggregate principal amount of loans outstanding under the credit agreement was $257.5 million. Pursuant to the amendment, the commitments under the facility will be reduced with the application of certain mandatory prepayments; however, the commitments shall in no event be reduced to less than $200 million as a result of such mandatory prepayments.
The credit agreement continues to contain customary mandatory prepayment provisions, and commencing with the fiscal year ending December 31, 2009, if the senior leverage ratio is greater than 2.50 to 1.00 at the end of any fiscal year, the credit agreement requires mandatory prepayments equal to 50% of Pioneer's excess cash flow, as defined in the amendment.
Borrowings under the credit agreement bear interest, at Pioneer's option, at the base rate or Eurodollar rate plus an applicable per-annum margin. The applicable per-annum margin is determined based upon Pioneer's total leverage ratio and varies from 3.50% to 6.00%, in the case of Eurodollar rate borrowings, and from 2.50% to 5.00%, in the case of base rate borrowings. Pioneer's commitment fee, due quarterly under the credit agreement, is also dependent on Pioneer's total leverage ratio and is determined based upon an applicable per-annum margin which ranges from 0.50% to 0.75%.
Separately, Pioneer's Board of Directors approved an increase to Pioneer's fiscal year 2009 capital expenditure budget from $65.2 million to $80.2 million.
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