Magnum Hunter Resources has closed on its previously announced commitment for a new $150 million three-year term senior secured revolving credit facility ("the new bank facility") provided by the Bank of Montreal ("BMO"). Magnum Hunter intends to use the initial advance under the new bank facility to repay all current borrowings under existing loan facilities with CIT. The full repayment of those loans occurred yesterday. The borrowing base will likely increase as the Company continues to grow its proved reserve base as contemplated with the next closing within the next sixty days on the acquisition of Triad Resources and affiliated assets.
The new bank facility is governed by a semi-annually borrowing base redetermination derived from the Company's proved crude oil and natural gas reserves. The initial borrowing base has been established at $25 million; however, the Company's borrowing base may be increased up to the maximum commitment level of $150 million as the Company's asset base grows.
All other terms and conditions are those usual and customary for this type of commercial bank borrowing facility. The applicable interest rate margin for this new bank facility will range from LIBOR plus 2.50% to LIBOR plus 3.50% depending on the amount drawn on the facility. The final agreement, which includes the specific terms and covenants governing the Company's new bank facility, will be filed with the Securities and Exchange Commission. BMO acted as Lead Arranger, Book Runner and Administrative Agent for the Company's new senior credit facility.
Mr. Ronald D. Ormand, Executive Vice President and Chief Financial Officer of the Company, commented, "As part of our strategy to position the Company for future growth, we are pleased to have closed on this new $150 million revolving credit facility. We appreciate the work performed by the senior credit officers at the Bank of Montreal to put this new lending facility into place. Having one of the premier lenders to the North American industry approve a $150 million facility is a testament to senior management's long standing banking relationships as well as our relationship with BMO. The new credit facility along with other recent financing efforts will allow the Company to continue making accretive oil and gas property acquisitions in order to further enhance shareholder value. It will also provide a significant portion of the required funds necessary to close the Triad Resources acquisition currently scheduled in January 2010."
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