LILIS ENERGY, INC. (OTCMKTS:LLEX) Files An 8-K Entry into a Material Definitive Agreement

LILIS ENERGY, INC. (OTCMKTS:LLEX) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

As previously disclosed, Lilis Energy, Inc. (the “Company”) is a party to the Second Amended and Restated Senior Secured Revolving Credit Agreement, dated October 10, 2018 (as amended, the “Credit Agreement”), among the Company, as borrower, certain subsidiaries of the Company, as guarantors (the “Guarantors”), the lenders party thereto, and BMO Harris Bank N.A., as administrative agent (the “Administrative Agent”).
Also as previously disclosed, the January 17, 2020 redetermination of the borrowing base under the Credit Agreement resulted in a borrowing base deficiency (the “Borrowing Base Deficiency”) under the Credit Agreement in the amount of $25 million, reflecting the amount by which the principal amount of borrowings outstanding under the Credit Agreement exceeded the borrowing base as so redetermined. The Credit Agreement required the Company to repay the amount of the Borrowing Base Deficiency on the schedule provided for in the Credit Agreement. The Company previously repaid $17.25 million of the Borrowing Base Deficiency, and the final payment of the remaining $7.75 million balance of Borrowing Base Deficiency was required to be made by the Company on June 5, 2020, which the Company has not paid.
On June 5, 2020, the Company, the Guarantors, the Administrative Agent and certain lenders constituting the “Majority Lenders” (as defined in the Credit Agreement) entered into a Limited Forbearance Agreement to the Credit Agreement (the “Forbearance Agreement”).
to the Forbearance Agreement, the Administrative Agent and the Majority Lenders agreed to refrain from exercising certain of their rights and remedies under the Credit Agreement and related documents arising solely as a result of the occurrence or continuance of certain specified defaults and events of default under the Credit Agreement (the “Specified Defaults”) during the Forbearance Period (as defined below). The Specified Defaults include the Company’s failure to properly deliver certain financial statements when due, certain defaults related to the status of trade payables and related liens and failure to maintain the leverage ratio and asset coverage ratio required by the Credit Agreement as of the fiscal quarter ended March 31, 2020.
The “Forbearance Period” is the period commencing on the date of the Forbearance Agreement and continuing until 6:00 p.m., Central time, on June 26, 2020, as such date may be extended by the Administrative Agent and the majority lenders under the Credit Agreement, or the earlier date upon which there occurs a default or event of default under the Credit Agreement, other than the Specified Defaults, or the Forbearance Agreement or certain other events specified in the Forbearance Agreement.
The Specified Defaults also include the non-payment by the Company of the final remaining $7.75 million balance of Borrowing Base Deficiency on June 5, 2020. The Forbearance Agreement, however, permits the lenders under the Credit Agreement in their capacity as counterparties to the Company’s commodity swap agreements to unwind and liquidate such swap arrangements during the Forbearance Period and to apply any net proceeds to pay down the outstanding obligations under the Credit Agreement. The Company expects that certain of the Company’s swap positions of such lenders will be liquidated in the next few weeks for net proceeds of at least $10.0 million, as estimated under recent market prices, which will be applied to reduce the outstanding obligations of the Company under the Credit Agreement. Any such reduction of outstanding obligations will not, however, cure Specified Defaults.
If the Company is unable to cure, or obtain a waiver of, the Specified Defaults before termination of the Forbearance Period and such period is not extended, the bank lenders under the Credit Agreement will be permitted to exercise all of their rights and remedies under the Credit Agreement.
The Forbearance Agreement also deferred the scheduled spring redetermination of the borrowing base under the Credit Agreement from on or about June 5, 2020 to on or about June 26, 2020 (as such date may be extended by the Administrative Agent and the majority lenders under the Credit Agreement).
The foregoing description of the terms of the Forbearance Agreement is not complete and is qualified in its entirety by reference to the full copy of the Forbearance Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K.
Item 8.01 Other Events.
As disclosed under Item 1.01 of this Current Report on Form 8-K, on June 5, 2020 we entered into a Forbearance Agreement with the Administrative Agent and the Majority Lenders under the Credit Agreement. to the Forbearance Agreement, subject to certain terms and conditions, the Administrative Agent and the Majority Lenders have agreed to refrain from exercising certain of their rights or remedies under the Credit Agreement arising solely as a result of the occurrence or continuance of the Specified Defaults during the Forbearance Period. The Forbearance Period will expire on June 26, 2020, absent further extension by the Administrative Agent and the Majority Lenders at their sole discretion, and may expire on an earlier date upon which there occurs a default or event of default other than the Specified Defaults under the Credit Agreement. No assurances can be made that we will be able to cure, or obtain a waiver of, the Specified Defaults before the expiration of the Forbearance Period, if such period is not extended. There are also no assurances that no other default or event of default will occur under the Credit Agreement and trigger an earlier termination of the Forbearance Period.
>The Specified Defaults also include the non-payment by the Company of the final remaining $7.75 million balance of Borrowing Base Deficiency on June 5, 2020. The Forbearance Agreement, however, permits the lenders under the Credit Agreement in their capacity as counterparties to the Company’s commodity swap agreements to unwind and liquidate such swap arrangements during the Forbearance Period. The Company expects that certain of the Company’s swap positions of such lenders will be liquidated in the next few weeks for net proceeds of at least $10.0 million, as estimated under recent market prices, which will be applied to reduce the outstanding obligations of the Company under the Credit Agreement. Any such reduction of outstanding obligations will not, however, cure Specified Defaults.
The Company intends to continue our discussions regarding the Company’s needs with representatives of the private funds managed by Värde Partners, Inc. and its affiliates (collectively, “Värde”), which own approximately $25.3 million principal amount of our outstanding debt under the Credit Agreement, all of our outstanding preferred stock, and a significant block of our outstanding common stock. There is, however, no assurance that such discussions will result in any offer, proposal or agreement or that the Majority Lenders would consider or grant an extension of the Forbearance Period in light of any such offer, proposal or agreement.
Forward-Looking Statements:
This Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These risks include, but are not limited to, the Company’s ability to cure the Specified Defaults during the Forbearance Period, the risk of any default or event of default other than the Specified Defaults occurring under the Credit Agreement during the Forbearance Period, the ability to continue as a going concern, the ability to obtain agreements to finance the Company’s continued exploration, drilling operations and working capital needs; all the other uncertainties, costs and risks involved in exploration and development activities; and the other risks identified in the Company’s Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this Current Report on Form 8-K are made as of the date hereof, and the Company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.
Item 9.01 Financial Statements and Exhibits.
* Filed herewith
LILIS ENERGY, INC. Exhibit
EX-10.1 2 a101llexforbearanceagreeme.htm EXHIBIT 10.1 Exhibit Execution VersionLIMITED FORBEARANCE AGREEMENT TO CREDIT AGREEMENTThis LIMITED FORBEARANCE AGREEMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as of June 5,…
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About LILIS ENERGY, INC. (OTCMKTS:LLEX)

Lilis Energy, Inc. is an upstream independent oil and gas company. The Company is engaged in the acquisition, drilling and production of oil and natural gas properties and prospects. The Company drills for, operates and produces oil and natural gas wells through its land holdings located in Wyoming, Colorado, and Nebraska. Its total net acreage in the Denver-Julesburg (DJ) Basin is approximately 7,200 acres. The Company’s primary targets within the DJ Basin are the conventional Dakota and Muddy J formations. In addition to its DJ Basin holdings, it focuses on the Permian’s Delaware Basin in Winkler and Loving Counties, Texas and Lea County, New Mexico. The Company’s net acreage in the Delaware Basin is approximately 4,433 net acres. The vertical well produces approximately 690 net million cubic feet (mcf) per day. The well holds the lease to all depths, from surface down to approximately 22,000 feet, including the Wolfcamp, Bone Springs, and Avalon formations.

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