SANDRIDGE ENERGY, INC. (NYSE:SD) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry Into a Material Definitive Agreement. |
On February10, 2017 (the Refinancing Date), SandRidge Energy,
Inc. (the Company) refinanced its existing reserve-based
revolving credit facility into a new $600.0million credit
facility with a $425.0million borrowing base (the Refinancing).
In order to effectuate the Refinancing, the Company entered into
an amendment to the existing credit agreement (the Existing
Credit Agreement, and as amended, the Refinanced Credit Facility)
to reflect the following, among other things:
|
increased the principal amount of commitments thereunder to $600.0million from $425.0million; |
|
extended the maturity date to March31, 2020 from February4, 2020; |
|
borrowing base determinations now include the Companys proportionately consolidated share of proved reserves held by SandRidge Mississippian Trust I, SandRidge Mississippian Trust II and SandRidge Permian Trust (collectively, the Royalty Trusts); |
|
reduced the interest rate from a flat base rate of LIBOR plus 475 basis points to a pricing grid tied to borrowing base utilization of (A)LIBOR plus an applicable margin that varies from 300 to 400 basis points or (B)the base rate plus an applicable margin that varies from 200 to 300 basis points; |
| reduced the LIBOR floor from 1% to 0%; |
|
eliminated the minimum proved developing producing reserves asset coverage ratio; |
|
removed the requirement to maintain $50.0million in a cash collateral account controlled by the Administrative Agent; |
|
eliminated the holiday from borrowing base determinations and the maximum consolidated total net leverage ratio and the minimum consolidated interest coverage ratio covenants; and |
|
eliminated certain negative covenants, such as the $20.0million liquidity requirement and the limitation on capital expenditures. |
The initial conforming borrowing base under the Refinanced Credit
Facility is $425.0million and the next scheduled borrowing base
redetermination is scheduled for October1, 2017, followed by
scheduled semiannual borrowing base redeterminations thereafter.
The Refinanced Credit Facility is secured by (i)first-priority
mortgages on at least 95%of the PV-9 valuation of all proved
reserves included in the most recently delivered reserve report
of the Company, (ii)a first-priority perfected pledge of
substantially all of the capital stock owned by each credit party
and equity interests in the Royalty Trusts that are owned by a
credit party and (iii)a first-priority perfected security
interest in substantially all the cash, cash equivalents,
deposits, securities and other similar accounts, and other
tangible and intangible assets of the credit parties (including
but not limited to as-extracted collateral, accounts receivable,
inventory, equipment, general intangibles, investment property,
intellectual property, real property and the proceeds of the
foregoing). As described above, the Refinanced Credit Facility
refinanced and thereby replaced the Existing Credit
Agreement.
The Refinanced
Credit Facility requires the company to, commencing with the
first full quarter ending after the effective date of the
Refinancing, maintain (i)a maximum consolidated total net
leverage ratio, measured as of the end of any fiscal quarter, of
no greater than 3.50 to 1.00 and (ii)a minimum consolidated
interest coverage ratio, measured as of the end of any fiscal
quarter, of no less than 2.25 to 1.00. Such financial covenants
are subject to customary cure rights.
The Refinanced
Credit Facility contains customary affirmative and negative
covenants, including as to compliance with laws (including
environmental laws, ERISA and anti-corruption laws), maintenance
of required insurance, delivery of quarterly and annual financial
statements, oil and gas engineering reports, maintenance and
operation of property (including oil and gas properties),
restrictions on the incurrence of liens, indebtedness, asset
dispositions, fundamental changes, restricted payments and other
customary covenants.
1
The Refinanced
Credit Facility includes events of default relating to customary
matters, including, among other things, nonpayment of principal,
interest or other amounts; violation of covenants; incorrectness
of representations and warranties in any material respect;
cross-payment default and cross acceleration with respect to
indebtedness in an aggregate principal amount of $25.0million or
more; bankruptcy; judgments involving liability of $25.0million
or more that are not paid; and ERISA events. Many events of
default are subject to customary notice and cure periods.
The above
description of the material terms and conditions of the
Refinanced Credit Facility does not purport to be complete and is
qualified in its entirety by reference to the full text of the
Refinanced Credit Facility attached as Exhibit A to the
refinancing amendment, which is filed as Exhibit 10.1
hereto.
| Item1.02 |
Termination of a Material Definitive Agreement |
In connection with
the execution and delivery of the Refinanced Credit Facility
described in Item 1.01 above, the Company refinanced and thereby
replaced the Existing Credit Agreement, effective as of
February10, 2017. The Company did not pay any prepayment
penalties in connection with the refinancing of the Existing
Credit Agreement. For a description of the Existing Credit
Agreement, see the Companys Current Report on Form 8-K filed on
October7, 2016.
Item2.03
Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
The description of
the Refinanced Credit Facility in Item 1.01 is incorporated
herein by reference.
| Item7.01 | Regulation FD Disclosure. |
On February13,
2017, the Company issued a press release announcing the entry
into the Refinancing. A copy of this press release is included
herein as Exhibit 99.1. The press release, including the
information contained therein, is furnished to Item 7.01, is not
to be considered filed under the Securities Exchange Act of 1934,
as amended, and shall not be incorporated by reference into any
of the Companys previous or future filings under the Securities
Act of 1933, as amended (the Securities Act).
| Item8.01 | Other Events. |
On February13,
2017, the Company notified the holders of its 0.00% convertible
senior subordinated notes due 2020 (the Notes) issued to the
indenture governing the Notes (the Indenture) that a mandatory
conversion event had occurred as a result of the entry into the
Refinancing, and that all outstandingNotesheld by such holders
would mandatorily convert to the terms of the Indenture (the
Mandatory Conversion). Settlement of the Mandatory Conversion is
expected to occur on or around February15, 2017. At settlement,
the remaining $263.7million principal amount ofoutstanding
Noteswill convert into approximately 14.1million shares of the
Companys common stock. The Company expects to issue the shares of
its common stock to holders of theNotesin reliance on the
exemption from registration provided by Section1145(a)(1) of
Chapter 11 of Title 11 of the United States Code. For a
description of the Notes, see the Companys Current Report on Form
8-K filed on October7, 2016.
| Item9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
The following
exhibits are furnished as part of this Current Report on Form
8-K:
|
Exhibit No. |
Description |
|
| 10.1 |
Refinancing Amendment to the Existing Credit Agreement, dated February10, 2017 by and among the Company, as borrower, Royal Bank of Canada, as administrative agent and letter of credit issuer, and the other lenders party thereto. |
|
| 99.1 |
Press release issued by SandRidge Energy, Inc. dated as of February 13, 2017. |
2
SANDRIDGE ENERGY, INC. (NYSE:SD) Recent Trading Information
SANDRIDGE ENERGY, INC. (NYSE:SD) closed its last trading session up +0.23 at 20.19 with 54,608 shares trading hands.