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XCO > SEC Filings for XCO > Form 8-K on 6-Aug-2013All Recent SEC Filings

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Form 8-K for EXCO RESOURCES INC


6-Aug-2013

Entry into a Material Definitive Agreement, Completion of Acquisition or Dispo


Item 1.01 Entry into a Material Definitive Agreement.

Amended and Restated EXCO Resources Credit Agreement

On July 31, 2013, EXCO Resources, Inc. ("EXCO") entered into that certain Amended and Restated Credit Agreement, dated as of July 31, 2013, by and among EXCO, as borrower, certain subsidiaries of EXCO, as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, J.P. Morgan Securities LLC, as sole bookrunner and co-lead arranger, Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and BMO Capital Markets Corp., as co-lead arrangers, Bank of America, N.A. and Wells Fargo Bank, N.A., as co-syndication agents and Bank of Montreal, as documentation agent (the "Amended and Restated EXCO Resources Credit Agreement") to amend and restate EXCO's existing credit agreement.

The Amended and Restated EXCO Resources Credit Agreement has a borrowing base of $1.6 billion, $1.3 billion of which is a revolving commitment and $300.0 million of which is a term loan commitment (the "Initial Term Loan"). The Amended and Restated EXCO Resources Credit Agreement provides that the net proceeds from certain asset sales during the first year of the loan will be used to reduce the outstanding borrowings and borrowing base. On July 31, 2014, the borrowing base will be reduced by an amount equal to $400.0 million less the amount of such net asset sale proceeds in excess of the borrowing base value (if any) received by EXCO and applied to reduce the outstanding balance of the loan. In connection with closing the transactions contemplated by the Participation Agreement (as hereinafter defined), $131 million of net proceeds received by EXCO were applied to reduce the outstanding balance of the loan and the borrowing base such that $269 million remains under the $400 million asset sale requirement to be paid on or before July 31, 2014.

At any time after the date that is nine months after the closing date, investment bankers engaged by EXCO at the request of the lenders, have the right to demand that EXCO publicly sell or privately place debt securities in an amount equal to (i) $400.0 million less the amount of such net asset sale proceeds received by EXCO in excess of the borrowing base value (if any) plus
(ii) an amount sufficient to reduce the amounts outstanding under the Amended and Restated EXCO Resources Credit Agreement so that there is at least $100.0 million in available borrowing capacity. The amount, type and terms of any debt financing would be determined by the investment banker after, reasonable consultation with EXCO, at the time of the demand, subject to certain maximum yield amounts.

The Amended and Restated EXCO Resources Credit Agreement also allows for a replacement term loan to replace the Initial Term Loan (the "Replacement Term Loans") that will rank pari passu in right of payment and of security with the revolving loans. Also, with the prior written consent of the administrative agent, EXCO and any one or more lenders may agree that such lenders shall make incremental term loans (the "Incremental Term Loans") to EXCO. Such Incremental Term Loans will also rank pari passu in right of payment and of security with the revolving loans.

Borrowings under the Amended and Restated EXCO Resources Credit Agreement are collateralized by first lien mortgages providing a security interest of not less than 80% of the Engineered Value (as defined in the Amended and Restated EXCO Resources Credit Agreement) in EXCO's oil and natural gas properties covered by the borrowing base. EXCO is permitted to have derivative financial instruments covering no more than (i) 100% of forecasted production from total proved reserves (as defined in the Amended and Restated EXCO Resources Credit Agreement) during the first two years of the five year period commencing


on July 31, 2013; (ii) 90% of the forecasted production for any month during the third year of such five year period and (iii) 85% of the forecasted production for any month during the fourth and fifth years of such five year period.

The Amended and Restated EXCO Resources Credit Agreement sets forth the terms and conditions under which EXCO is permitted to pay a cash dividend on its common stock and provides that EXCO may declare and pay cash dividends on its common stock in an amount not to exceed $50.0 million in any four consecutive fiscal quarters, provided that as of each payment date and after giving effect to the dividend payment, (i) no default has occurred and is continuing; (ii) EXCO has at least 10% of its borrowing base available under the Amended and Restated EXCO Resources Credit Agreement and (iii) payment of such dividend is permitted under the indenture governing the Senior Notes.

Under the Amended and Restated EXCO Resources Credit Agreement, the next scheduled borrowing base redetermination will occur on April 1, 2014. Subsequent redeterminations will occur semi-annually with EXCO and the lenders having the right to request interim unscheduled redeterminations. The interest rate grid for the revolving loans and the Initial Term Loan under the Amended and Restated EXCO Resources Credit Agreement ranges from a London Interbank Offered Rate ("LIBOR") plus 175 basis points ("bps") to LIBOR plus 275 bps or an Alternate Base Rate ("ABR") pricing alternative ranging from ABR plus 75 bps to ABR plus 175 bps depending upon borrowing base usage. The interest rate grid is increased by 100 bps per annum during the first year of the loan term until the net proceeds in excess of the borrowing base value (if any) received by EXCO from certain asset sales equals $400.00 million. The administrative agent has the right to increase the interest rate grid in their discretion up to an additional 100 bps per annum at any point and to change the unused commitment fee to 50 basis points for all borrowing base usages prior to the earlier of 120 days after the closing date or the date that the administrative agent and its affiliates hold borrowing base commitments of less than $250 million. The Amended and Restated EXCO Resources Credit Agreement matures on July 31, 2018.

As of July 31, 2013, EXCO was in compliance with the financial covenants contained in the Amended and Restated EXCO Resources Credit Agreement, which require that EXCO:

            maintain a Consolidated Current Ratio (as defined in the Amended and
             Restated EXCO Resources Credit Agreement of at least 1.0 to 1.0 as
             of the end of any fiscal quarter; and


            not permit its leverage ratio of Consolidated Funded Indebtedness to
             Consolidated EBITDAX (each as defined in the Amended and Restated
             EXCO Resources Credit Agreement) to be greater than 4.5 to 1.0 at
             the end of any fiscal quarter.

Repayment of amounts outstanding under the Amended and Restated EXCO Resources . . .



Item 2.01 Completion of Acquisition or Disposition of Assets.

Eagle Ford Purchase and Sale Agreement; Eagle Ford Farmout Agreement On July 31, 2013 (the "CHK Closing"), EOC closed the transactions contemplated by that certain Eagle Ford Purchase and Sale Agreement (the "EF PSA"), dated as of July 2, 2013, by and between EOC and Chesapeake Exploration, L.L.C., an Oklahoma limited liability company ("CHK"), effective in economic terms as of April 1, 2013. Pursuant to the terms of the EF PSA, (a) EOC purchased from CHK CHK's interest in and to the following assets: (i) certain producing oil and gas wells located in the counties of Dimmit, Frio, La Salle and Zavala (the "Existing Wells"), (ii) certain non-producing oil, gas and mineral leases located in Zavala county (the "Area 1 Assets") and (iii) certain non-producing oil, gas and mineral leases, drilling units and retained tracts located in the counties of Dimmit, Frio, La Salle and Zavala (the "Outside Assets" and collectively with the Existing Wells and the Area 1 Assets, the "EF Properties") and (b) EOC and CHK entered into that certain Farmout Agreement (the "FO Agreement") pursuant to which EOC will have the option to acquire from CHK from time to time during the three years following the CHK Closing all or any portion of CHK's interest in and to certain leases in the counties of Dimmit, Frio, La Salle and Zavala covering approximately 147,000 net acres that are not part of the EF Properties (the "FO Assets") by drilling qualifying wells on the FO Assets to be earned by EOC. EOC paid a purchase price of approximately $685 million for the EF Properties (after preliminary purchase price adjustments and subject to customary post-closing purchase price adjustments).
A description of the material terms of the EF PSA can be found in EXCO's Current Report on Form 8-K filed on July 8, 2013, which description is incorporated herein by reference.
Forward Looking Statements

This Form 8-K may contain forward-looking statements relating to future financial results, business expectations and business transactions. Business plans may change as circumstances warrant. Actual results may differ materially from those predicted as a result of factors over which EXCO has no control. Such factors include, but are not limited to, estimates of reserves, commodity price changes, regulatory changes and general economic conditions. These risk factors and additional information are included in EXCO's reports on file with the Securities and Exchange Commission ("SEC"). EXCO undertakes no obligation to publicly update or revise any forward-looking statements.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 is hereby incorporated herein by reference.



Item 7.01 Regulation FD Disclosure.


On July 31, 2013, EXCO issued a press release, a copy of which is furnished as Exhibit 99.1, announcing the entry into the Amended and Restated EXCO Resources Credit Agreement and the Participation Agreement, and the closing of the transactions contemplated by the EF PSA.
In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 7.01 (including the information in Exhibit 99.1) shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Section 9 - Financial Statements and Exhibits



Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

EXCO will file the financial statements required by Item 9.01(a) of Form 8-K by an amendment to this Current Report on Form 8-K no later than 71 days from the date this Current Report on Form 8-K is required to be filed.

(b) Pro Forma Financial Information.

EXCO will file the financial information required by Item 9.01(b) of Form 8-K by an amendment to this Current Report on Form 8-K no later than 71 days from the date this Current Report on Form 8-K is required to be filed.

(d) Exhibits.

Exhibit No.     Description
   10.1         Amended and Restated Credit Agreement, dated as of July 31, 2013,
                by and among EXCO Resources, Inc., as Borrower, certain
                subsidiaries of Borrower, as Guarantors, the lenders party
                thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, J.P.
                Morgan Securities LLC, as Sole Bookrunner and Co-Lead Arranger,
                Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner &
                Smith Incorporated and BMO Capital Markets Corp., as Co-Lead
                Arrangers, Bank of America, N.A. and Wells Fargo Bank, N.A., as
                Co-Syndication Agents and Bank of Montreal, as Documentation
                Agent.
    99.1      Press Release, dated July 31, 2013


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