UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: February 12, 2013
Date of earliest event reported: February 8, 2013
Constellation Energy Partners LLC
(Exact name of registrant as specified in its charter)
Delaware | 001-33147 | 11-3742489 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
1801 Main Street, Suite 1300 Houston, TX |
77002 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (832) 308-3700
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 | Entry into a Material Definitive Agreement. |
The information discussed in Item 2.03 below is incorporated herein by reference.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. |
Reserve-Based Credit Facility Amendment
On February 8, 2013, we entered into a third amendment to our reserve-based credit facility. Pursuant to the amendment, our lenders in the reserve-based credit facility will consent to the previously announced sale of our Robinsons Bend assets in the Black Warrior Basin of Alabama and the subsequent release of collateral associated with those assets. Upon the closing of the sale, our borrowing base will be $37.5 million and the maturity date of the facility will be extended to March 31, 2014.
The current lenders and their percentage commitments in the reserve-based credit facility are The Royal Bank of Scotland plc (26.84%), BNP Paribas (21.95%), The Bank of Nova Scotia (21.95%), Societe Generale (14.63%), and ING Capital LLC (14.63%). Each lender will receive a 5 basis point fee for the amendment. There are no other changes to the interest rates, covenants or other terms of our reserve-based credit facility as a result of this amendment.
The foregoing description of the Third Amendment to Amended and Restated Credit Agreement is qualified in its entirety by the actual amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Item 8.01 | Other Events. |
On February 12, 2013, Constellation Energy Partners LLC (the Company) issued a press release announcing that the Company extended the maturity of its reserve-based credit facility to March 31, 2014, and that its lenders will consent to the Companys previously announced sale of the Robinsons Bend Field. The amendment to the reserve-based credit facility was an interim step towards the restructuring of the reserve-based credit facility to facilitate the closing of the Robinsons Bend Field asset sale. The Company also announced that it is currently working with prospective lenders on a new reserve-based credit facility and that it expects to close on the new facility in the second quarter of 2013.
A copy of the press release is furnished and attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 8.01 by reference.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit Number |
Description | |
Exhibit 10.1 | Third Amendment to Amended and Restated Credit Agreement dated as of February 8, 2013, among Constellation Energy Partners LLC, as borrower, The Royal Bank of Scotland plc, as administrative agent, and the lenders party thereto. | |
Exhibit 99.1 | Press release dated February 12, 2013, publicly announcing that the Company extended the maturity of its reserve-based credit facility to March 31, 2014, and that its lenders will consent to the Companys previously announced sale of the Robinsons Bend Field. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CONSTELLATION ENERGY PARTNERS LLC | ||||||
Date: February 12, 2013 | By: | /S/ CHARLES C. WARD | ||||
Charles C. Ward | ||||||
Chief Financial Officer and Treasurer |
EXHIBIT INDEX
Exhibit Number |
Description | |
Exhibit 10.1 | Third Amendment to Amended and Restated Credit Agreement dated as of February 8, 2013, among Constellation Energy Partners LLC, as borrower, The Royal Bank of Scotland plc, as administrative agent, and the lenders party thereto. | |
Exhibit 99.1 | Press release dated February 12, 2013, publicly announcing that the Company extended the maturity of its reserve-based credit facility to March 31, 2014, and that its lenders will consent to the Companys previously announced sale of the Robinsons Bend Field. |
EXHIBIT 10.1
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this Amendment), dated as of February 8, 2013 (Execution Date), is entered into by and among CONSTELLATION ENERGY PARTNERS LLC, a Delaware limited liability company (the Borrower), and the Lenders signatory hereto (the Lenders), and THE ROYAL BANK OF SCOTLAND plc, as Administrative Agent (the Administrative Agent) and as Collateral Agent (the Collateral Agent).
RECITALS
WHEREAS, the Borrower, the Lenders and The Royal Bank of Scotland plc, as Administrative Agent and a Lender, are party to that certain Amended and Restated Credit Agreement dated as of November 13, 2009, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of February 11, 2010 and that certain Second Amendment to Amended and Restated Credit Agreement dated as of June 3, 2011 (such Amended and Restated Credit Agreement, as the same may from time to time be amended, modified, supplemented or restated, herein called the Credit Agreement). Terms used and not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement, and the provisions of Section 1.03 of the Credit Agreement are incorporated herein by reference;
WHEREAS, by notice to the Borrower dated December 28, 2012, the Borrowing Base was set by the Lenders at $85,000,000.00; and
WHEREAS, the Borrower executed that certain membership interest purchase and sale agreement on or about February 1, 2013, pursuant to which the Borrower intends to sell all of its assets and interests in the Robinsons Bend Field in Tuscaloosa County, Alabama (the Robinsons Bend Sale); and
WHEREAS, the Borrower and the Lenders seek to clarify the terms and conditions pursuant to which (a) the Borrowing Base will be reduced in conjunction with the Robinsons Bend Sale, (b) collateral to be sold pursuant to the Robinsons Bend Sale will be released, and (c) the Maturity Date will be extended; and
WHEREAS, the parties hereto have agreed, subject to the terms and conditions hereinafter set forth, to amend the Credit Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Waiver Regarding Sale. Subject to the terms and conditions of this Amendment, the Administrative Agent, on behalf of the Lenders, hereby approves the proposed Robinsons Bend Sale and waives the provisions of Section 9.12 of the Credit Agreement solely with respect to such proposed Robinsons Bend Sale. Upon the Final Effective Date (as defined below), the Administrative Agent and the Collateral Agent agree to release the collateral to be sold pursuant to the Robinsons Bend Sale on the terms and conditions described in Section 11.10 of the Credit Agreement.
SECTION 2. Agreement Regarding Borrowing Base. The parties hereto acknowledge and agree that the Borrowing Base, as determined by the Lenders, shall be reduced on the date that the Robinsons Bend Sale is consummated, funded and closed to $37,500,000.00 (the Sale Date).
SECTION 3. Amendments to the Credit Agreement. Subject to Section 5 of this Amendment, the Credit Agreement is hereby amended by deleting the definition of Maturity Date in Section 1.02 of the Credit Agreement in its entirety and substituting the following in place thereof:
Maturity Date means the earlier to occur of (a) March 31, 2014, or (b) the date that the Loan Commitments are sooner terminated pursuant to Sections 2.06 or 10.02.
SECTION 4. Representations and Warranties. The Borrower represents and warrants as follows:
(a) The Borrower is duly authorized and empowered to execute, deliver and perform this Amendment and all other instruments referred to or mentioned herein to which it is a party, and all action on its part requisite for the due execution, delivery and the performance of this Amendment has been duly and effectively taken.
(b) After giving effect to this Amendment, the representations and warranties contained in the Credit Agreement, as amended hereby, and any other Loan Documents executed in connection herewith or therewith are true in all material respects on and as of the date hereof as though made on and as of the date hereof, except to the extent that such representation or warranty was made as of a specific date, in which case such representation or warranty was true in all material respects when made.
(c) After giving effect to this Amendment, no event has occurred and is continuing which constitutes a Default.
(d) When this Amendment is duly executed and delivered, the Credit Agreement as amended by this Amendment will be legal and binding obligations of the Borrower, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors rights and by equitable principles of general application.
SECTION 5. Conditions to Effectiveness.
(a) Subject to the limited exception in Section 5(b) below, this Amendment shall become effective when, and only when, the Administrative Agent shall have received the following on or before the Execution Date:
(i) counterparts of this Amendment duly executed and delivered on behalf of the Borrower and all Lenders;
(ii) a Secretarys Certificate of the Borrower, including resolutions authorizing the execution, delivery and performance of this Amendment and any other documents signed in connection therewith, and the Borrowers articles of formation, evidence of existence and good standing, and incumbency certificate, all in form and substance satisfactory to the Administrative Agent;
(iii) the Ratification and Affirmation of Guarantors duly executed and delivered on behalf of the Guarantors;
(iv) such other documents, instruments and agreements as the Administrative Agent reasonably deems necessary, in form and substance reasonably satisfactory to the Administrative Agent; and
(v) all fees and other amounts due and payable, including to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower pursuant to Section 9.
(b) In addition to the satisfaction of the conditions in Section 5(a), the modification to the definition of Maturity Date in this Amendment shall not become effective until the date that the following additional conditions precedent have been satisfied (the Final Effective Date):
(i) the Administrative Agent shall have received from the Borrower fully executed copies of the membership interest purchase and sale agreement, evidence of assignment and such other documents, instruments and agreements as the Administrative Agent reasonably deems necessary, in form and substance reasonably satisfactory to the Administrative Agent to evidence the Robinsons Bend Sale;
(ii) the Sale Date shall have occurred on or before March 8, 2013;
(iii) the Borrower shall have paid to the Administrative Agent, for the account of each Lender, a fee in the amount of 5 bps based on the Lenders pro rata share of the post-asset sale borrowing base; and
(iv) the Administrative Agent shall have received from the Borrower (1) proceeds from the Robinsons Bend Sale in an amount sufficient to prepay the Total Revolving Credit Exposure to any amount equal to or lesser than the Borrowing Base as adjusted on the Sale Date so that no Borrowing Base Deficiency will result after giving effect to the Robinsons Bend Sale, and (2) all fees and other amounts due and payable, including to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower pursuant to Section 9.
(c) No Default or Event of Default exists on the Execution Date, Final Effective Date or will arise as a result of the execution and effect of this Agreement.
SECTION 6. Reference to and Effect on Loan Documents.
(a) On and after the effective date of this Amendment, each reference in the Credit Agreement to this Agreement, hereunder, hereof, herein or any other expression of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the Credit Agreement, thereunder, thereof, therein or any other expression of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended by this Amendment.
(b) Except as specifically amended above, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. Without limiting the generality of the foregoing, the Security Instruments and all of the Collateral described therein do and shall continue to secure the payment of all obligations stated to be secured thereby under the Credit Agreement, as amended hereby, and the other Loan Documents.
(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Lenders under any of the Loan Documents or constitute a waiver of any provision of any of the Loan Documents.
SECTION 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
SECTION 8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
SECTION 9. Costs and Expenses. The Borrower agrees to pay on demand all out of pocket costs and expenses of the Administrative Agent in connection with the preparation, reproduction, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, including reasonable legal fees and expenses for counsel for the Administrative Agent
[Signature pages follow]
The parties hereto have caused this Amendment to be executed by their respective duly authorized representatives as of the date first written above.
CONSTELLATION ENERGY PARTNERS LLC | ||
By: |
/s/ Charles C. Ward | |
| ||
Charles C. Ward, Chief Financial Officer and Treasurer |
26.829268% of Outstanding Principal
Amount of the Loans |
THE ROYAL BANK OF SCOTLAND plc, as Administrative Agent, Collateral Agent and as a Lender |
By: |
RBS Securities Inc., as Agent | |||
By: | /s/ Sandra Aultman | |||
Sandra Aultman, Managing Director |
21.951220% of Outstanding Principal
Amount of the Loans |
THE BANK OF NOVA SCOTIA, as a Lender |
By: | /s/ Terry Donovan | |||
Name: | Terry Donovan | |||
Title: | Managing Director |
21.951220% of Outstanding Principal
Amount of the Loans |
WELLS FARGO BANK, N.A., as a Lender |
By: | /s/ Betsy Jocher | |||
Name: | Betsy Jocher | |||
Title: | Director |
14.634146% of Outstanding Principal
Amount of the Loans |
ING Capital LLC, as a Lender |
By: | /s/ Charles Hall | |||
Name: | Charles Hall | |||
Title: | Managing Director |
14.634146% of Outstanding Principal
Amount of the Loans |
SOCIÉTÉ GÉNÉRALE, as a Lender |
By: | /s/ Graeme Bullen | |||
Name: | Graeme Bullen | |||
Title: | Managing Director |
EXHIBIT 99.1
News Release
General Inquiries: 877.847.0008
www.constellationenergypartners.com
Investor Contact: | Charles C. Ward 877.847.0009 |
Constellation Energy Partners Amends Credit Facility
HOUSTON(BUSINESS WIRE)Feb. 12, 2013Constellation Energy Partners LLC (NYSE MKT: CEP) today announced that it has executed an amendment to its reserve-based credit facility.
Pursuant to the amendment, the lenders to the reserve-based credit facility will consent to the sale of the Robinsons Bend Field assets and subsequent release of collateral associated with those assets. Upon closing of the sale, the companys borrowing base will be reduced to $37.5 million and the maturity date of the facility will be extended to March 31, 2014.
The amendment to our reserve-based credit facility is an interim step towards the restructuring of our reserve-based credit facility that was needed to facilitate the closing of our sale of the Robinsons Bend Field assets, said Stephen R. Brunner, President and Chief Executive Officer of Constellation Energy Partners. We are currently working with prospective lenders on a new reserve-based credit facility that better reflects market terms and conditions, the value of our asset base after the Robinsons Bend sale, and our strategic focus. Based on our progress to date, we anticipate that well be in a position to close on the new facility towards the early part of the second quarter.
Additional details concerning the amendment to the reserve-based credit facility and the sale of the Robinsons Bend Field assets can be found in the companys filings with the Securities and Exchange Commission and on the companys Web site (http://www.constellationenergypartners.com).
About the Company
Constellation Energy Partners LLC is a limited liability company focused on the acquisition, development and production of oil and natural gas properties, as well as related midstream assets.
Forward-Looking Statements
We make statements in this news release that are considered forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, managements assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this news release are not guarantees of future performance, and we cannot assure you that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors listed in the Risk Factors section in our SEC filings and elsewhere in those filings. All forward-looking statements speak only as of the date of this news release. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
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