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BofA Merrill Lynch, Wells Fargo Arrange $100MM ABL Facility for Key Energy

June 02, 2015, 08:09 AM
Filed Under: Energy Services

Key Energy Services, Inc.  has closed a $100 million asset-based revolving credit facility ("ABL") due February 2020 and closed and funded a $315 million term loan facility due June 2020. The facilities replace Key's existing $400 million senior revolving credit facility.

The facilities do not have cash flow based financial maintenance covenants; however, the facilities require Key to maintain $100 million in liquidity, including cash and availability under the ABL. Upon closing, Key had $270.6 million of liquidity, assuming the completion of certain post-closing collateral perfection requirements. The facilities also require Key to maintain the ratio of the net orderly liquidation value of its assets and certain term loan proceeds to term loan borrowings of 1.5x. As of the date of closing, this ratio was 2.15x. The ABL also includes a fixed charge coverage ratio of 1.0x, which is tested only if excess availability under the ABL falls below a specified threshold or upon the occurrence of certain other events. The term loan was issued at an OID of 3.0% with an annual rate of LIBOR plus 9.25% with a 1.00% LIBOR floor. The ABL bears interest at an annual rate on outstanding borrowings of LIBOR plus 4.5%, with a fee on unused commitments ranging from 1.00% - 1.25% based on utilization.

Commenting on the transaction, Dick Alario, Key's Chairman, president and chief executive officer stated, "We believe that with the consummation of the refinancing of Key's existing revolving credit facility, we have secured sufficient liquidity with a favorable covenant structure to navigate the current industry downturn and flexibility with respect to our on-going Foreign Corrupt Practices Act investigation."

Bank of America Merrill Lynch acted as the Sole Lead Arranger of the term loan facility and Bank of America Merrill Lynch and Wells Fargo acted as Joint Lead Arrangers on the ABL.

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