Clayton Williams Energy, Inc. announced today that it has entered into a credit agreement with certain funds managed by Ares Management, L.P. so that the funds will make secured term loans to the Clayton in the principal amount of $350 million.
Clayton Williams Energy, Inc. has also has agreed to issue to the Lenders warrants to purchase 2.25 million shares of the company’s common stock at a price of $22.00 per share with rights to appoint two members to the company’s board of directors. Proceeds from this transaction will be used to fully repay the company’s outstanding indebtedness under its revolving credit facility and provide additional liquidity to fund the company’s operations and future development. Closing of this transaction is expected to occur on or before March 31, 2016.
Concurrently, the company announced an amendment to its bank revolving credit facility to reduce lender commitments to $100 million and ease financial covenants, among other changes. The amendment will be effective upon closing of the secured term loan transaction.
Mel Riggs, President of Clayton Williams Energy, said:
“Today’s announcement marks the successful conclusion of our company’s review of strategic alternatives. This transaction provides the liquidity we need to support our continuing operations and preserve our large core acreage positions in the Delaware Basin and Eagle Ford for future development and value creation. We are excited about building on this relationship with Ares Management.”
Further commentary on this transaction will occur during the company’s Year End and Q4 2015 financial results conference call on March 10, 2016. Additional details regarding the new credit agreement and amendment to the company’s bank revolving credit facility will also be included in a Current Report on Form 8-K to be filed by the company.
Goldman Sachs served as sole arranger and bookrunner, and Stephens Inc. advised the Lenders. Vinson & Elkins served as legal advisor to the company, and Kirkland & Ellis LLP served as legal advisor to the Lenders.