|
Item 1.01.
|
Entry into a Material Definitive Agreement.
|
2017 Credit Agreement
On November 17, 2017, California Resources Corporation (the “
Company
”) entered into a $1.3 billion credit agreement
with Goldman Sachs Bank USA, as lead arranger and bookrunner, Bank of New York Mellon Trust Company, N.A., as Administrative Agent, and the various lenders identified therein (the “
2017 Credit Agreement
”).
The proceeds of the loans under the 2017 Credit Agreement (the “
2017 Term Loans
”) were used to pay down all of the
outstanding term loans and a portion of the outstanding revolving loans under the credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, Swingline Lender and a Letter of Credit Issuer, Bank of America, N.A., as Syndication Agent,
Swingline Lender and a Letter of Credit Issuer, and the lenders named therein, dated as of September 24, 2014 (as previously amended, the “
2014 Credit Agreement
”). The 2017 Term Loans were issued with original issue discount of
2.00% and bear interest at a fluctuating rate per annum equal to 4.75% plus the LIBOR Rate, subject to a 1.00% LIBOR floor (or ABR rates in certain circumstances).
The 2017 Term Loans will be secured by the same first out liens that secure the remaining revolving loans under the 2014 Credit Agreement and
by the same collateral that secures the credit agreement with The Bank of New York Mellon Trust Company, N.A., as Administrative Agent and Collateral Agent and the lenders identified therein, dated as of August 12, 2016 (the “
2016
Credit Agreement
”). Any prepayment of the 2017 Term Loans made prior to 90 days prior to the maturity date is subject to a prepayment premium of 2.00%, and such premium is also due upon acceleration of the loans in connection with an event
of default.
The 2017 Term Loans mature on December 31, 2022 subject to a springing maturity of (i) 91 days prior to the maturity of
our 2020 Notes to the extent that more than $100 million of such notes remain outstanding at such date, (ii) 91 days prior to the maturity of our 2021 Notes, to the extent that more than $100 million of such notes remain outstanding on
such date, and (iii) 91 days prior to the stated maturity date of the 2016 Credit Agreement, to the extent that more than $100 million of such loans remain outstanding on such date.
The 2017 Credit Agreement provides for customary covenants and events of default consistent with the covenants in our 2014 Credit Agreement,
including limitations on additional indebtedness, liens, asset dispositions, investments, restricted payments and other negative covenants, in each case subject to exceptions. Additionally, the 2017 Credit Agreement requires us to maintain a minimum
ratio of 1.20 to 1.00 of the
PV-10
of our proved reserves to our debt secured by liens ranking equally or senior to the 2017 Term Loans (the “
First-Lien Asset Coverage Ratio
”). The events of
default provided for in the 2017 Credit Agreement include the following (subject to any applicable cure period), among other things: (i) nonpayment; (ii) inaccuracy of representations and warranties; (iii) breach of covenants;
(iv) payment defaults under, or acceleration of, certain other indebtedness; (v) defined events of bankruptcy, insolvency and reorganization; (vi) certain ERISA events; (vii) failure of the guarantee by the Guarantors or the
collateral documents securing the 2017 Term Loans to be in full force and effect; (viii) failure to discharge certain judgments; and (ix) changes of control. If an event of default occurs or is continuing, the Administrative Agent may
accelerate repayment of the 2017 Term Loans.
All capitalized terms not defined herein shall have the meanings ascribed to them in the
2017 Credit Agreement. The description above is qualified in its entirety by the 2017 Credit Agreement, which is filed as Exhibit 10.1 to this current report on Form
8-K
and is incorporated by reference into
this Item 1.01.
Seventh Amendment to 2014 Credit Agreement
As previously announced, on November 9, 2017, the Company entered into an amendment to its 2014 Credit Agreement, the effectiveness of
which was subject to certain conditions. With the closing of the 2017 Credit Agreement, all conditions have been satisfied and the amendment has become effective.
2
Equity Distribution Agreement
On November 17, 2017, the Company entered into an Equity Distribution Agreement (the “
Agreement
”) with Morgan
Stanley & Co. LLC (the “
Manager
”). Pursuant to the terms of the Agreement, the Company may sell from time to time through the Manager, as the Company’s sales agent, shares of the Company’s common stock, par value
$0.01 (the “
Common Stock
”), up to an aggregate amount of 6,000,000 shares of Common Stock (the “
Shares
”). Sales of the Shares, if any, will be made by means of ordinary brokers’ transactions on the New York
Stock Exchange, any other national securities exchange or facility thereof, a trading facility of a national securities association or an alternate trading system, to or through a market maker or directly on or through an electronic communication
network or any similar market venue, at market prices, in block transactions or as otherwise agreed by the Company and the Manager.
The
Company intends to use the net proceeds from the offering for general corporate purposes, which may include, among other things, redeeming or repurchasing some of our outstanding senior notes and senior secured second lien notes or repaying other
outstanding indebtedness, funding capital expenditures, acquisitions and additions to working capital.
The Shares will be issued pursuant
to the Company’s shelf registration statement on Form
S-3
(Registration
No. 333-208671),
filed on December 21, 2015.
The Agreement contains customary representations, warranties and agreements by the Company, indemnification obligations of the Company and the
Manager, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.
The summary of
the Agreement in this report does not purport to be complete and is qualified by reference to such agreement, which is filed as Exhibit 1.1 hereto. Legal opinions relating to the Shares are included in Exhibit 5.1 hereto.