Item 1.01 Entry into a Material Definitive Agreement.
Forbearance Agreement
As previously disclosed, Lonestar Resources US Inc., a Delaware corporation (the “Company”), elected not to make the approximately $14.1 million interest payment (the “Interest Payment”) due and payable on July 1, 2020 with respect to its 11.25% senior notes due 2023 (the “Notes”) issued under the indenture governing the Notes, dated as of January 4, 2018 (as amended, supplemented or otherwise modified from time to time, the “Indenture”). The Company elected not to make the Interest Payment in order to evaluate certain financial alternatives.
The Company’s failure to make the Interest Payment on July 1, 2020 represented an event of default under the Credit Facility (as defined below) at that time and the Company’s failure to make the Interest Payment within thirty days after it is due and payable constitutes an “event of default” under the Indenture. As active discussions are still ongoing regarding the Company’s evaluation of financial alternatives, the Company determined it would not make the Interest Payment prior to the expiration of the thirty day grace period, resulting in an event of default under the Indenture.
On July 31, 2020, the Company and certain of its subsidiaries, entered into a forbearance agreement (the “Forbearance Agreement”) with certain holders of the outstanding Notes and any additional holder of Notes that becomes a party hereto in accordance with the terms thereof (collectively, the “Forbearing Holders”).
Pursuant to the Forbearance Agreement, subject to certain terms and conditions therein, the Forbearing Holders have agreed to temporarily forbear from the exercise of any rights or remedies they may have in respect of the aforementioned event of default under the Indenture. The Forbearance Agreement terminates on August 21, 2020, unless certain specified circumstances cause an earlier termination.
The above description of the terms of the Forbearance Agreement does not purport to be complete and is qualified in its entirety by the full text of the Forbearance Agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.
Amendment to the Forbearance Agreement, Fourteenth Amendment, and Borrowing Base Agreement
As previously disclosed, on July 2, 2020, the Company and certain of its subsidiaries entered into a Forbearance Agreement, Fourteenth Amendment, and Borrowing Base Agreement with Citibank, N.A., as administrative agent, and the lenders party thereto (the “Credit Facility Forbearance Agreement”) with respect to the Company’s senior secured credit facility (as amended, supplemented or modified from time to time, the “Credit Facility”). Pursuant to the Credit Facility Forbearance Agreement, among other things, the administrative agent and the lenders under the Credit Facility (the “Lenders”) agreed to refrain from exercising their rights and remedies under the Credit Facility and related loan documents with respect to certain defaults, including the Company’s failure to make the Interest Payment on time, until July 31, 2020, subject to an earlier termination as a result of certain specified circumstances.
On July 31, 2020, the Company and certain of its subsidiaries entered into an Amendment (the “Amendment”) with respect to the Credit Facility Forbearance Agreement with the Lenders, pursuant to which the Lenders agreed to extend the stated term of the Credit Facility Forbearance Agreement until August 21, 2020.
The above description of the terms of the Amendment does not purport to be complete and is qualified in its entirety by the full text of the Amendment, which is attached to this Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by reference.